RAND ACQUISITION CORPORATION
MANAGEMENT BONUS PROGRAM
RAND ACQUISITION CORPORATION
MANAGEMENT BONUS PROGRAM
1. ESTABLISHMENT AND PURPOSE
The Rand Acquisition Corporation Management Bonus Program (the "Plan") is
established by Rand Acquisition Corporation (the "Company") to retain persons
eligible to participate in the Plan; motivate Participants to achieve long-term
Company goals; and further align Participants' interests with those of the
Company's stockholders. The Plan is adopted as of March 3, 2006 (the "Effective
Date").
2. DEFINITIONS
For purposes of this Plan, the following terms are defined as set forth below:
(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Company as such terms are defined in Section
424(e) and 424(f) of the Code.
(b) "Audited EBITDA" means the actual EBITDA as determined after each
Fiscal Year in accordance with GAAP.
(c) A Participant's "Award" means an amount equal to such Participant's
Vested Share multiplied by such Participant's Plan Account Balance.
(d) A Participant's "Base Amount" means the opening balance of such
Participant's Plan Account Balance, as specified in "Attachment A".
(e) "Board" means the Board of Directors of the Company.
(f) "Budgeted EBITDA" means the anticipated EBITDA determined by the
Board prior to each Fiscal Year.
(g) "Cause" means (i) conviction of the Participant of a criminal
offence involving fraud, larceny, misappropriation of funds,
embezzlement or dishonesty; (ii) receipt by or on behalf of the
Participant or any member of the Participant's immediate family of
any personal profit arising out of in connection with a transaction
to which the Company or an Affiliate is party without making full
prior disclosure to the Company or such Affiliate; (iii) any
misfeasance, nonfeasance or malfeasance by the Participant in the
performance of his or her duties which causes material harm to the
Company or an Affiliate; (iv) failure of the Participant to follow
and carry out the lawful instructions of his superior after notice
and reasonable opportunity for the Participant to cure such failure;
(v) the Participant having been under the influence of drugs (other
than prescription medicine or other medically-related drugs to the
extent that they are taken in accordance with their directions) or
alcohol during the performance of his or her duties (it being
understood that the Participant may attend industry functions at
which alcohol will be consumed by the Participant), or while
otherwise under the influence of drugs or alcohol, engages in
inappropriate conduct; or (vi) the Participant having engaged in
behavior that would constitute grounds for liability for sexual
harassment, discrimination. Notwithstanding the foregoing, if the
Participant and the Company or an Affiliate have entered into an
employment or services agreement which defines the term "Cause" (or
a similar term), such definition shall govern for purposes of
determining whether such Participant has incurred a Separation of
Service for Cause for purposes of this Plan.
(h) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
(i) "Commission" means the Securities and Exchange Commission or any
successor agency.
(j) "Committee" means a committee of Directors appointed by the Board to
administer this Plan.
(k) "Company" means Rand Acquisition Corporation, a Delaware
corporation.
(l) "Director" means a member of the Company's Board of Directors.
(m) "Disability" means: (1) the Company has provided a written notice to
the Participant supported by a written statement from a reputable
independent physician selected by the Company to the effect that the
Participant shall have become so incapacitated as to be unable to
resume, within 90 days, his or her employment with the Company or an
Affiliate by reason of physical or mental illness or injury; or (ii)
the Company has provided written notice to the Participant that the
Participant has been unable to substantially perform his or her
duties to the Company or an Affiliate for 90 consecutive days
(exclusive of any permitted vacation days) or for 120 days in any
360 day period by reason of any physical or mental illness or
injury.
(n) "EBITDA" or "Earnings Before Interest Taxes Depreciation and
Amortization" means the sum, without duplication, of the net income
of the Company determined in accordance with GAAP (consistently
applied to the extent past practice qualifies as GAAP), as: (1)
reduced by the amount of any (i) extraordinary income, (ii) net
gains resulting from the sale or other disposition of assets not in
the ordinary course of business and (iii) income attributable to
adjustments relating to prior periods; all as the foregoing items
are included in connection with the determination of net income and
determined on a consolidated basis and in accordance with GAAP
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(consistently applied to the extent past practice qualifies as
GAAP); and as (2) increased by the amount of any (i) interest
expense, (ii) taxes, (iii) depreciation expense, (iv) amortization
expense, (v) extraordinary losses, (vi) net losses resulting from
the sale or other disposition of assets not in the ordinary course
of business, (vii) deductions or losses attributable to adjustments
relating to prior periods; all as the foregoing items are deducted
in connection with the determination of net income and determined on
a consolidated basis and in accordance with GAAP (consistently
applied to the extent past practice qualifies as GAAP).
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.
(p) "Fiscal Year" means the twelve month period ended March 31 of each
year.
(q) "GAAP" means United States generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting
profession which are applicable to the circumstances from time to
time.
(r) "Participant" means a person designated as such in accordance with
Section 3.
(s) A Participant's "Plan Account Balance" means the Base Amount for
such Participant, as adjusted in accordance with Section 5.
(t) "Representative" means (i) the person or entity acting as the
executor or administrator of a Participant's estate pursuant to the
last will and testament of a Participant or pursuant to the laws of
the jurisdiction in which the Participant had his or her primary
residence at the date of the Participant's death; (ii) the person or
entity acting as the guardian or temporary guardian of a
Participant; or (iii) the person or entity which is the beneficiary
of the Participant upon or following the Participant's death.
(u) "Separation from Service" is given the same meaning as such term is
defined under Section 409A of the Code and any regulation
promulgated, or any guidance released, thereunder. A Participant
shall not be considered to have incurred a Separation from Service
on account of a transfer (i) from employment with the Company to
employment with an Affiliate, (ii) from employment with an Affiliate
to employment with the Company, or (iii) from employment with an
Affiliate to employment with another Affiliate.
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(v) "Stock" means a share of the common stock, par value $.0001 per
share, of the Company.
(w) A Participant's "Vested Share" means the portion of the Plan Account
Balance for such Participant in which such Participant is vested as
provided in Section 6.
In addition, certain other terms used herein have the definitions given to them
in the first places in which they are used.
3. ELIGIBILITY
Participation in the Plan shall be limited to the individuals listed on
"Attachment A" hereto (the "Participants").
4. AWARDS
Subject to Section 8(a), the Award granted to a Participant under this Plan
shall be equal to such Participant's Vested Share multiplied by such
Participant's Plan Account Balance as of the Payment Date.
5. PLAN ACCOUNT BALANCE
Following the Effective Date, each Participant's Plan Account Balance will be
adjusted as follows:
As of March 31, 2007 and 2008, each Plan Account Balance will be increased
or decreased pursuant to the following formula:
Plan Account Balance at Audited EBITDA for the Fiscal Year then ended
the time of adjustment X ---------------------------------------------
Audited EBITDA for the immediately preceding
Fiscal Year
6. VESTING
Subject to the provisions of Section 8, on each of March 31, 2006, 2007 and
2008, each Participant then employed by the Company or an Affiliate shall vest
into one-third of such Participant's Plan Account Balance (such vested portion
thereafter being referred to as such Participant's "Vested Share").
7. DISTRIBUTION; REGISTRATION RIGHTS
All Awards under the Plan will be settled on July 31, 2008 (the "Payment Date").
All Awards may be settled in cash and/or in Stock (valued at the Stock's volume
weighted average price for the 20 trading days preceding March 31, 2008), or any
combination thereof, all in the discretion of the Administrator. Notwithstanding
any other provision of the Plan, if, as of the Payment Date, a Participant's
Plan Account Balance is greater than would result pursuant to the following
formula, such Participant's Plan Account Balance shall be reduced to the amount
determined pursuant to the following formula prior to the settlement of an Award
under the Plan:
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Stock's volume weighted average price for the
20 trading days preceding the Payment Date
Base Amount X ---------------------------------------------
Stock's volume weighted average price for the
20 trading days preceding the Effective Date
The Company shall enter into the Registration Rights Agreement attached as
"Attachment B" hereto with any Participant that is issued Stock in settlement of
an Award under the Plan.
8. SEPARATION FROM SERVICE
The provisions of this Section 8 shall apply in the event a Participant incurs a
Separation from Service from the Company or an Affiliate at any time prior to
the date on which the Participant shall become fully vested in its Plan Account
Balance as set forth in Section 6:
(a) Should a Participant incur a Separation from Service from the
Company or an Affiliate by reason of death, Disability or
termination by the Company or an Affiliate without Cause (which
shall include for Participants with whom the Company or an Affiliate
is party to an employment or services agreement, a termination by
the Participant for "Good Reason" (as defined in any such agreement)
at any time prior to the date on which the Participant shall become
fully vested in its Plan Account Balance as set forth in Section 6,
then (i) such Participant shall, as of the effective date of such
Separation from Service, become fully vested in its Plan Account
Balance and (ii) such Participant (or such Participant's legal
representative) shall have the option, exercisable by written notice
to the Company within fourteen (14) days of the effective date of
such Separation from Service, to elect to freeze the amount of such
Participant's Award at an amount equal to the Award to which such
Participant would be entitled if the Payment Date were the effective
date of such Separation from Service (calculated in accordance with
Section 7, including the limiting formula therein, and based on such
Participant's Plan Account Balance as of the effective date of such
Separation from Service). A Participant who does not timely deliver
the notice referred to in this Section 8(a) shall be deemed to have
elected not to have frozen an Award hereunder, and such
Participant's Award shall be calculated in accordance with Section 4
and settled in accordance with Section 7. All Awards, whether or not
frozen pursuant to this Section 8(a), shall be settled on the
Payment Date in accordance with Section 7.
(b) Should a Participant incur a Separation from Service from the
Company or an Affiliate for Cause, or incur a Separation from
Service from the Company or an Affiliate voluntarily (other than for
Good Reason, if applicable, which shall be deemed a termination
without Cause and be treated in the manner set forth in clause (a)
of this Section 8) without providing the Company or the Affiliate,
as applicable, 60 days advance notice of such voluntary Separation
from Service, then such Participant's rights to its Plan Account
Balance, including with respect to its Vested Share, shall be
forfeited, and such Participant shall no longer have any rights in
or to its Plan Account Balance or under the Plan.
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(c) A Participant that incurs a voluntary Separation from Service from
the Company or an Affiliate (other than for Good Reason, if
applicable, which shall be deemed a termination without Cause and be
treated in the manner set forth in clause (a) of this Section 8) and
who does provide the Company or such Affiliate, as applicable, with
60 days advance notice of such voluntary Separation from Service,
shall retain its Vested Share as of the effective date of such
Separation from Service (and shall receive an Award based on such
Vested Share on the Payment Date in accordance with Section 7) but
shall, as of such effective date, cease to further vest in such
Participant's Plan Account Balance.
(d) Any unvested portion of a Participant's Plan Account Balance
resulting from a Separation from Service described in Section 8(c)
shall be added to the Plan Account Balances of each then remaining
Participant (other than Participants that have elected to freeze
their Award pursuant to Section 8(a)) in proportion to the
respective Plan Account Balance of each such remaining Participant,
and with respect to each such remaining Participant, in proportion
to each such Participant's vested and unvested Plan Account Balance.
9. ADMINISTRATION
The Plan shall be administered by a Committee; provided, however, that, if at
any time no Committee shall be in office, the Plan shall be administered by the
Board. As used herein, the term "Administrator" means the Board or any of its
Committees as shall be administering the Plan. The Administrator will enforce
the Plan in accordance with its terms and will have all powers necessary to
accomplish that purpose, including, but not limited to, the following
discretionary authority:
(a) to make determinations as to any Award granted under this Plan;
(b) to make such adjustments as are reasonably necessary to account for
extraordinary or special events or circumstances, including
adjustments to Budgeted EBITDA on account of acquisitions of assets
or businesses out of the ordinary course of business or other
extraordinary transactions not contemplated in estimating Budgeted
EBITDA;
(c) to determine the amount and the permissible methods of payment under
the Plan;
(d) to construe and interpret the Plan and the terms hereof;
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(e) to appoint and compensate agents, counsel, auditors or other
specialists to aid it in the discharge of its duties and the
administration of the Plan;
(f) to authorize all distributions in accordance with the provisions of
the Plan;
(g) to keep records relating to the Participants and other matters
applicable to the Plan;
(h) to prescribe procedures to be followed by the Participant in
claiming benefits; and
(i) to prescribe and adopt the use of necessary forms including the
forms to be utilized in connection with this Plan.
The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan and to otherwise supervise the
administration of the Plan.
Except to the extent prohibited by applicable law, the Administrator may
allocate all or any portion of its responsibilities and powers to any one or
more of its members and may delegate all or any portion of its responsibilities
and powers to any other person or persons selected by it. Any such allocation or
delegation may be revoked by the Administrator at any time. The Administrator
may authorize any one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the Administrator.
Any determination made by the Administrator or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Administrator or such delegate. All decisions made
by the Administrator or any appropriately delegated officer pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and Participants.
No member of the Administrator, and no officer of the Company, shall be liable
for any action taken or omitted to be taken by such individual or by any other
member of the Administrator or officer of the Company in connection with the
performance of duties under this Plan, except for such individual's own willful
misconduct or as expressly provided by law.
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10. MISCELLANEOUS
(a) Amendment. The Board may amend, alter, or discontinue the Plan, but
no amendment, alteration or discontinuation shall be made which
would adversely affect the vested or unvested rights of a
Participant without the Participant's consent. No such amendment
shall be made without the approval of the Company's stockholders to
the extent such approval is required by law, agreement or the rules
of any stock exchange or market on which the Stock is listed.
(b) Unfunded Status of Plan. It is intended that this Plan be an
"unfunded" plan for incentive and deferred compensation. The
Administrator may authorize the creation of trusts or other
arrangements to meet the obligations created under this Plan to
deliver Stock or make payments, provided that, unless the
Administrator otherwise determines, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of this
Plan. The Plan is intended to be maintained primarily for a select
group of management or highly compensated employees, and shall be
construed and administered in accordance with such intention.
(c) Non-transferability of Awards. Except as provided herein, the Awards
payable hereunder, and any interest therein, shall not be
transferable by a Participant, and a Participant shall not be
permitted to anticipate, alienate, sell, assign, transfer, pledge or
otherwise encumber his or her rights to an Award. Any attempted
anticipation, alienation, sale, assignment, pledge or encumbrance
shall be null and void ab initio. Except as provided in Section
10(d)(vi), no interest or right to any Award may be taken for the
satisfaction of debts of, or other obligations or claims against, a
Participant.
(d) General Provisions.
(i) All certificates for shares of Stock or other securities
delivered under the Plan, if any, shall be subject to such
stop transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations
and other requirements of the Commission, any stock exchange
or market on which the Stock is then listed and any applicable
Federal or state securities law, including, but not limited to
the Exchange Act, and the Administrator may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(ii) Nothing contained in the Plan shall prevent the Company or any
Affiliate from adopting other or additional compensation
arrangements for its employees.
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(iii) The adoption of the Plan shall not confer upon any employee,
director, consultant or advisor any right to continued
employment, directorship or service, nor shall it interfere in
any way with the right of the Company or any Affiliate to
terminate the employment or service of any employee,
consultant or advisor at any time.
(iv) All Awards payable under the Plan shall be subject to
withholding by the Company on account of any Federal, state,
local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise
determined by the Administrator, withholding obligations on
account of an Award settled in Stock may be settled with
Stock, including Stock that is part of the Award that gives
rise to the withholding requirement. The Administrator may
establish such procedures as it deems appropriate for the
settlement of withholding obligations with Stock.
(v) The Administrator shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to
whom any amounts payable in the event of the Participant's
death are to be paid.
(vi) Any amounts owed to the Company or an Affiliate by a
Participant of whatever nature including, without limitation,
pursuant to that certain letter agreement dated the Effective
Date and executed by each Participant in favor of the Company
(the "Letter Agreement"), may be offset by the Company from
the value of any shares of Stock, cash or other thing of value
under this Plan, whether or not vested, including by
proportionate reduction of each Participant's Plan Account
Balance with respect to amounts owed pursuant to the Letter
Agreement, and no shares of Stock, cash or other thing of
value under this Plan shall be transferred to a Participant
unless and until all disputes between the Company and the
Participant have been fully and finally resolved and the
Participant has waived all claims to such against the Company
and its Affiliate.
(vii) The grant of Stock shall in no way affect the right of the
Company or an Affiliate to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
(viii) If any payment or right accruing to a Participant under this
Plan (without the application of this Section 10(c)(viii)),
either alone or together with other payments or rights
accruing to the Participant from the Company or an Affiliate
("Total Payments") would constitute a "parachute payment" (as
defined in Section 280G of the Code and regulations
thereunder), such payment or right shall be reduced to the
largest amount or greatest right that will result in no
portion of the amount payable or right accruing under this
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Plan being subject to an excise tax under Section 4999 of the
Code or being disallowed as a deduction under Section 280G of
the Code; provided, however, that the foregoing shall not
apply to the extent provided otherwise in an Agreement or in
the event the Participant is party to an agreement with the
Company or an Affiliate that explicitly provides for an
alternate treatment of payments or rights that would
constitute "parachute payments." The determination of whether
any reduction in the rights or payments under this Plan is to
apply shall be made by the Administrator in good faith after
consultation with the Participant, and such determination
shall be conclusive and binding on the Participant. The
Participant shall cooperate in good faith with the
Administrator in making such determination and providing the
necessary information for this purpose. The foregoing
provisions of this Section 10(c)(viii) shall apply with
respect to any person only if, after reduction for any
applicable Federal excise tax imposed by Section 4999 of the
Code and Federal income tax imposed by the Code, the Total
Payments accruing to such person would be less than the amount
of the Total Payments as reduced, if applicable, under the
foregoing provisions of this Plan and after reduction for only
Federal income taxes.
(ix) The headings contained in this Plan are for reference purposes
only and shall not affect the meaning or interpretation of
this Plan.
(x) If any provision of this Plan shall for any reason be held to
be invalid or unenforceable, such invalidity or
unenforceability shall not effect any other provision hereby,
and this Plan shall be construed as if such invalid or
unenforceable provision were omitted.
(xi) This Plan shall inure to the benefit of and be binding upon
each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the
Company hereunder, shall be binding upon the Participant's
heirs, Representatives and successors.
(xii) In the event there is an effective registration statement
pursuant to which shares of Stock shall be offered for sale in
an underwritten offering, a Participant shall not, during the
period requested by the underwriters managing the registered
public offering, effect any public sale or distribution of
shares of Stock received pursuant to an Award.
(xiii) None of the Company, an Affiliate or the Administrator shall
have any duty or obligation to disclose affirmatively to a
record or beneficial holder of Stock and such holder shall
have no right to be advised of, any material information
regarding the Company or any Affiliate at any time prior to,
upon or in connection with receipt of Stock under this Plan.
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(xiv) This Plan shall be governed by, and construed in accordance
with, the laws of the state of New York.
(xv) This Plan constitutes the entire agreement of the Company and
the Participants with respect to the subject matter hereof and
shall supersede any prior expressions of intent or
understanding with respect to this Plan.
RAND ACQUISITION CORPORATION
By: /s/ Laurence Levy
--------------------------------
Its: Chief Executive Officer
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ATTACHMENT A
Participant Base Amount
----------- -----------
Scott Bravener $900,000
James Siddall $750,000
Mark Rohn $390,000
Jeffrey Botham $180,000
Anthony Walker $300,000
Robert Pierson $120,000
Frank Bravener $120,000
Dave Scruton $120,000
John Carlson $120,000