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to be awarded a certain percentage interest in the equity
appreciation created beyond that value. The documentation also
set forth the terms and conditions under which participants would
become entitled to payment thereunder, including both “Vesting
Provisions” and “Payment Events & Methods”. The section entitled
“Vesting Provisions” stated:
KEEAP II is designed to be a long-term equity
appreciation incentive plan. Accordingly, the Board of
Directors will require a vesting period of a number of
years of employment service with UCI beginning June 1,
1998 (the inception date of KEEAP II) before the key
executive will earn any of his KEEAP II percentage
interest. Specifically, the vesting provisions are as
follows:
1) Partial Vesting Period - after 4 years of
employment service or June 1, 2002: 50% Vested
2) Full Vesting Period - after 5 years of
employment service or June 1, 2003: 100% Vested
A key executive’s departure prior to the above vesting
periods will necessitate a complete forfeiture of the
executive’s percentage interest in the KEEAP II.
The section labeled “Payment Events & Methods” then provided the
following:
The shareholders of UCI will be responsible for
settling payment obligations with KEEAP II participants
only when a Liquidity Event occurs. A Liquidity Event
is defined as an initial public offering of UCI’s
common stock, a lump sum dividend to UCI shareholders
in excess of $10 million or a sale of the Company to a
strategic or financial acquirer. The shareholders of
UCI may settle KEEAP II obligations in cash or “in
kind” in the event UCI is acquired in a stock for stock
merger with a publicly traded company. In the absence
of a Liquidity Event, the shareholders of UCI are under
no obligation to make payments to KEEAP II
participants. If a Liquidity Event occurs prior to the
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