DECRANE HOLDINGS CO.
MANAGEMENT INCENTIVE PLAN
SECTION 1. PURPOSE. The purposes of the DeCrane Holdings Co. Management
Incentive Plan are to promote the interests of DeCrane Holdings Co. (the
"COMPANY") and its stockholders by (i) attracting and retaining exceptional
executive personnel and other key employees of the Company and its Subsidiaries,
as defined below; (ii) motivating such employees by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. For purposes of this definition, the terms "control" (including
with correlative meanings, the terms "controlling", "controlled by" and "under
common control with"), when used with respect to any Person, means the
possession, directly or indirectly of the power to direct or cause the direction
of the management and policies of such Person, whether through the ownership of
voting securities, by contract or otherwise.
"AWARD" means any Option.
"AWARD AGREEMENT" means an agreement in substantially the Form attached
hereto as Exhibit A or any other written agreement, contract, or other
instrument or document, designated by the Committee, evidencing any Award which
may, but need not, be executed or acknowledged by a Participant.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means (i) dishonesty by a Participant that results in
substantial personal enrichment at the expense of the Company; (ii) willful
violations of a Participant's obligations to the Company (including under any
employment agreement between the Participant and the Company) which result in
material injury to the Company; (iii) a Participant's commission of any felony
involving the personal dishonesty of the Participant; or (iv) a Participant's
chronic alcoholism or abuse of controlled substances.
"CHANGE OF CONTROL" means:
(a) any "person" (as such term is used in Section 3(a)(9) and
13(d)(3) of the Exchange Act) other than (A) the DLJ Entities and/or
their respective Permitted Transferees (as defined in the Investors'
Agreement) or (B) any "group" (within the meaning of such Section
13(d)(3)) of which the DLJ Entities constitute a majority (on the basis
of ownership interest), acquires, directly or indirectly, by virtue of
the consummation of any purchase, merger or other combination,
securities of the Company representing more than 51% of the combined
voting power of the Company's then outstanding voting securities with
respect to matters submitted to a vote of the stockholders generally;
or
(b) a sale or transfer by the Company or any of its
Subsidiaries of substantially all of the consolidated assets of the
Company and its Subsidiaries to an entity which is not an Affiliate of
the Company prior to such sale or transfer.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
"COMMITTEE" means a committee of the Board designated by the Board to
administer the Plan. Until otherwise determined by the Board, the full Board
shall be the Committee under the Plan.
"DISABILITY" shall mean a Participant's inability to perform the duties
of his or her employment due to mental or physical incapacity for a period of
six consecutive months.
"EMPLOYEE" means an employee of the Company or any Subsidiary.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means with respect to the Shares, as of any given
date or dates, the average reported closing price of a share of such class of
common stock on such exchange or market as is the principal trading market for
such class of common stock for the three trading days immediately preceding such
date or dates. If such class of common stock is not traded on an exchange or
principal trading market on such date, the fair market value of a Share shall be
determined by the Committee in good faith taking into account as appropriate
recent sales of the Shares, recent valuations of the Shares and such other
factors as the Committee shall in its discretion deem relevant or appropriate.
2
"INVESTORS' AGREEMENT" means the Amended and Restated Investors'
Agreement dated as of October 2, 1998 among (i) the Company, (ii) DLJ Merchant
Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ
Offshore Partners II, C.V., DLJ Diversified Partners, L.P., DLJ Diversified
Partners-A, L.P., DLJ Millennium Partners, L.P., DLJ Millennium Partners-A,
L.P., DLJMB Funding II, Inc., UK Investment Plan 1997 Partners, DLJ EAB
Partners, DLJ First ESC, L.P. and DLJ ESC II, L.P. (collectively, the "DLJ
ENTITIES") and (iii) certain other Persons listed on the signature pages
thereof.
"OPTION" means a right to purchase Shares from the Company granted
under Section 6 of the Plan.
"PARTICIPANT" means the Employees set forth on Exhibit B hereto
selected by the Committee to receive the Awards set forth in Exhibit B (and to
the extent applicable, any heirs or legal representatives thereof).
"PERMITTED TRANSFEREE" shall have the meaning assigned to it in the
Investors' Agreement.
"PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.
"PLAN" means this DeCrane Holdings Co. Management Incentive Plan.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SHARES" means shares of common stock, $0.01 par value, of the Company
or such other securities as may be designated by the Committee from time to
time.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation or
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are at the time directly or indirectly owned by
such Person.
"SUBSTITUTE AWARDS" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
3
SECTION 3. ADMINISTRATION.
(a) AUTHORITY OF COMMITTEE. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the type
or types of Awards to be granted to a Participant; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award and Award Agreement; (v) determine whether, to
what extent, and under what circumstances Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (vii) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
(b) COMMITTEE DISCRETION BINDING. Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be within the
sole discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all Persons, including the Company, any Subsidiary,
any Participant, any holder or beneficiary of any Award, any shareholder and any
Employee.
4
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section
4(b) and 4(c), the number of Shares with respect to which Awards may be
granted under the Plan shall be 356,257 Shares. If, after the effective date
of the Plan, any Shares covered by an Award granted under the Plan or to
which such an Award relates are forfeited, or if such an Award is settled for
cash or otherwise terminates or is canceled without the delivery of Shares,
then the Shares covered by such Award, or to which such Award relates, or the
number of Shares otherwise counted against the aggregate number of Shares
with respect to which Awards may be granted, to the extent of any such
settlement, forfeiture, termination or cancellation, shall, in the calendar
year in which such settlement, forfeiture, termination or cancellation
occurs, again become Shares with respect to which Awards may be granted
unless any dividends have been paid thereon prior to such settlement,
forfeiture, termination or cancellation. In addition, Shares tendered in
satisfaction or partial satisfaction of the exercise price of any Award or
any tax withholding obligations will again become Shares with respect to
which Awards may be granted. Notwithstanding the foregoing and subject to
adjustment as provided in Section 4(b), no Employee of the Company may
receive Options in any calendar year that relate to more than 150,000 Shares.
(b) ADJUSTMENTS. In the event that the Committee determines that
any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse
stock split, reorganization, reclassification, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other
securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate
transaction or event affects the Shares such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number of Shares of the Company
(or number and kind of other securities or property) with respect to which
Awards may thereafter be granted, (ii) the number of Shares or other
securities of the Company (or number and kind of other securities or
property) subject to outstanding Awards, and (iii) the grant or exercise
price with respect to any Award, or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards
shall not be counted against the Shares available for Awards under the Plan.
5
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(e) Participants who have previously purchased shares from the
Company shall be entitled to purchase additional Shares from the Company, at
Fair Market Value and on such other terms and conditions as are substantially
similar to that of such previous purchase, in such amounts as may be required
to prevent dilution of each such Participant's ownership interest in the
Company.
SECTION 5. ELIGIBILITY. Any Employee, including any officer or
employee-director of the Company or any Subsidiary, shall be eligible to be
designated a Participant.
SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan and contractual
restrictions affecting the Company, the Committee shall have sole and
complete authority to determine the Employees to whom Options shall be
granted, the number of Shares to be covered by each Option, the exercise
price therefor and the conditions and limitations applicable to the exercise
of the Option.
(b) EXERCISE PRICE. The Committee in its sole discretion shall
establish the exercise price at the time each Option is granted; PROVIDED,
that in no event shall the exercise price per Share be less than the Fair
Market Value of a Share on the date of grant.
(c) EXERCISE. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of Federal or
state securities laws, as it may deem necessary or advisable.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise
of an Option until payment in full of the exercise price, or adequate
provision therefor, is received by the Company. Such payment may be made: (i)
in cash; (ii) in Shares owned by the Participant for at least six months (the
value of such Shares shall be their Fair Market Value on the date of
exercise); (iii) by a combination of cash and Shares; or (iv) in such other
manner as permitted by the Committee at the time of grant or thereafter.
6
SECTION 7. TERMINATION OF EMPLOYMENT; VESTING. (a) TERMINATION OF
EMPLOYMENT. Each Award Agreement shall contain such terms as the Committee
may in its sole discretion determine concerning vesting, forfeiture, the
Company's rights of repurchase of Shares acquired upon exercise of an Option,
and/or the effects of termination or suspension of a Participant's employment
upon the exercisability of any Option granted thereunder.
(b) VESTING. Ten percent (10%) of the Options set forth on Exhibit
B in respect of each Participant designated thereon a "Corporate Participant"
or an "Operating Company Participant" shall be immediately vested. Ninety
percent (90%) of each such Option held by each such Corporate Participant or
Operating Company Participant shall vest as set forth on Schedule 1, Schedule
2 or Schedule 3, as appropriate, in each case upon attainment of the
conditions and targets set forth in the relevant Schedule.
SECTION 8. CHANGE OF CONTROL. The Committee, in its sole
discretion, may provide in an Award Agreement for the accelerated vesting of
an Award in the event of a Change of Control.
SECTION 9. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time;
provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement, including for
these purposes any approval requirement which is a prerequisite for exemptive
relief from Section 16(b) of the Exchange Act, for which or with which the
Board deems it necessary or desirable to qualify or comply. Notwithstanding
anything to the contrary herein, the Committee may amend the Plan in such
manner as may be necessary so as to have the Plan conform with local rules
and regulations in any jurisdiction outside the United States.
(b) AMENDMENTS TO AWARDS. Subject to the terms of the Plan and
applicable law, the Committee may waive any conditions or rights under, amend
any terms of, or alter, suspend, discontinue, cancel or terminate, any Award
theretofore granted, prospectively or retroactively; provided that any such
waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights of a Participant or any
holder or beneficiary of any Award theretofore granted shall not to that
extent be effective without the consent of the affected Participant, holder
or beneficiary.
7
(c) CANCELLATION. Any provision of this Plan or any Award Agreement
to the contrary notwithstanding, in the event of a Change of Control or an
offer to Participants generally relating to the acquisition of Shares,
including through purchase, merger or otherwise, the Committee may cause any
Award granted hereunder to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
the Fair Market Value of such canceled Award.
SECTION 10. GENERAL PROVISIONS.
(a) DIVIDEND EQUIVALENTS. In the sole and complete discretion of
the Committee, an Award may provide the Participant with dividends or
dividend equivalents, payable in cash, Shares, other securities or other
property on a current or deferred basis.
(b) NONTRANSFERABILITY. Except to the extent otherwise provided in
an Award Agreement, no Award shall be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Participant, except by will
or the laws of descent and distribution.
(c) NO RIGHTS TO AWARDS. No Employee, Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or
beneficiaries of Awards. The terms and conditions of Awards need not be the
same with respect to each recipient.
(d) SHARE CERTIFICATES. Certificates issued in respect of Shares
shall, unless the Committee otherwise determines, be registered in the name
of the Participant or its Permitted Transferees and shall be deposited by
such Participant or Permitted Transferee, together with a stock power
endorsed in blank, with the Company. When the Participant ceases to be bound
by any transfer restrictions set forth herein or in the Investors' Agreement,
the Company shall deliver such certificates to the Participant upon request.
Such stock certificate shall carry such appropriate legends, and such written
instructions shall be given to the Company's transfer agent, as may be deemed
necessary or advisable by counsel to the Company in order to comply with the
requirements of the Securities Act of 1933, any state securities laws or any
other applicable laws and the Investors' Agreement. Subject to the provisions
of the Investors' Agreement, all certificates for Shares or other securities
of the Company or any Subsidiary delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and Exchange
Commission or any stock exchange upon which such Shares or
8
other securities are then listed and any applicable laws or rules or
regulations, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(e) WITHHOLDING. A Participant may be required to pay to the
Company or any Subsidiary, and the Company or any Subsidiary shall have the
right and is hereby authorized to withhold from any Award, from any payment
due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash,
Shares, other securities, other Awards or other property) of any applicable
withholding taxes in respect of an Award, its exercise, or any payment or
transfer under an Award or under the Plan and to take such other action as
may be necessary in the opinion of the Company to satisfy all obligations for
the payment of such taxes. The Committee may provide for additional cash
payments to holders of Awards to defray or offset any tax arising from any
such grant, lapse, vesting, or exercise of any Award.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto.
(g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Subsidiary from adopting or
continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options, restricted stock, Shares and other
types of Awards provided for hereunder (subject to shareholder approval if
such approval is required), and such arrangements may be either generally
applicable or applicable only in specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ or
service of the Company or any Subsidiary. Further, the Company or an
Subsidiary may at any time dismiss a Participant from employment or service,
free from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
(i) RIGHTS AS A STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be issued
under the Plan until he or she has become the holder of such Shares.
(j) GOVERNING LAW. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware.
9
(k) SEVERABILITY. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to the applicable laws, or if
it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, Person or Award and the
remainder of the Plan and any such Award shall remain in full force and
effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole
discretion, it determines that the issuance or transfer of such Shares or
such other consideration might violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the Exchange
Act, and any payment tendered to the Company by a Participant in connection
therewith shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award
granted hereunder shall be construed as an offer to sell securities of the
Company, and no such offer shall be outstanding, unless and until the
Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal
securities laws and any other laws to which such offer, if made, would be
subject.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Subsidiary and a
Participant or any other Person. To the extent that any Person acquires a
right to receive payments from the Company or any Subsidiary pursuant to an
Award, such right shall be no greater than the right of any unsecured general
creditor of the Company or any Subsidiary.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash or other securities or other property shall be paid or
transferred in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
(o) TRANSFER RESTRICTIONS. Shares acquired hereunder may not be
sold, assigned, transferred, pledged or otherwise disposed of, except as
provided in the Plan, the applicable Award Agreement and the Investors'
Agreement.
10
(p) HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 11. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of December 14,
1999, subject to approval by the shareholders of the Company. Awards may be
granted hereunder prior to such shareholder approval subject in all cases,
however, to such approval.
(b) EXPIRATION DATE. The Board and the Committee's authority to
grant Awards under the Plan shall terminate on the tenth anniversary of the
Plan's effective date. Unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted hereunder may, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under any such Award shall, continue after the authority for grant of new
Awards hereunder has been exhausted.
11
EXHIBIT A
Award Agreement
under the
DeCrane Holdings Co.
Management Incentive Plan
Date of Grant: December 20, 1999
Name of Optionee:
--------------------------
Number of Shares:
--------------------------
Exercise Price: $23.00/share
Expiration Date: December 20, 2009
DeCrane Holdings Co., a Delaware corporation (the "COMPANY"), hereby
grants to the above-named optionee (the "OPTIONEE") a performance-based
vesting option (the "OPTION") to purchase from the Company, for the price per
share set forth above, the number of shares of Common Stock, $0.01 par value
(the "SHARES"), of the Company set forth above pursuant to the DeCrane
Holdings Co. Management Incentive Plan (the "PLAN"). The Options are not
intended to be treated as incentive stock options under the Code.
Capitalized terms not otherwise defined herein shall have the same
meanings as in the Plan. The terms and conditions of the Option granted
hereby, to the extent not controlled by the terms and conditions contained in
the Plan, are as follows:
1. EXERCISE PRICE. The price at which each Share subject to this
Option may be purchased shall be the price set forth above.
2. NUMBER OF SHARES; EXERCISE. The number of Shares for which the
Option may be exercised are set forth above. To the extent this Option has
become vested in accordance with Section 3 below, the Option may be exercised
at any time until the Expiration Date, subject to the terms of the Plan and
of Section 7 below.
3. VESTING.
(a) GENERAL.
(i) The Option shall be immediately vested and
exercisable with respect to 10% of the Shares subject thereto.
(ii) To the extent not previously vested in
accordance with the provisions of this Section 3, the Option shall
become fully vested and exercisable on the earlier of: (x) the eighth
anniversary of the Date of Grant, provided the Optionee is then in the
employ of the Company or a Subsidiary; or (y) upon a Change in Control
provided that the internal rate of return realized by the DLJ Entities
in respect of such Change in Control exceeds the targets set forth on
Schedule 1 to the Plan.
(b) PERFORMANCE CONDITIONS.
(i) The Option shall be considered to be a
"GROWTH-BASED OPTION" to the extent of 90% of the Shares subject
thereto. A portion of this Growth-Based Option shall become vested and
exercisable on the thirtieth day following the availability of audited
financial statements of the Company for each of the four fiscal years
of the Company commencing with the fiscal year ending December 31, 1999
(each such day, a "VESTING DATE"), provided, in the case of Operating
Company Participants, the operating company to which such Optionee's
employment primarily relates (the "OPERATING COMPANY") has achieved
such Operating Company's Target EBITDA for such fiscal year as set
forth in Schedule 2 or Schedule 3 to the Plan, as applicable, or, in
the case of Corporate Participants, provided that the Total
Consolidated EBITDA achieved for such year equals the Total Target
Consolidated EBITDA for such year as set forth in Schedule 3 to the
Plan. Schedule 2 and Schedule 3 set forth the total portion of the
Growth-Based Option that will be treated as vested and exercisable as
of each Vesting Date based on achievement of the specified percentages
of the relevant Target EBITDA and Schedule 3 sets forth the Total
Target Consolidated EBITDA, as the case may be, in each case for each
fiscal year.
(ii) If the Target EBITDA value referred to in clause
(b)(i) for any Operating Company is exceeded in any fiscal year, an
amount equal to all or a portion of the excess of actual EBITDA over
such target EBITDA shall be taken into account in respect of the
immediately preceding fiscal year solely for purposes of determining
whether such Operating Company's Target EBITDA for such preceding
fiscal year has
A-2
been attained; provided, however, that any such excess EBITDA in any
fiscal year that is taken into account as provided herein shall not be
taken into account, directly or indirectly, for any purpose in respect
of any other preceding fiscal year or any fiscal year commencing after
such immediately preceding fiscal year.
(iii) If the Target EBITDA value referred to in
clause (b)(i) for any Operating Company is exceeded in any fiscal year,
an amount equal to all or a portion of the excess of actual EBITDA over
such target EBITDA, provided that such excess has not been taken into
account in respect of the immediately preceding fiscal year pursuant to
Clause (b)(ii), shall be taken into account in the immediately
succeeding fiscal year solely for purposes of determining whether such
Operating Company's Target EBITDA for such succeeding fiscal year has
been attained; provided, however, that any such excess EBITDA in any
fiscal year shall not be taken into account, directly or indirectly,
for any purpose in respect of any fiscal year commencing after such
immediately succeeding fiscal year.
(iv) The Target EBITDA for the Operating Companies
may be reallocated among such Companies provided that: (x) the Board
and management of the Company agree on such reallocation and (y) the
Target Total Divisional EBITDA (Rev.) set forth on Schedule 3 remains
unchanged. In the event that the Company acquires any business during
such period, the Target Total Consolidated EBITDA (Rev.) on Schedule 3
shall be increased by the EBITDA projected for such business for the
year of acquisition and for each subsequent year, as projected for each
such year at the time of its acquisition. The Committee shall have the
discretion to adjust the corporate elimination in Schedule 3 to reflect
such acquisition.
4. MANNER OF EXERCISE. The Optionee (or his representative, devisee or
heir, as applicable) may exercise any portion of this Option which has become
exercisable in accordance with the terms hereof as to all or any of the Shares
then available for purchase by delivering to the Company written notice
specifying:
(i) the number of whole Shares to be purchased together with
payment in full of the aggregate Exercise Price of such shares;
(ii) the address to which dividends, notices, reports, etc.
are to be sent; and
(iii) the Optionee's social security number.
A-3
Payment shall be in cash, by certified or bank cashier's check payable to the
order of the Company, free from all collection charges, or in unencumbered
Shares (provided such shares shall have been held by the Optionee for at least
six months unless the Committee determines in its sole discretion that such
six-month holding period is not necessary to comply with any accounting, legal
or regulatory requirement) having a Fair Market Value equal to the full amount
of the Exercise Price therefor, or such other form as may be permitted by the
Committee. Only one stock certificate will be issued unless the Optionee
otherwise requests in writing. Shares purchased upon exercise of the Option will
be issued in the name of the Optionee or the Optionee's Permitted Transferee. No
Shares shall be issued hereunder unless and until the Optionee (or his
representative, devisee or heir, as applicable) executes and agrees to be bound
by the Investors' Agreement. The Optionee shall not be entitled to any rights as
a stockholder of the Company in respect of any Shares covered by this Option
until such Shares shall have been paid for in full and issued to the Optionee.
5. CERTIFICATES. Certificates issued in respect of Shares acquired upon
exercise of the Option shall, unless the Committee otherwise determines, be
registered in the name of the Optionee or its Permitted Transferee. When the
Optionee ceases to be bound by the provisions of the Investors' Agreement, the
Company shall deliver such certificates to the Optionee or its Permitted
Transferee upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act of 1933, any state
securities laws or any other applicable laws or the Investors' Agreement.
6. NONTRANSFERABILITY. This Option is personal to the Optionee and may
be exercised only by the Optionee or his or her representative in the event of
the Optionee's Disability or death. This Option shall not be transferable other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, this Option may be transferred to a trust solely for the benefit of
the Optionee or the Optionee's immediate family (which shall be deemed to
include the Optionee's spouse, parents, siblings, children, stepchildren and
grandchildren).
7. FORFEITURE OF OPTION; RIGHT OF REPURCHASE.
(a) If the Optionee's employment with the Company and its Subsidiaries
shall terminate for any reason other than by the Company or its Subsidiary for
Cause, then (i) to the extent not yet vested as of the date of termination of
employment, the Option shall immediately be forfeited; and (ii) to the extent
vested as of the date of termination of employment, the Option may be
A-4
retained and exercised, in accordance with the terms of the Plan and this
Award Agreement, during the six month period following such termination.
(b) If the Optionee's employment with the Company and its Subsidiaries
shall be terminated by the Company or its Subsidiary for Cause, then the entire
Option shall immediately be forfeited, and all Shares previously acquired upon
exercise of the Option shall be subject to a right of repurchase by the Company
from the Participant or his or her Permitted Transferee at a price equal to the
Exercise Price.
8. SALE OF UNDERLYING SHARES. The Optionee's right and obligation to
sell any Shares acquired upon exercise of the Option (in the case of Optionees
who are party thereto) shall be subject to the terms of the Investors'
Agreement.
9. EMPLOYMENT RIGHTS. This Option does not confer on the Optionee any
right to continue in the employ of the Company or any Subsidiary or interfere in
any way with the right of the Company or any Subsidiary to determine the terms
of the Optionee's employment.
10. TERMS OF PLAN; INTERPRETATIONS. This Option and the terms and
conditions herein set forth are subject in all respects to the terms and
conditions of the Plan, which shall be controlling. All interpretations or
determinations of the Committee and/or the Board shall be binding and conclusive
upon the Optionee and his legal representatives on any question arising
hereunder. The Optionee acknowledges that he has received and reviewed a copy of
the Plan.
11. DELEGATION. Optionee acknowledges that any powers, rights or
responsibilities of the Board and/or the Committee set forth herein may be
delegated to and exercised by any subcommittee thereof as permitted under the
Plan.
12. NOTICES. All notices hereunder to the party shall be delivered or
mailed to the following addresses:
If to the Company:
DeCrane Holdings Co.
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Thompson Dean
Fax: (212) 892-7272
A-5
and
DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
Attention: R. Jack DeCrane
Fax: (310) 643-0746
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr., Esq.
Fax: (212) 450-4800
If to the Optionee:
To the person and at the address specified on the signature
page.
Such addresses for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the other party.
13. ENTIRE AGREEMENT. This Agreement, together with the Plan and (in
the case of Optionees who are party thereto) the Investors Agreement, contains
the entire understanding of the parties hereto in respect of the subject matter
contained herein. This Agreement, the Plan and the Investors' Agreement
supersede all prior agreements and understandings between the parties hereto
with respect to the subject matter hereof.
14. GOVERNING LAW. This Award Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
application of the conflict of laws principles thereof.
15. COUNTERPARTS. This Award Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
A-6
IN WITNESS WHEREOF, the undersigned have caused this Award Agreement to
be duly executed as of the date first above written.
DeCRANE HOLDINGS CO.
By:
---------------------------
Name:
Title:
OPTIONEE:
------------------------------
Name:
Address: c/o DeCrane Holdings Co.
2361 Rosecrans Avenue
Suite 180
El Segundo, CA 90245
A-7
EXHIBIT B
DECRANE HOLDINGS CO.
MANAGEMENT INCENTIVE PLAN
- --------------------------------------------------------------------------------------------------
STOCK OPTION
STOCK OPTIONS (#) PERCENTAGE (%)
- --------------------------------------------------------------------------------------------------
CORPORATE PARTICIPANTS
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
OPERATING COMPANY PARTICIPANTS
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
TOTAL ALLOCATED
- --------------------------------------------------------------------------------------------------
UNALLOCATED
- --------------------------------------------------------------------------------------------------
Total 356,257 10.00 %
- --------------------------------------------------------------------------------------------------
A-8