<PAGE>

                                                                    EXHIBIT 10.5

                             WATKINS-JOHNSON COMPANY
                              3333 HILLVIEW AVENUE
                               PALO ALTO, CA 94304

                                January 31, 2000


Mr. Ralph E. Hoover, Jr.
1190 Vintner Way
Pleasanton, California  94566

         Re:      EMPLOYMENT AGREEMENT

Dear Mr. Hoover:

         This letter agreement (this "AGREEMENT") sets forth the terms and
conditions of your employment with Watkins-Johnson Company (the "COMPANY"),
effective as of the date of consummation of the transactions contemplated by
that certain Agreement and Plan of Merger, dated October 25, 1999, between the
Company and FP-WJ Acquisition Corp. (the "EFFECTIVE DATE"); provided that, if
the transaction is not consummated, this Agreement shall be void ab initio.

         1.       EMPLOYMENT AND SERVICES. The Company shall employ you as
Senior Vice President - Sales and Marketing of the Company, for the period
beginning on the Effective Date and ending upon termination pursuant to
paragraph 4 (the "EMPLOYMENT PERIOD"). During the Employment Period, you shall
render such services to the Company and its affiliates and subsidiaries as the
Board of Directors of the Company shall reasonably designate from time to time,
and you shall devote your best efforts and full time and attention to the
business of the Company.

         2.       COMPENSATION. The Company shall pay you an annual base salary
("ANNUAL BASE SALARY") of $200,200 during the Employment Period, subject to
annual review in each year of the Employment Period thereafter (for any partial
year during the Employment Period, the Annual Base Salary shall be prorated
based on the number of days during such year on which you are employed by the
Company). Your Annual Base Salary may be increased in years following the first
year of employment but may not be decreased. As used herein, the term "ANNUAL
BASE SALARY" refers to the Annual Base Salary as so increased. Such Annual Base
Salary shall be payable in installments in accordance with the Company's regular
payroll practices.

         In addition, you will be eligible to receive an annual bonus to be
awarded ninety (90) days after the end of each fiscal year, to be paid as soon
as practicable but not later than one hundred twenty (120) days after the end of
such fiscal year. In order to determine the amount of such bonus, the Company,
acting in good faith, shall determine appropriate business targets for each
fiscal year; your annual bonus shall be based upon the extent to which the
Company attains such targets as indicated on EXHIBIT A attached hereto. You
acknowledge hereby the business targets with respect to fiscal year 2000 have
been previously agreed-upon by you and the Company and will therefore be binding
with respect to that fiscal year. The determination of appropriate business
targets with respect to each

<PAGE>

subsequent fiscal year shall take place not later than thirty (30) days
following the receipt by the Board of Directors of the Company from the
Company's senior management of the Company's operating budget with respect to
such fiscal year.

         Notwithstanding anything herein to the contrary, (i) there shall be
deducted or withheld from any amounts payable to you amounts for all federal,
state, city or other taxes required by applicable law to be so withheld or
deducted and any other amounts authorized for deduction by or required by law
and (ii) you shall not be entitled to receive any bonus otherwise payable with
respect to any fiscal year pursuant to the immediately preceding paragraph if
any default or event of default shall exist as of the end of such fiscal year
under the Company's senior bank credit facility as a result of the violation or
breach by the Company of any of the (x) minimum interest coverage, (y) maximum
leverage ratio or (z) minimum consolidated EBITDA covenants contained in such
facility; PROVIDED, HOWEVER, that with respect to determining whether or not the
Company shall have violated or breached such minimum consolidated EBITDA
covenant for the purposes of this Agreement, no consideration shall be given to
any non-recurring expenses incurred as a result of the Company's relocation from
its current facility in Building 6 in the Stanford Research Park.

         3.       BENEFITS. During the Employment Period, you shall be entitled
to participate in the Company's fringe benefit plans, subject to and in
accordance with applicable eligibility requirements, such as life and disability
insurance plans and all other benefit plans (other than severance and
equity-based plans or arrangements) generally available to the Company's
executive officers, including relocation of personal residence benefits to the
extent such relocation request would otherwise constitute Good Reason within the
meaning of paragraph 4, in accordance with the terms of any such plans or
policies as in effect from time to time during the Employment Period. In
addition, the Company will reimburse your reasonable out-of-pocket expenses
incurred in connection with the performance of your services hereunder,
consistent with Company policy. You shall be entitled to take time off in
accordance with the Company's top management vacation policy.

         4.       TERMINATION AND SEVERANCE. The Employment Period shall
terminate on the first to occur of (i) ninety (90) days following written notice
by you to the Company of your resignation without Good Reason, (it being
understood that you will continue to perform your services hereunder during such
ninety (90) day period), (ii) thirty (30) days following written notice by you
to the Company of your resignation with Good Reason (it being understood that
you will continue to perform your services hereunder during such thirty (30) day
period), (iii) your death or Disability, (iv) a vote of the Board of the Company
directing such termination for Cause, (v) a vote of the Board of the Company
directing such termination without Cause, or (vi) the third (3rd) anniversary of
the Effective Date (the "SCHEDULED EXPIRATION DATE"); provided, however, that
the Scheduled Expiration Date shall be automatically extended for successive
one-year periods unless, at least ninety (90) days prior to the then-current
Scheduled Expiration Date, either the Company or you shall give written notice
to the other of an intention not to extend the Employment Period. In the event
of termination of the Employment Period pursuant to clause (ii) or (v) above, or
in the event that the Company elects not to extend the Employment Period upon
the expiration thereof, the Company shall pay to you an amount equal to your
Annual Base Salary as in effect immediately prior to the termination of the
Employment Period, such amount to be paid periodically in accordance with the
Company's regular payroll practices over the twelve


                                     - 2 -
<PAGE>

(12) month period immediately following such termination (the "SEVERANCE
BENEFIT"). Notwithstanding the preceding sentence, the Severance Benefit shall
be computed as an amount equal to one hundred fifty percent (150%) of your
Annual Base Salary as in effect immediately prior to the termination of the
Employment Period and shall be paid periodically in accordance with the
Company's regular payroll practices over the twelve (12) month period
immediately following such termination, SOLELY in a circumstance in which there
has occurred a Change of Control (as defined in the Shareholders Agreement among
the Company and its shareholders dated as of even date herewith (the
"SHAREHOLDERS AGREEMENT")) within three (3) months prior to such termination.
Notwithstanding anything in this Agreement to the contrary, in the event that
payment of the Severance Benefit, either alone or together with other payments
(or the value of other benefits) which you have the right to receive from the
Company in connection with a change of control, would not be deductible (in
whole or in part) by the Company as a result of the Severance Benefit or other
payments or benefits constituting a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE"), the
Severance Benefit (or, at your election, such other payments and/or benefits, or
a combination of such other payments and/or benefits and/or the Severance
Benefit) shall be reduced to the largest amount as will result in no portion of
the Severance Benefit (or such other payments and/or benefits) not being fully
deductible by the Company as a result of Section 280G of the Code. The
determination of the amount of any such required reduction pursuant to the
foregoing provision, and the valuation of any non-cash benefits for purposes of
such determination, shall be made exclusively by the firm that was acting as the
Company's auditors prior to the change in control (whose fees and expenses shall
be borne by the Company, and such determination shall be conclusive and
binding).

         Except as otherwise set forth in this paragraph 4 or pursuant to the
terms of employee benefit plans in which you participate pursuant to paragraph
3, you shall not be entitled to any compensation or other payment from the
Company in connection with the termination of your employment hereunder. In
addition to the Severance Benefit, under circumstances in which the Severance
Benefit is payable, you shall also remain eligible to receive benefits under the
Company's benefit plans for one year (or, in the event that the enhanced
Severance Benefit is payable in connection with a Change of Control, three
years) following the termination of your employment with the Company. In the
case of benefit plans that do not permit such continued participation, in lieu
thereof you shall be entitled to receive a cash payment from the Company
sufficient to enable you to purchase comparable benefits for the applicable
period.

         For purposes of this Agreement, the following definitions will apply:
(a) "GOOD REASON" shall mean the occurrence of (X) a Change of Control, provided
that you elect to resign within three (3) months following such Change of
Control, or (Y) any of the following without your consent which shall remain
uncured for a period of not less than thirty (30) days following your delivery
of notice of such occurrence to the Company: (i) the assignment of you by the
Company to any duties materially inconsistent with, or a material diminution of,
your position, including duties, title, offices, or responsibilities; (ii) the
transfer of your principal place of employment to a geographic location more
than 50 miles from both your current personal residence and from the location of
your current principal place of employment; or (iii) any material breach of this
Agreement by the Company which is not cured within fifteen (15) days after the
Company has received written notice from you


                                     - 3 -
<PAGE>

identifying the breach in reasonable detail; (b) "CAUSE" shall mean any of the
following acts or circumstances: (i) willful destruction by you of Company
property having a material value to the Company; (ii) fraud, embezzlement,
theft, or comparable dishonest activity committed by you against the Company;
(iii) your conviction of or entering a plea of guilty or NOLO CONTENDERE to any
crime constituting a felony or any misdemeanor involving fraud, dishonesty or
moral turpitude; (iv) your breach, neglect, refusal, or failure to discharge, in
each case in any material respect, your duties under this Agreement (other than
due to Disability) commensurate with your title and function or your failure to
comply with the lawful directions of the Board, in any such case that is not
cured within fifteen (15) days after you have received written notice thereof
from the Board of the Company; or (v) a willful and knowing material
misrepresentation to the Board of the Company; and (c) "DISABILITY" shall mean
that for a period of three (3) consecutive months or an aggregate of four (4)
months in any twelve (12) month period you are incapable of substantially
fulfilling the duties of your positions as set forth in paragraph 1 because of
physical, mental or emotional incapacity, injury, sickness or disease. Any
question as to the existence or extent of the Disability upon which you and the
Company cannot agree shall be determined by a qualified, independent physician
selected by the Company. The determination of any such physician shall be final
and conclusive for all purposes; provided, however, that you or your legal
representatives shall have the right to present to such physician such
information as to such Disability as you or they may deem appropriate, including
the opinion of your personal physician.

         5.       CONFIDENTIAL INFORMATION. You acknowledge that information
obtained by you while employed by the Company or any affiliate thereof
(including as a consultant to Fox Paine & Company, LLC) concerning the business
or affairs of (i) the Company, its affiliates and subsidiaries or (ii) any
enterprise which is the subject of an actual or potential transaction (a
"POTENTIAL TRANSACTION"), considered, evaluated, reviewed or otherwise made
known to Fox Paine & Company, LLC, the Company, its affiliates or subsidiaries,
or you ("CONFIDENTIAL INFORMATION") is the property of the Company. You shall
not, without the prior written consent of the Board of the Company, disclose to
any person or use for your own account any Confidential Information except (i)
in the normal course of performance of your duties hereunder, (ii) to the extent
necessary to comply with applicable laws (provided that you shall give the
Company prompt notice prior to any such disclosure), or (iii) to the extent that
such information becomes generally known to and available for use by the public
other than as a result of your acts or omissions to act. Upon termination of
your employment or at the request of the Board of the Company at any time, you
shall deliver to the Board all documents containing Confidential Information or
relating to the business or affairs of the Company, its affiliates and
subsidiaries that you may then possess or have under your control.

         6.       NON-SOLICITATION.

                  a.       NON-SOLICITATION. As a means reasonably designed to
protect the Company's Confidential Information, you agree that, for a period of
twelve (12) months from the conclusion of the Employment Period, you will not
directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity, (i) hire, solicit,
encourage the resignation of, or in any other manner seek to engage or employ
any person who is then, or within the prior three (3) months had been, an
employee


                                     - 4 -
<PAGE>

of the Company, whether or not for compensation and whether or not as an
officer, consultant, adviser, independent sales representative, independent
contractor or participant, or (ii) contact, solicit, service or otherwise have
any dealings related to the sale, manufacture, distribution, marketing or
provision of products, components, equipment, hardware, other technology or
services (of any sort) in the wireless communications industry or any other
industry or business or prospective industry or business in which the Company
participates or contemplates participating in as of such conclusion, with any
person or entity with whom the Company has a current or known prospective
business relationship or who is or was at any time during his employment with
the Company (including any predecessor or successor entity) a customer, vendor
or client of the Company, or a known prospective customer, vendor or client of
the Company, PROVIDED in each case described in this clause (ii) that such
activity by you does or could reasonably be expected to have a material adverse
effect on the relationship between the Company and any such third party.

                  b.       SCOPE OF RESTRICTION. If, at the time of enforcement
of this paragraph 6, a court shall hold that the duration, scope or area
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum duration, scope or area reasonable
under such circumstances shall be substituted for the stated duration, scope or
area.

                  c.       WORKS MADE FOR HIRE. You agree that all intellectual
property rights, developments, designs, computer software, inventions,
applications and improvements, including but not limited to trade names, assumed
names, service names, service marks, trademarks, logos, patents, copyrights,
licenses, formulas, trade secrets and technology, whether in design, methods,
processes, formulae, machines or devices and all other applications
(collectively, "INVENTIONS"), whether made, created, invented, devised,
acquired, succeeded to (whether by devise, estate, testamentary disposition or
otherwise), or developed prior to the date of this Agreement for the Company by
you, other than Inventions made, created, invented, devised or developed by you
(i) on your own personal time, (ii) without the use of the Company's equipment,
supplies, facilities and resources and (iii) which are not related to the sale,
manufacture, distribution, marketing development or provision of products,
components, equipment, hardware, other technology or services (of any sort) in
the wireless communications industry (collectively, "UNRELATED INVENTIONS"), are
works made for hire and shall be the exclusive property of the Company without
separate compensation to you. You will, at the request and expense of the
Company made at any time, execute and deliver to the Company or its nominee such
applications and instruments as may be desirable and appropriate for obtaining
for the Company or its nominee, patents, copyrights, trademarks, know-how and
other intellectual property protection of the United States and all other
countries for vesting in the Company or its nominee, all of your claim, right,
title and interest in said Inventions and for maintaining, enforcing and
defending the same, and to otherwise vest in or evidence the Company's or its
nominee's exclusive ownership of all of the rights referred to herein. In the
event that for whatever reason the results of your past or future work for the
Company should not be deemed to be works made for hire, you agree to assign, and
you hereby do assign, to the Company or its nominee all claim, right, title and
interest, in any country, to each and every of the Inventions that is the result
of work done in the course of your past or future employment by the Company, or
that you create or develop, or that you acquire by whatever means that was
created or developed, in whole or in part by using the Company's equipment,


                                     - 5 -
<PAGE>

supplies, resources or facilities. Each and every such assignment is and shall
be in consideration of this Agreement with the Company, and no further
consideration therefor is or shall be provided to you by the Company. You hereby
waive enforcement of any moral or legal rights which might limit the Company's
rights to exploit any of the foregoing materials in any manner.

                  d.       EQUITABLE RELIEF. You acknowledge that the provisions
contained in Sections 5 and 6 hereof are reasonable and necessary to protect the
legitimate interests of the Company, that any breach or threatened breach of
such provisions will result in irreparable injury to the Company and that the
remedy at law for such breach or threatened breach would be inadequate.
Accordingly, in the event of the breach by you of any of the provisions of
Sections 5 and 6 hereof, the Company, in addition and as a supplement to such
other rights and remedies as may exist in its favor, may apply to any court of
law or equity having jurisdiction to enforce this Agreement, and/or may apply
for injunctive relief against any act that would violate any of the provisions
of this Agreement (without being required to post a bond). You further agree
that injunctive relief may be sought for any breach or threatened breach of
Section 5 or Section 6 without a showing of irreparable injury, in order to
prevent any such breach or threatened breach. Such right to obtain injunctive
relief may be exercised, at the option of the Company, concurrently with, prior
to, after, or in lieu of, the exercise of any other rights or remedies that the
Company may have as a result of any such breach or threatened breach.

                  e.       NONCOMPETITION. Notwithstanding anything in the
Shareholders Agreement to the contrary, the terms "Company's Line of Business"
and "Covenant Period" as defined therein shall, with respect to you, be defined
for the purposes of the Shareholders Agreement as follows:

                  "COMPANY'S LINE OF BUSINESS" shall mean the manufacture, sale
         or provision of products, components, equipment, hardware, other
         technology or services in the wireless communications industry, which
         are the same as, or otherwise competitive with, the products,
         components, equipment, hardware, other technology or services,
         manufactured, sold or provided by the Company or any of its Affiliates,
         or proposed to be manufactured, sold or provided by the Company or any
         of its Affiliates, at the time that a restriction on a Management
         Shareholder becomes effective pursuant to Article V of this Agreement.

                  "COVENANT PERIOD" shall mean the term of a Management
         Shareholder's employment or other engagement by the Company or any of
         its Affiliates PLUS, in the event that the Company or any of its
         Affiliates repurchases such Management Shareholder's entire equity
         interest in the Company in connection with the termination of such
         employment or engagement, an additional period equal to nine (9) months
         from and after the termination thereof.

         7.       SURVIVAL. Any termination of your employment or of this
Agreement shall have no effect on the continuing operation of paragraph 4, 5 or
6 for the periods specified therein.


                                     - 6 -
<PAGE>

         8.       WAIVER OF CLAIMS. You agree as a condition to your receipt of
any termination or severance benefits pursuant to paragraph 4 hereof, you will
agree, as of the date of such termination, to waive, discharge and release any
and all claims, demands and causes of action, whether known or unknown, against
the Company, its affiliates and subsidiaries, and their respective current and
former directors, officers, employees, attorneys and agents arising out of,
connected with or incidental to your employment or other dealings with the
Company, its affiliates or subsidiaries, which you or anyone acting on your
behalf might otherwise have had or asserted and any claim to any compensation or
benefits from your employment with the Company or its affiliates (other than
employee benefits to be provided pursuant to the terms of paragraph 4 hereof or
of any employee benefit plans as set forth in paragraph 3 hereof).
Notwithstanding anything contained herein to the contrary, no termination or
severance payments shall be made under this Agreement or otherwise until such
time as you have delivered an executed release of claims and any applicable
revocation periods under state or federal law have expired. The Company agrees,
as further consideration for your waiver, to concurrently execute a waiver of
unknown claims against you on terms and conditions substantially identical to
the waiver provided by you (it being understood that the Company may
specifically reserve claims identified in writing by the Company at the time
that such waiver is provided).

         9.       GOVERNING LAW. This Agreement and all questions concerning the
construction, validity and interpretation of this Agreement shall be governed by
and determined in accordance with the internal law, and not the law of
conflicts, of the State of California.

         10.      NOTICES. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given, if mailed, by
registered or certified mail, return receipt requested, or, if by other means,
when received by the other party at the address set forth herein, or such other
address as may hereafter be furnished to the other party by like notice. Notice
or communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee if delivered other
than by mail, and in the case of mail, three days after the depositing of the
same in the United States mail as above stated (or, in the case of registered or
certified mail, by the date noted on the return receipt). Notices shall be
addressed as follows:

                  If to the Executive:      Mr. Ralph E. Hoover, Jr.
                                            1190 Vintner Way
                                            Pleasonton, California 94566

                  If to the Company:        Watkins-Johnson Company
                                            3333 Hillview Avenue
                                            Palo Alto, CA 94304
                                            Attention: President

                  with a copy to:           Fox Paine & Company, LLC
                                            950 Tower Lane
                                            Suite 1150
                                            Foster City, CA 94404
                                            Attention: W. Dexter Paine, III


                                     - 7 -
<PAGE>

         11.      SEPARABILITY CLAUSE. Any part, provision, representation or
warranty of this Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof.

         12.      SUCCESSORS AND ASSIGNS; ASSIGNMENT OF AGREEMENT. This
Agreement shall bind and inure to the benefit of and be enforceable by the
parties hereto and the respective successors and assigns of the parties hereto.
As used in this Agreement, "COMPANY" shall mean the Company as hereinbefore
defined and any successors to its businesses and/or assets as aforesaid which
assume and agree to perform this Agreement by operation of law, or otherwise.
This Agreement is personal to you and without the prior written consent of the
Company shall not be assignable by you otherwise than by will or the laws of
descent and distribution.

         13.      WAIVER. The failure of any party to insist upon strict
performance of a covenant hereunder or of any obligation hereunder, irrespective
of the length of time for which such failure continues, shall not be a waiver of
such party's right to demand strict compliance in the future. No consent or
waiver, express or implied, to or of any breach or default in the performance of
any obligation hereunder, shall constitute a consent or waiver to or of any
other breach or default in the performance of the same or any other obligation
hereunder. No term or provision of the Agreement may be waived unless such
waiver is in writing and signed by the party against whom such waiver is sought
to be enforced.

         14.      ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement between the parties hereto with respect to the subject matter
contemplated herein and supersedes all prior agreements, whether written or
oral, between the parties, relating to the subject matter hereof. This Agreement
shall not be modified except in writing executed by all parties hereto.

         15.      CAPTIONS. Titles or captions of paragraphs contained in this
Agreement are inserted only as a matter of convenience and for reference, and in
no way define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.

         16.      COUNTERPARTS. For the purpose of facilitating proving this
Agreement, and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts. Each counterpart shall be deemed to be an
original, and all such counterparts shall constitute one and the same
instrument.

         17.      NO OBLIGATION TO MITIGATE. You shall not be required to
mitigate damages or the amount of any payment provided for hereunder by seeking
other employment or otherwise, nor shall the amount of any payment provided for
under this Agreement be reduced by any compensation earned by you as a result of
employment by another employer, or by earnings as a consultant, or by retirement
or other benefits paid after the date of termination.

         18.      ARBITRATION. Any dispute, controversy or claim arising under
or in connection with this Agreement, or the alleged breach hereof, shall be
settled exclusively by the American Arbitration Association in accordance with
the Employment Dispute Resolution


                                     - 8 -
<PAGE>

Rules of the American Arbitration Association then in effect. Judgment upon the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof. Any arbitration held hereunder shall take place in Palo
Alto, California. In addition, any dispute, controversy or claim arising under
or in connection with your rights or obligations under the Shareholders
Agreement or pursuant to any stock option or other equity arrangements between
you and the Company, shall be settled exclusively by arbitration as described in
this Section 18.

         19.      LEGAL FEES. In the event of any dispute hereunder or the
enforcement of any right hereunder that requires recourse to arbitration or
litigation, the prevailing party therein shall be entitled, in addition to other
remedies, to recover legal fees and costs from the non-prevailing party, as
determined by the arbitrator(s) or the court.

                            [signatures page follows]


                                     - 9 -
<PAGE>

         Please execute a copy of this letter Agreement in the space below and
return it to the undersigned at the address set forth above to confirm your
understanding and acceptance of the agreements contained herein.

                                      Very truly yours,

                                      WATKINS-JOHNSON COMPANY


                                      By: _____________________________________
                                      Name:    Malcolm J. Caraballo
                                      Title:   President




Accepted and agreed to



___________________________________
Ralph E. Hoover, Jr.


                                     - 10 -
<PAGE>

                                    EXHIBIT A



<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
 NOMINAL BONUS (% OF BASE SALARY)             35%
-------------------------------------------------------------------------------------------------------------
                         REVENUE
-------------------------------------------------------------------------------------------------------------
                          < 80%      80%      90%     100%     110%     120%    140%   160%    180%    200%
-------------------------------------------------------------------------------------------------------------
<S>            <C>        <C>        <C>      <C>     <C>      <C>      <C>     <C>    <C>     <C>     <C>
               200%        0%        33%      42%     50%       52%      54%    56%     57%     59%    61%
-------------------------------------------------------------------------------------------------------------
               180%        0%        31%      40%     48%       50%      52%    54%     55%     57%    59%
-------------------------------------------------------------------------------------------------------------
               160%        0%        28%      37%     46%       48%      49%    51%     53%     55%    56%
-------------------------------------------------------------------------------------------------------------
               140%        0%        26%      35%     44%       46%      47%    49%     51%     53%    54%
-------------------------------------------------------------------------------------------------------------
               130%        0%        24%      33%     42%       43%      45%    47%     49%     50%    52%
-------------------------------------------------------------------------------------------------------------
               120%        0%        22%      31%     40%       41%      43%    45%     47%     48%    50%
-------------------------------------------------------------------------------------------------------------
   EBITDA      110%        0%        20%      28%     37%       39%      41%    42%     44%     46%    48%
-------------------------------------------------------------------------------------------------------------
               100%        0%        18%      26%     35%       37%      39%    40%     42%     44%    46%
-------------------------------------------------------------------------------------------------------------
                90%        0%        15%      24%     33%       35%      36%    38%     40%     42%    43%
-------------------------------------------------------------------------------------------------------------
                80%        0%        13%      22%     31%       33%      34%    36%     38%     40%    41%
-------------------------------------------------------------------------------------------------------------
                70%        0%        11%      20%     28%       30%      32%    34%     35%     37%    39%
-------------------------------------------------------------------------------------------------------------
                60%        0%         9%      18%     26%       28%      30%    32%     33%     35%    37%
-------------------------------------------------------------------------------------------------------------
              < 60%        0%         0%      0%       0%       0%       0%      0%     0%      0%      0%
-------------------------------------------------------------------------------------------------------------
</TABLE>


                                     - 11 -