Exhibit 10.49


 


STOCK OPTION AGREEMENT


 


THIS
AGREEMENT, dated as of February 2, 2001 is made by and between K-L
Holdings, Inc., a Delaware corporation (hereinafter referred to as the “Company”),
and «1», an employee of the Company or a
Subsidiary (as defined below) or Affiliate (as defined below) of the Company,
hereinafter referred to as “Optionee”.


 


WHEREAS, the
Company wishes to afford the Optionee the opportunity to purchase shares of its
common stock, par value $0.01 per share (the “Common Stock”);


 


WHEREAS, the
Company wishes to carry out the Plan (as hereinafter defined), the terms of
which are hereby incorporated by reference and made a part of this Agreement;
and


 


WHEREAS, the
Committee (as hereinafter defined), appointed to administer the Plan, has determined
that it would be to the advantage and best interest of the Company and its
shareholders to grant the Options provided for herein to the Optionee as an
incentive for increased efforts during his term of office with the Company or
its Subsidiaries or Affiliates, and has advised the Company thereof and
instructed the undersigned officers to issue said Options;


 


NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:


 


ARTICLE I


 


DEFINITIONS


 


Whenever the
following terms are used in this Agreement, they shall have the meaning
specified in the Plan or below unless the context clearly indicates to the
contrary.


 


Section 1.1.                                   - Affiliate


 


“Affiliate”
shall mean, with respect to the Company, any entity directly or indirectly
controlling, controlled by, or under common control with, the Company or any
other entity designated by the Board of Directors of the Company in which the
Company or an Affiliate has an interest.


 


Section 1.2.                                   - Cause


 


“Cause” shall
mean (i) the Optionee’s willful and continued failure to perform duties,
which are within the control of the Optionee and consistent with such Optionee’s
title and position, that is not cured within 15 days following written notice
of such failure, (ii) the Optionee’s conviction of or plea of guilty or no
contest to a (x) felony or (y) crime involving moral turpitude, (iii) the
Optionee’s willful malfeasance or misconduct which is injurious to the Company
or its subsidiaries, other than in a manner that is insignificant or
inconsequential, (iv) a breach by Optionee of the material terms of the
Management Stockholder’s Agreement concerning any non-compete, non-solicitation
or confidentiality, following notice of such breach


 





















 


(which notice may be oral or written) or (v) any violation by the
Optionee of any material written Company policy after written notice of such
breach, if such violation is shown by the Company to be reasonably expected to
result in material injury to the business, reputation or financial condition of
the Company.


 


Section 1.3.                                   - Change of
Control


 


“Change of
Control” shall mean (i) sales of all or substantially all of the assets of
the Company to a Person who is not KKR or an affiliate of KKR (collectively,
the “KKR Partnerships”), (ii) a sale by KKR or any of its
respective affiliates resulting in more than 50% of the voting stock of the
Company being held by a Person or group that does not include KKR or any of its
respective affiliates or (iii) a merger, consolidation, recapitalization
or reorganization of the Company with or into another Person which is not an
affiliate of KKR; if and only if as a result of any of the foregoing events in
(i)-(iii) the KKR Partnerships lose the ability, without the approval of a
Person who is not an affiliate of KKR, to elect a majority of the Board of
Directors of the Company (or the resulting entity).  Notwithstanding the foregoing, if any of the
transactions described in (i)-(iii) of the preceding sentence shall occur
and the other Person involved in such transaction (or its ultimate parent
entity) is an operating company controlled by KKR or an affiliate of KKR prior
to such transaction (an “Alternate KKR Entity”), then the determination of
whether a change of control has occurred shall be made by determining whether
an event set forth in clauses (i), (ii) or (iii) above has occurred
(including the ability to elect a majority of the Board) if the Alternate KKR
Entity is treated as being unaffiliated with KKR and by treating the voting
power of the Alternate KKR Entity in the Company (or the resulting entity) as
if it were held by a Person unaffiliated with KKR.


 


Section 1.4.                                   - Code


 


“Code” shall
mean the Internal Revenue Code of 1986, as amended.


 


Section 1.5.                                   - Committee


 


“Committee”
shall mean the Compensation Committee of the Company.


 


Section 1.6.                                   - Good Reason


 


“Good Reason”
shall mean (i) a reduction in the Optionee’s base salary or annual bonus
opportunity (other than a reduction in base salary that is offset by an
increase in bonus opportunity upon the attainment of reasonable financial
targets, which reduction may not exceed either (x) 10% of the Optionee’s base
salary in any 12 month period or (y) an aggregate of 20% of the Optionee’s base
salary immediately prior to November 20, 2000, (ii) a substantial
reduction in the Optionee’s duties and responsibilities, which continues beyond
15 days after written notice by the Optionee to the Company of such reduction, (iii) the
elimination or reduction of the Optionee’s eligibility to participate in the
Company’s benefit programs that is inconsistent with the eligibility of
similarly situated employees of the Company to participate therein, (iv) a
transfer of the Optionee’s primary workplace by more than thirty-five (35)
miles from the current workplace, (v) any serious chronic mental or
physical illness of an immediate family member that requires the Optionee to
terminate his or he employment with the Company because of a substantial
interference with his or her duties at the Company or (vi) any failure by


 


2





















 


the Company to
pay when due any payment owed to the Optionee within 15 days after the date
such payment becomes due.


 


Section 1.7.                                   - Grant Date


 


“Grant Date”
shall mean February 2, 2001, the date on which the Options provided for in
this Agreement are granted.


 


Section 1.8.                                   - Group


 


“Group” shall
mean two or more Persons acting together as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities of the Company.


 


Section 1.9.                                   - Initial Vesting
Date


 


“Initial
Vesting Date” shall mean November 20, 2000.


 


Section 1.10.                             - KKR


 


“KKR”
shall mean Kohlberg Kravis Roberts & Co. Ltd.


 


Section 1.11.                             - KKR Return


 


“KKR
Return” shall mean the threshold internal rate of return, realized by the KKR
Partnerships upon the occurrence of a Change of Control, on the shares of
Common Stock owned by the KKR Partnerships that is equal to at least 27% per
annum, which return shall be calculated on a fully diluted basis, taking into
account all outstanding shares of Common Stock (including, without limitation
all of the shares underlying the Time Option, which is at the time of, or which
would become exercisable in connection with, the Change of Control pursuant to Section 3.1(a)(ii),
and all of the shares underlying the Performance Option, which would otherwise
become exercisable pursuant to Section 3.1(b)(iii)).


 


Section 1.12.                             - Management
Stockholder’s Agreement


 


“Management
Stockholder’s Agreement” shall mean that certain Management Stockholder’s
Agreement dated as of February 2, 2001 between the Optionee and the
Company.


 


Section 1.13.                             - Options


 


“Options”
shall mean the Time Option (which shall, in part and to the extent permitted by
applicable law and as set forth on the signature page hereto, be an “incentive
stock option”, within the meaning of Section 422 of the Code) and
Performance Option (which shall in its entirety be an option that is not an
incentive stock option) to purchase Common Stock granted under this
Agreement.  To the extent that, for any
reason, an Option intended to be an incentive stock option does not qualify as
an incentive stock option, it shall be deemed an option that is not an
incentive stock option.


 


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Section 1.14.                             - Performance Option


 


“Performance
Option” shall mean an Option with respect to which the commencement of
exercisability is governed by Section 3.1(b) hereof.


 


Section 1.15.                             - Performance Targets


 


“Performance
Targets” shall have the meaning as set forth on Exhibit A attached hereto.


 


Section 1.16.                             - Permanent Disability


 


“Permanent
Disability: shall mean a determination, made at the request of the Optionee or
upon the reasonable request of the Company set forth in a notice to the
Optionee, by a physician selected by the Company and the Optionee, that the
Optionee is unable to perform his duties as an employee of the Company or its subsidiaries
and in all reasonable medical likelihood such inability will continue for a
period in excess of 180 days.


 


Section 1.17.                             - Person


 


“Person” shall
mean “person”, as such term is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (or any successor
section thereto).


 


Section 1.18.                             - Plan


 


“Plan” shall
mean the 2000 Stock Purchase and Option Plan of K-L Holdings, Inc. and
Subsidiaries.


 


Section 1.19.                             - Pronouns


 


The masculine
pronoun shall include the feminine and neuter, and the singular the plural,
where the context so indicates.


 


Section 1.20.                             - Retirement


 


“Retirement”
shall mean retirement at age 65 or over (or such other age as may be approved
by the Board of Directors of the Company) after having been employed by the
Company or a Subsidiary for at least three years after November 20, 2000.


 


Section 1.21.                             - Secretary


 


“Secretary”
shall mean the Secretary of the Company.


 


Section 1.22.                             - Time Option


 


“Time Option”
shall mean an Option with respect to which the commencement of exercisability
is governed by Section 3.1(a) hereof.


 


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Section 1.23.                             - Vesting Date


 


“Vesting Date”
shall mean each anniversary of the Initial Vesting Date on which the Time
Option first becomes exercisable pursuant to Section 3.1(a)(i) hereof.


 


ARTICLE II


 


GRANT OF OPTIONS


 


Section 2.1.                                   - Grant of
Options


 


For good and
valuable consideration, on and as of the date hereof the Company irrevocably
grants to the Optionee a Time Option and/or a Performance Option to purchase
any part or all of an aggregate of the number of shares set forth with respect
to each such Option on the signature page hereof of its Common Stock upon
the terms and conditions set forth in this Agreement.


 


Section 2.2.                                   - Exercise Price


 


Subject to Section 2.4,
the exercise price of the shares of Common Stock covered by the Options shall
be $5.00 per share without commission or other charge (which is the fair market
value per share of the Common Stock on the Grant Date).


 


Section 2.3.            - No
Guarantee of Employment


 


Nothing in
this Agreement or in the Plan shall confer upon the Optionee any right to
continue in the employ of the Company or any Subsidiary or Affiliate or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries or Affiliates, which are hereby expressly reserved, to terminate
the employment of the Optionee at any time for any reason whatsoever, with or
without cause.


 


Section 2.4.                                   - Adjustments in
Options Pursuant to Merger, Consolidation, etc.


 


Subject to
Sections 8 and 9 of the Plan, in the event that the outstanding shares of the
stock subject to an Option, are, from time to time, changed into or exchanged
for a different number or kind of shares of the Company or other securities of
the Company by reason of a merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares, or other
corporate event, the Committee shall make, as appropriate and equitable, an
adjustment in the number and kind of shares and/or the amount of consideration
as to which or for which, as the case may be, such Option, or portions thereof
then unexercised, shall be exercisable and/or, other than in an event that is a
Change of Control, shall pay to the Optionee a dividend in respect of the
shares of Common Stock subject to the Option, in any event in order to allow
the Optionee to participate in such corporate event in an equitable
manner.  Any such adjustment made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.


 


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ARTICLE III


 


PERIOD OF
EXERCISABILITY


 


Section 3.1.                                   - Commencement of
Exercisability


 


(a)                                  Time Option.


 


(i)                                     So
long as the Optionee continues to be employed by the Company or its
Subsidiaries, the Time Option shall become exercisable pursuant to the
following schedule:


 


	
  Date Time Option

  Becomes Exercisable

  	
   

  	
  Percentage of Time Option

  Shares Granted As to Which

  Time Option Is Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  After the first anniversary of the Initial
  Vesting Date

  	
   

  	
  10

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the second anniversary of the Initial
  Vesting Date

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the third anniversary of the Initial
  Vesting Date

  	
   

  	
  45

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fourth anniversary of the Initial
  Vesting Date

  	
   

  	
  70

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  After the fifth anniversary of the Initial
  Vesting Date

  	
   

  	
  100

  	
  %

  



 


(ii)                                  Notwithstanding
the foregoing, the Time Option shall become immediately exercisable as to 100%
of the shares of Common Stock subject to such Option immediately prior to a
Change of Control (but only to the extent such Option has not otherwise
terminated or become exercisable).


 


(iii)                               In
the event the Optionee’s employment is terminated as a result of the Optionee’s
death, Permanent Disability or Retirement, or is terminated by the Company
without Cause or by the Optionee for Good Reason, the vesting of the Time
Option shall accelerate such that the Time Option shall be exercisable as to
20% of the shares of Common Stock in respect of each Vesting Date through which
the Optionee has remained employed, which vesting schedule shall be in
lieu of the vesting schedule set forth in Section 3.1(a)(i).  For example and for the avoidance of doubt,
in the event that the Optionee’s employment is terminated by the Company
without Cause after the second anniversary of the Initial Vesting Date but
prior to the third anniversary of the Initial Vesting Date, the Time Option
shall be exercisable as to 40%, in total, of the shares of Common Stock subject
to the Time Option, in


 


6





















 


lieu of the 30%, in total, of
the shares of Common Stock as to which the Time Option would otherwise be
exercisable in accordance with the vesting schedule set forth in Section 3.1(a)(i).


 


(b)                                 Performance Option.


 


(i)                                     The
Performance Option shall become exercisable with respect to 25% of the shares
of Common Stock subject to such Option commencing on the second anniversary of
the Grant Date and on each anniversary thereafter upon the achievement by the
Company of the Performance Targets established in respect of each fiscal year
of the Company and set forth on Exhibit A attached hereto (each, a “Plan
Year”).  If the Company does not achieve
its Performance Targets for any given Plan Year (a “Missed Year”), the Performance
Option shall not become exercisable in respect of such Plan Year; provided,
however, that if (x) the Company achieves its Cumulative EBITDA
Target (as set forth on Exhibit A) as of any Plan Year subsequent to a
Missed Year and (y) the KKR Partnerships achieve their ROGI Target (as set
forth on Exhibit A) in respect of the same Plan Year for which the
achievement of Performance Targets are being determined, then any prior
percentage of the Performance Option in respect of prior Missed Years shall
become exercisable (but only to the extent such Option has not otherwise
terminated or become exercisable).


 


(ii)                                  Notwithstanding
the foregoing, the Performance Option shall become exercisable as to 100% of
the shares of Common Stock subject to such Option on the eighth anniversary of
the Grant Date (but only to the extent such Option has not otherwise terminated
or become exercisable).


 


(iii)                               Notwithstanding the
foregoing, the Performance Option shall become immediately exercisable
immediately prior to a Change of Control (but only to the extent such Option
has not otherwise terminated or become exercisable) as to such percentage, if
any, of the shares of Common Stock subject to such Option which, after such
acceleration of exercisability, shall still result in the KKR Partnerships’
achievement of the KKR Return.  Upon the
occurrence of the Change of Control, all or any portion of the Performance
Option that, after the application of the foregoing sentence, remains
unexercisable, shall immediately terminate.


 


(c)                                  Notwithstanding the foregoing,
no Option shall become exercisable as to any additional shares of Common Stock
(which do not otherwise become exercisable in accordance with Section 3.1(a)(iii) above)
following the termination of employment of the Optionee for any reason and any
Option, which is non-exercisable as of the Optionee’s termination of
employment, shall be immediately cancelled.


 


Section 3.2.                                   - Expiration of
Options


 


Except as
otherwise provided in Section 5 or 6 of the Management Stockholder’s Agreement,
the Optionee may not exercise the Options to any extent after the first to
occur of the following events:


 


(a)                                  The tenth anniversary of the
Grant Date; or


 


(b)                                 The tenth anniversary of the
Grant Date, if the Optionee’s employment is terminated by reason of death or
Permanent Disability;


 


7





















 


(c)                                  The first anniversary of the
date of the Optionee’s termination of employment by reason of Retirement, by
the Company without Cause or by the Optionee for Good Reason; or


 


(d)                                 The date of an Optionee’s
termination of employment by the Company for any reason other than as set forth
in Section 3.2(b) or (c) above (without regard to Section 5
or 6 of the Management Stockholder’s Agreement); or


 


(e)                                  The date the Option is
terminated pursuant to Section 5 or 6 of the Management Stockholder’s
Agreement; or


 


(f)                                    If the Committee so determines
pursuant to Section 9 of the Plan, the effective date of either the merger
or consolidation of the Company into another Person, or the exchange or
acquisition by another Person of all or substantially all of the Company’s
assets or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of the
Company.  At least ten (10) days
prior to the effective date of such merger, consolidation, exchange,
acquisition, recapitalization, reclassification, liquidation or dissolution,
the Committee shall give the Optionee notice of such event if the Option has
then neither been fully exercised nor become unexercisable under this Section 3.2.


 


ARTICLE IV


 


EXERCISE OF
OPTIONS


 


Section 4.1.                                   - Person Eligible
to Exercise


 


Except as
otherwise provided in the Management Stockholder’s Agreement, during the
lifetime of the Optionee, only he may exercise an Option or any portion
thereof.  After the death of the
Optionee, any exercisable portion of an Option may, prior to the time when an
Option becomes unexercisable under Section 3.2, be exercised by his
personal representative or by any person empowered to do so under the Optionee’s
will or under the then applicable laws of descent and distribution.


 


Section 4.2.                                   - Partial
Exercise


 


Any
exercisable portion of an Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2;
provided, however, that any partial exercise shall be for whole shares of
Common Stock only.


 


Section 4.3.                                   - Manner of
Exercise


 


An Option, or any
exercisable portion thereof, may be exercised solely by delivering to the
Secretary or his office all of the following prior to the time when the Option
or such portion becomes unexercisable under Section 3.2:


 


8





















 


(a)                                  Notice in writing signed by the
Optionee or the other person then entitled to exercise the Option or portion
thereof, stating that the Option or portion thereof is thereby exercised, such
notice complying with all applicable rules established by the Committee;


 


(b)                                 Full payment (in cash, by check
or by a combination thereof) for the shares with respect to which such Option
or portion thereof is exercised;


 


(c)                                  A bona fide written
representation and agreement, in a form satisfactory to the Committee, signed
by the Optionee or other person then entitled to exercise such Option or
portion thereof, stating that the shares of stock are being acquired for his
own account, for investment and without any present intention of distributing
or reselling said shares or any of them except as may be permitted under the
Securities Act of 1933, as amended (the “Act”), and then applicable rules and
regulations thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability resulting
to the Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above; provided,
however, that the Committee may, in its reasonable discretion, take whatever
additional actions it deems reasonably necessary to ensure the observance and
performance of such representation and agreement and to effect compliance with
the Act and any other federal or state securities laws or regulations;


 


(d)                                 Full payment to the Company of
all amounts which, under federal, state or local law, it is required to
withhold upon exercise of the Option; and


 


(e)                                  In the event the Option or
portion thereof shall be exercised pursuant to Section 4.1 by any person
or persons other than the Optionee, appropriate proof of the right of such
person or persons to exercise the option.


 


Without
limiting the generality of the foregoing, the Committee may require an opinion
of counsel acceptable to it to the effect that any subsequent transfer of
shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares.  Share certificates evidencing stock issued on
exercise of this Option shall bear an appropriate legend referring to the
provisions of subsection (c) above and the agreements herein.  The written representation and agreement
referred to in subsection (c) above shall, however, not be required
if the shares to be issued pursuant to such exercise have been registered under
the Act, and such registration is then effective in respect of such shares.


 


Section 4.4.                                   - Conditions to
Issuance of Stock Certificates


 


The shares of
stock deliverable upon the exercise of an Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares, which
have then been reacquired by the Company. 
Such shares shall be fully paid and nonassessable.  The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of an Option or portion thereof prior to fulfillment of all of the
following conditions:


 


9





















 


(a)                                  The obtaining of approval or
other clearance from any state or federal governmental agency which the
Committee shall, in its reasonable and good faith discretion, determine to be
necessary or advisable; and


 


(b)                                 The lapse of such reasonable
period of time following the exercise of the Option as the Committee may from
time to time establish for reasons of administrative convenience.


 


Section 4.5.                                   - Rights as
Stockholder


 


The holder of
an Option shall not be, nor have any of the rights or privileges of, a
stockholder of the Company in respect of any shares purchasable upon the
exercise of the Option or any portion thereof unless and until certificates
representing such shares shall have been issued by the Company to such holder.


 


ARTICLE V


 


MISCELLANEOUS


 


Section 5.1.                                   - Administration


 


The Committee
shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan
as are consistent therewith and to interpret or revoke any such rules.  All actions taken and all interpretations and
determinations made by the Committee shall be final and binding upon the
Optionee, the Company and all other interested persons.  No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options. 
In its absolute discretion, the Board of Directors may at any time and
from time to time exercise any and all rights and duties of the Committee under
the Plan and this Agreement.


 


Section 5.2.                                   - Options Not
Transferable


 


Except as
provided in the Management Stockholder’s Agreement, neither the Options nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or shall
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that this Section 5.2 shall not prevent transfers by
will or by the applicable laws of descent and distribution.


 


10





















 


Section 5.3.                                   - Shares to Be
Reserved


 


The Company
shall at all times during the term of the Options reserve and keep available
such number of shares of stock as will be sufficient to satisfy the
requirements of this Agreement.


 


Section 5.4.                                   - Notices


 


Any notice to
be given under the terms of this Agreement to the Company shall be addressed to
the Company in care of its Secretary, and any notice to be given to the
Optionee shall be addressed to him at the address given beneath his signature
hereto.  By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address
for notices to be given to him.  Any
notice, which is required to be given to the Optionee, shall, if the Optionee
is then deceased, be given to the Optionee’s personal representative if such
representative has previously informed the Company of his status and address by
written notice under this Section 5.4. 
Any notice shall have been deemed duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, deposited (with postage
prepaid) in a post office or branch post office regularly maintained by the
United States Postal Service.


 


Section 5.5.                                   - Titles


 


Titles are
provided herein for convenience only and are not to serve as a basis for
interpretation or construction of this Agreement.


 


Section 5.6.                                   - Applicability
of Plan and Management Stockholder’s Agreement


 


The Options
and the shares of Common Stock issued to the Optionee upon exercise of the
Options shall be subject to all of the terms and provisions of the Plan and the
Management Stockholder’s Agreement, to the extent applicable to the Options and
such shares.  In the event of any
conflict between this Agreement and the Plan, the terms of the Plan shall
control.  In the event of any conflict
between this Agreement or the Plan and the Management Stockholder’s Agreement,
the terms of the Management Stockholder’s Agreement shall control.


 


Section 5.7.                                   - Amendment


 


This Agreement
may be amended only by a writing executed by the parties hereto, which
specifically states that it is amending this Agreement.


 


Section 5.8.                                   - Governing Law


 


The laws of
the State of Delaware shall govern the interpretation, validity and performance
of the terms of this Agreement regardless of the law that might be applied
under principles of conflicts of laws.


 


Section 5.9.                                   - Arbitration;
Legal Fees


 


(a)                                  In the event of any controversy
among the parties hereto arising out of, or relating to, this Agreement which
cannot be settled amicably by the parties, such controversy


 


11





















 


shall be finally, exclusively and conclusively settled by mandatory
arbitration conducted expeditiously in accordance with the American Arbitration
Association rules, by a single independent arbitrator.  If the parties are unable to agree on the
selection of an arbitrator, then any party may petition the American Arbitration
Association for the appointment of the arbitrator, which appointment shall be
made within (10) days of the petition therefore.  Either the Company or the Management
Stockholder may institute such arbitration proceeding by giving written notice
to the other party.  The arbitrator in
New York or New Jersey shall hold a hearing within thirty (30) days of his or
her appointment.  In preparation for
their presentation at such hearing, each party may depose a maximum of four
people.  Each such deposition shall last
no more than (6) hours.  Each side
may file with the arbitrator one brief note in excess of thirty (30) pages,
excluding exhibits.  Each side shall have
no more that eight (8) hours to present its position to the
arbitrator.  The hearing shall be no more
that three (3) days in length.  The
decision of the arbitrator shall be final and binding upon all parties hereto
and shall be rendered pursuant to a written decision, which contains a detailed
recital of the arbitrator’s reasoning. 
Judgment upon the award rendered may be entered in any court having
jurisdiction thereof.


 


(b)                                 In the event of any arbitration
or other disputes with regard to this Agreement or any other document or
agreement referred to herein, the party that does not prevail shall pay the
legal fees and disbursements of the prevailing party promptly upon presentation
of invoices thereof.


 


12





















 


IN WITNESS
WHEREOF, this Agreement has been executed and delivered by the parties hereto.


 


	
   

  	
  K-L HOLDINGS. INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  «1»

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address

  
	
   

  	
   

  
	
   

  	
  Optionee’s
  Taxpayer Identification Number:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  



 


Aggregate
number of shares


of Common
Stock for which


the Time
Option granted


hereunder is
exercisable


(50% of total
number of shares):


 


«E»;
of which


 


«F»
shall be incentive stock options and


 


«G»
shall be non-qualified stock options.


 


Aggregate
number of shares


of Common
Stock for which


the
Performance Option granted


hereunder is
exercisable


(50% of total
number of shares):


 


«H»,
all of which shall be non-qualified stock options.


 


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