Document:

SEVERANCE POLICY

Exhibit 10.2

FIRST DATA CORPORATION

SEVERANCE POLICY

(Global Pay Structure Level 6 Employees)

Effective June 1, 2010

 

 

1.Purpose

This severance policy is maintained by First Data Corporation and certain of its subsidiaries and affiliates (the "Company").  The purpose of this severance policy is to provide temporary benefits to eligible executives whose employment is involuntarily Terminated to assist such executives with their transition to new employment.  The severance policy is not intended to create a vested entitlement for executives who are offered a Comparable Position of employment or to provide benefits to executives who are Terminated for a non-eligible termination reason.  No executives have any vested right to any benefits under this Policy prior to the date the executives is Terminated for reasons rendering the executives eligible for benefits under the express terms of the Policy.  This Policy does not create any contract of employment or right to employment for any period of time.  Employment with the Company is at-will, and may be Terminated by either the Company or the executive at any time for any reason.

2.Effective Date

The effective date of this Policy is June 1, 2010 (the "Effective Date").  On the Effective Date, this Policy supersedes and replaces all severance policies previously maintained by the Company for the benefit of its executives.

	Application

This Policy applies solely to individuals who are eligible executives with the exclusion of Executive Committee executives of the Company on their Termination Date.

4.Eligibility

Except as provided below and subject to Section 3 of this Policy, the following employees are eligible to receive Severance Benefits according to the terms of this Policy if the Company terminates their employment after the Effective Date of this Policy for any reason set forth in Section 5:  i) all executives whose positions are in the Global Pay Structure ("GPS") Level 6 of the Company and who are on the Company's U.S. dollar payroll; and ii) any employee listed on Schedule A whose Termination Date is on or before December 31, 2011.  Unless otherwise expressly set forth in a written agreement between the Company and an executive, executives are not eligible to receive Severance Benefits under this policy if, on the date their employment is Terminated, they are eligible, by virtue of an acquisition agreement or otherwise, to receive severance, termination, or similar benefits under another policy, plan, program, or agreement. Executives hired by the Company, whether such employment is for a set term or otherwise, under the terms of an offer letter or agreement that excludes eligibility for or payment of severance benefits, shall not be eligible for benefits under this Policy. Generally, any employee who is determined by the Company in its sole and absolute discretion to have failed to meet performance or conduct standards at the time of a job elimination ("Non-Performing Employee") shall not be eligible for benefits under this Policy.  However, the Company may decide in its sole and absolute discretion to make a Non-Performing Employee eligible for benefits under this Policy by taking into consideration: 1) length of service with the Company; 2) whether the Non-Performing Employee would have been likely to improve his/her performance; 3) personal circumstances of the Non-Performing Employee; and 4) any other criteria the Company determines to use in its sole and absolute discretion. 

 

5.Eligible Termination Reasons

	Involuntary Termination of employment with the Company as a direct result of position elimination or reduction in force (including Terminations resulting from the sale of a business unit) provided the executive (1) is not offered a Comparable Position with either the Company or the Successor nor (2) accepts employment with either the Company or the Successor (without regard to whether such employment is in a Comparable Position).

	Any other Termination of employment the Company in its sole and absolute discretion as Policy sponsor determines should result in the payment of Severance Benefits under this Policy so long as the company determines that such payments may be made in compliance with 409A.

6.          Non-Eligible Termination Reasons

A non-eligible termination reason is any reason for Termination that, in the Company's sole discretion, is not considered an eligible termination reason.  Examples of reasons for Termination that the Company generally will consider as non-eligible termination reasons include, without limitation, the following:

	Voluntary resignation, including job abandonment or constructive termination. 

	Termination of employment in connection with the sale or transfer of any portion of the Company's business to a Successor, if the executive is offered a Comparable Position with the Successor or if the executive accepts employment with the Successor (without regard to whether such employment is in a Comparable Position). 

	Misconduct as defined for purposes of this Policy.

	Excessive absenteeism or lateness.

	Position elimination or reduction in force, including but not limited to, position elimination or reduction in force in connection with a merger, acquisition, sale, transfer, outsourcing or subcontracting of a job function, or reorganization, if in connection with such position elimination or reduction in force the executive is offered a Comparable Position (regardless of whether or not the employee accepts or declines the offer of employment).

	Failure to report to work or to return from a leave of absence beyond the approved leave period.

	Return from an unprotected leave of absence and no position is available.

	Death or retirement.

	Failure to meet performance standards or management's loss of confidence in the Executive.

	Transfer to a position of employment that is not eligible for Severance Benefits under this policy.

 

7.Severance Pay Schedule and Other Benefits

Except as otherwise provided on a Schedule to this Policy, benefits under this plan shall be paid as follows:

	
	
< 1 Year
	
1 to < 2 Years
	
2 to < 3 Years
	
3 to < 4 Years
	
4 to < 5 Years
	
5 Years +

	
GPS Level 6 

Employees
	
6 mos
	
7 mos
	
8 mos
	
9 mos
	
10 mos
	
12 mos

The amount of Severance Pay payable to eligible executives will be calculated using Base Salary plus annual target bonus amount.  For example, an eligible executive with between 3 and 4 years of service, with a base salary of $200,000 and bonus of $100,000 would be entitled to 9 months of severance pay determined by adding the annual Base Salary to the annual target bonus, then multiplying by 9/12.  ($200,000 + $100,000)(.75) = $225,000.  To determine the semimonthly pay amount, this sum is divided by the number of semimonthly pay periods in the Severance Period.  In this example, $225,000 divided by 18 results in semimonthly Severance Pay (gross) of $12,500.  The Company will deduct all taxes or other withholdings that are required by law to be withheld from Severance Benefits. 

Subject to the terms of any applicable plan documents, during the severance period, medical, dental, and prescription drug benefits coverage may be continued and certain other welfare benefits may be continued as to the persons and for the periods of time determined by the Company in its absolute and sole discretion as Policy sponsor.  Coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (COBRA) will start upon the Executive's Termination Date.  In order to receive continuation of benefits, the Executive must timely elect COBRA coverage.  During the severance period, the Executive will pay the employee rate that would have been otherwise paid during regular employment.  Following the severance period, the Executive will be required to pay the full COBRA rate.  Executives receiving payments of Severance Pay are not eligible to continue contributions to the Company's qualified retirement plans or nonqualified deferred compensation program.  

Notwithstanding any other provision in this Policy, expatriates eligible for Severance Benefits under this Policy will receive only the greater of:  1) the Severance Benefits the expatriate would be eligible to receive under this Policy; or 2) the severance, termination, or similar pay the expatriate would be entitled to receive under the local law of the country or jurisdiction where the expatriate performs his or her expatriate duties for the Company.

Payments under the Policy are intended to be exempt from, or comply with Code Section 409A ("409A") and the Policy will be interpreted to achieve this result.  In no event is the Company responsible for any tax or penalty owed by an eligible employee with respect to payments under this Policy.

For the avoidance of doubt, 409A does not cover the portion of the Severance Pay:  1) actually or constructively received by the eligible employee on or before March 15th following the end of the year in which the eligible employee Terminates employment; or 2) that is paid upon an involuntary termination or pursuant to a window program (as determined under 409A and related regulations) and that is equal to the lesser of i) two times the eligible employee's annualized compensation (as determined under 409A); or ii) two times the Code Section 401(a)(17) limit for the year of the eligible employee's separation from service.  All payments under this Policy must be paid by December 31st of the second calendar year following the calendar year of the eligible employee's Termination from employment.

	Requirement of Release

Payment of Severance Benefits is conditioned upon the executive timely signing an agreement and release (in a form satisfactory to the Company) which will include restrictive covenants and a comprehensive release of all claims, including but not limited to, all employment-related claims.  Payment of Severance Benefits will commence no sooner than 8 days following Employee's execution of the agreement and release.  In no event, will payment commence later than 31 days after separation from service if a waiver is requested from an individual or later than 55 days after separation from service if a waiver is requested in connection with an exit incentive or other employment termination program offered to a group or class of employees. 

If an executive's employment is Terminated for a reason covered under Section 5 but the executive dies prior to executing an agreement and release, his or her estate or representative may not execute an agreement and release and no Severance Benefits will be paid under this Policy.  

9.Method of Payment

Severance Pay will be paid in installments throughout the severance period set forth in Section 7 in accordance with the Company's regular payroll schedule.1  For purposes of 409A each installment payment will be treated as a separate payment.  If an executive dies after becoming eligible for Severance Benefits and executing an agreement and release but before full receipt of Severance Benefits, the remaining Severance Pay, bonus payable under Section 11, and amounts with respect to commissions and vacation payable under Section 12, if any, will be paid to the executive's estate in one lump sum.  All payments will be net of amounts withheld with respect to taxes, offsets, or other obligations.  To the extent this Policy is subject to 409A, and to the extent the Company or any entity which would be considered a service recipient under 409A has stock which is publicly traded and to the extent required under 409A, any specified employee of the Company may not receive a distribution from this Policy in the event of a separation from service for a reason other than the employee's death for six months after such separation from service. Any such distribution due during such six-month period will be accumulated and paid in one lump sum on the last day of the seventh month following such separation from service.  A "specified employee" means an employee who, as of the date of the employee's separation from service, is a key employee of the Company.  An employee is a key employee if the employee meets the requirements of section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with applicable regulations and disregarding section 416(i)(5))) of the Code at any time during the calendar year.  For purposes of determining whether an employee is a key employee, effective January 1, 2008, compensation will be defined as compensation for purposes of determining who is a highly compensated employee under the First Data Corporation Incentive Savings Plan.  If an employee is a key employee during the calendar year, the employee will be treated as a key employee for the entire 12-month period beginning on the following April 1st.  

______________

1 Under limited circumstances, subject to Section 7, and only to the extent permitted under 409A, and with the approval of the Senior Vice President of Human Resources for the applicable business unit, Severance Pay may be paid in a lump sum.

 

10.Offsets  

Severance Benefits payable under this Policy will be offset by any other severance, termination, or similar benefits the Company provides, including but not limited to any amounts paid under any employment agreement or other individual contractual arrangement, amounts paid pursuant to federal, state, or local government workers' notification (such as payments paid pursuant to WARN during a period of time in which the executive is receiving pay in lieu of notice and is not working) or office closing requirements, or statutory severance benefits provided pursuant to the law of any country or political subdivision thereof.  Severance Benefits payable under this Policy also will be offset by any amounts received by the executive during the severance period pursuant to short-term or long-term disability plans or arrangements maintained or contributed to by the Company.  The Company also may, in its discretion and to the extent permitted under applicable law, offset against the executive's Severance Benefits the value of unreturned property and any outstanding loan, debt or other amount the executive owes to First Data Corporation, its subsidiaries or affiliates.  The Company may recover any overpayment of Severance Benefits made to an executive or an executive's estate under this Policy or, to the extent permitted by applicable law, offset any other overpayment made to the executive against any Severance Benefits or other amount First Data Corporation, its subsidiaries or affiliates owes the executive or the executive's estate.

11.Bonuses

In the Company's sole and absolute discretion, eligible executives may be paid a pro-rata portion of either their target or actual incentive bonus based on the portion of the bonus plan year the executive was actively employed by the Company.  Any such bonus payment will be made at such time as determined by the Company in its sole discretion (but no later than March 15th of the calendar year following the year of employment Termination), and will be based on the Company's achievement of financial or other goals and/or executive's pre-established performance criteria as well as the applicable bonus plan document.  The amount and payment of the bonus, if any, will be determined in the sole discretion of the Company.  Notwithstanding the foregoing eligible employees whose Termination Date is on or after November 15, 2007 and on or before December 31, 2007 shall receive their actual incentive bonus (with individual performance at 100% of target and company performance reflecting actual results) as if the employee were actively employed by the Company for all of 2007.   

12.Commissions and Vacation

Executives will receive payment for any accrued, unused vacation and commissions earned as of the later of the last day of their notice period and the last day of their active employment duties.  Payment for any accrued, unused vacation will be made within the time period required under applicable law.  The applicable commission plan documents will govern payment of commissions.  

13.First Data Corporation Long-Term Incentive Plans ("LTIP")

Nothing in this Policy alters the terms and conditions of the Company's LTIPs or any Stock Option Agreements thereunder.  Executives receiving Severance Benefits must exercise any vested stock options within the period of time specified in the applicable Stock Option Agreement.  Executives should refer to the LTIPs or any applicable stock option agreement for details regarding their applicable post termination exercise period.

14.Outplacement

In the Company's sole and absolute discretion, executives who are eligible for Severance Benefits under the Policy also may be eligible for outplacement services selected by the Company.  Examples of outplacement services include job search strategies and resume preparation assistance.  Eligibility for, and the scope of, any outplacement services will be determined in the sole discretion of the Company.  Under no circumstances will executives be eligible to receive a cash payment in lieu of outplacement services. 

15.Re-employment and Other Employment

In the event an employee is re-employed by First Data Corporation or any of its subsidiaries or affiliates prior to the commencement of or within the period during which the Severance Benefits are paid, the payment of any Severance Benefits payable with respect to the prior termination immediately will cease and such Severance Benefits will no longer be payable under this Policy.  In the event that Severance Pay was paid in a lump sum, such employee must repay any Severance Pay that was attributable to the post-rehire severance period.  

Subject to Section 7 of this policy, if an employee obtains employment (other than with First Data Corporation or any of its subsidiaries or affiliates or as otherwise described above) while receiving Severance Benefits, the employee will continue to receive any remaining Severance Pay in installments in accordance with the Company's regular payroll schedule (or, at the discretion of the Senior Vice President of Human Resources for the applicable business unit, receive any such remaining Severance Pay in a lump sum, but only to the extent permitted by 409A) and, except as otherwise required under applicable law, he or she will no longer be eligible to participate in any First Data Corporation employee benefit plan. 

	Bridge of Service

Executives who are re-employed by First Data Corporation or any of its subsidiaries or affiliates within five years of their Termination Date will, for purposes of determining the number of months of Severance Benefits to which they may be entitled in connection with any future Termination, receive credit for the Years of Service they accumulated on or before their prior Termination Date. Executives who are re-employed by First Data Corporation or any of its subsidiaries or affiliates after the expiration of five years from their Termination Date will not, for purposes of determining the number of weeks of Severance Benefits to which they may be entitled in connection with any future Termination, receive such credit.

17.Funding

This Severance Policy is not funded, and payment of benefits hereunder is made from the general assets of the Company.

18.Administration

This policy shall be administered by the Employee Benefits Committee of First Data Corporation ("EBC") or its successor or delegate, which as the Named Fiduciary shall have the absolute discretion and exclusive right to interpret, construe and administer the policy and to make final determinations on all questions arising under the policy, including but not limited to, questions concerning eligibility for, the amount of and receipt of policy benefits.  Severance Benefits under this policy shall be paid only if the EBC determines in its absolute discretion that the executive is entitled to them.  All decisions of the EBC will be conclusive, final and binding upon the parties.  

19.Changing or Ending the Policy

First Data Corporation reserves the right to amend or terminate this Policy at any time and for any reason, with or without retroactive effect.

 

	Definitions

Code is the Internal Revenue Code, as amended from time to time.  

Comparable Position is an employment position with First Data Corporation, an affiliate or a subsidiary of First Data Corporation or an unrelated successor to First Data Corporation or such affiliate or subsidiary, which as a whole, provides substantially the same level of compensation and fringe benefits, as determined by the Company in its sole discretion, and is located within 35 miles of the prior primary work location.  A Comparable Position does not have to provide an identical level of compensation and fringe benefits and does not have to be identical or even similar to the executive's previous position with the Company (or result in the executive performing identical or even similar job responsibilities).

Misconduct is determined by the Company in its sole discretion and includes any actions contrary to or in violation of the Company's policies, procedures, values, or Code of Conduct, including but not limited to the following:

	Theft, dishonesty or other irregularities impacting the Company, such as the falsification of any Company records and lying during an investigation.

	Damage, loss or destruction of Company, employee or customer property due to negligent or intentional acts.

	Unauthorized removal from Company premises or use of property belonging to the Company without the appropriate level of approval.

	Substance abuse on the premises or being under the influence of intoxicants that may negatively impact work performance.  

	Disruptive behavior or harassment of co-workers including, but not limited to, unwillingness or inability to work in harmony with others, discourtesy or conduct inappropriate to the Company's work environment. 

	Fighting, gambling, disorderly conduct or misconduct, physical or verbal aggression (including, but not limited to, using profane, obscene or abusive language; threatening, intimidating, harassing or coercing others; or carrying weapons while on Company premises or at Company sponsored functions).

	Engaging in any activity inconsistent with the Company's stated compliance with state, federal, and other laws governing the conduct of Company business.

	Conduct which reflects discredit on the individual as an executive of the Company. 

Regular Base Salary is the executive's current annual rate of base cash compensation paid on each regularly scheduled payday for the executive's regular work schedule as of his or her Termination Date and is calculated to include any before-tax contributions that are deducted for Company benefit plans.  Regular base salary does not include premium pay, such as shift differential and overtime, taxable or nontaxable fringe benefits or awards, vacation, performance awards, bonus, commission or other incentive pay, or any payments which are not made on each regular payday, regardless of how such payments may be characterized.

Severance Benefits are Severance Pay and any other severance benefits payable to an eligible executive pursuant to this severance Policy. 

Severance Pay is the amount of severance pay payable to an eligible executive pursuant to the Severance Pay Schedule set forth in Section 7 of this policy.

Successor is an entity that, by acquisition, merger or otherwise succeeds to or assumes responsibility for the business operations of the Company or any business unit or subdivision thereof.

Termination, whenever used in this policy with respect to employment, shall mean "separation from service" within the meaning of 409A and related regulations.

Termination Date is the date on which the executive's employment with the Company terminates for a reason set forth under Section 5.

Years of Service are, subject to Section 16 of this policy, the number of full years of uninterrupted service as a regular full-time employee from such executive's most recent date of hire up to his or her Termination Date.  Partial years of service are not taken into account for purposes of this Policy.  Years of Service also includes:  1) time spent on Company-approved leave of absences, provided that no more than one (1) cumulative Year of Service will be credited for such leave of absences; and 2) prior service with certain acquired companies or other affiliated companies provided the prior service is negotiated for in the applicable acquisition agreement.  In the absence of such provision in the applicable acquisition agreement and subject to a determination by the EBC, Years of Service may include prior service recognized by the acquired company or other company affiliated with the acquired company immediately proceeding the effective sale date of the applicable acquisition agreement.  Notwithstanding anything in this Policy to the contrary, any otherwise eligible employee whose anniversary of employment date occurs no later than sixty (60) days after Termination Date shall be credited with one additional Year of Service.   

21.Miscellaneous

No executive vests in any entitlement or eligibility to benefits under this Policy until he or she has satisfied all requirements for eligibility specified in the Policy, his or her employment has Terminated under eligible conditions, and the EBC has determined that the executive is entitled to benefits under the Policy.  No interest accrues on any Severance Benefit to which an executive may be entitled under this Policy.  Executives cannot assign or pledge any Severance Benefits that they are eligible for under this Policy.  Subject to state and federal law, no creditor may attach or garnish any executive's Severance Benefits

	Review Procedure

Executives eligible to receive Severance Benefits under this Policy will be notified of such eligibility as soon as administratively practicable after employment Termination.  If an executive who believes he or she is eligible to receive Severance Benefits does not receive such notice or disagrees with the amount of Severance Benefits set forth in such notice, or if an executive is informed that he or she is not eligible for Severance Benefits under this Policy, the executive (or his or her legal representative) may file a written claim for benefits with the Company's senior human resources executive.  The written claim must include the facts supporting the claim, the amount claimed, and the executive's name and mailing address.  

If the claim is denied in part or in full, the Company's senior human resources executive will notify the executive by mail no later than 60 days (or 120 days in special circumstances) after the senior human resources executive receives the written claim.  The notice of denial will state the specific reasons for the denial, the provisions of the Policy on which the denial is based, an explanation of the claims appeal procedure and, if applicable, a description of any additional information or material required by the EBC to consider the claim as well as an explanation as to why such information or material is necessary.

An executive (or his or her legal representative) may appeal the denial by filing a written appeal with the EBC.  The written appeal must be received no later than 60 days after the executive or legal representative received the notice of denial.  During the same 60-day period, the executive or legal representative may have reasonable access to pertinent documents and may submit written comments and supporting documents, records and other materials to the EBC.  The EBC will review the appeal and notify the executive or legal representative by mail of its final decision no later than 60 days (or 120 days in special circumstances) after the EBC receives the written appeal.

OTHER INFORMATION YOU SHOULD KNOW

If you are an executive covered by this Policy, you are entitled to the following rights and protections under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"):

a.Examine, without charge, at the EBC's office and at other specified locations, such as worksites, all documents governing the Policy and copies of annual reports (Form 5500 series) filed by or on behalf of the Policy with the U.S. Department of Labor and available at the Public Disclosure Room of the Pension and Welfare Benefit Administration.

b.Obtain copies of all documents governing the policy and copies of annual reports (Form 5500 series) and updated summary plan descriptions.  The EBC may make a reasonable charge for the copies.

In addition to creating rights for participants, ERISA imposes duties upon the people who are responsible for the operation of employee benefit plans and policies.  The people who operate your Policy, called "fiduciaries", have a duty to do so prudently and in the best interest of you and other participants and beneficiaries.  No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a benefit or exercising your rights under ERISA.

If your claim for a benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge and to appeal any denial, all within certain time schedules.  Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the EBC and do not receive them within 30 days, you may file suit in a federal court.  In such a case, the court may require the EBC to provide the materials and pay you up to $100 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of EBC.  If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court.  

If it should happen that Policy fiduciaries misuse the Policy's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court.  The court will decide who pays court costs and legal fees.  If you are successful, the court may order the person you have sued to pay these costs and fees.  If you lose, because for example, your case is considered frivolous, you may have to pay all these costs and fees on your own.

If you have any questions about your benefit under this Policy, contact the Company's Human Resources Department.  If you have any questions about this statement or about your rights under ERISA, of if you need assistance in obtaining documents from the Policy Administrator, contact the nearest office Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, D.C. 20210.  You also may obtain certain publications about your rights and responsibilities under ERISA by calling the publication hotline of the Employee Benefits Security Administration.

 

 

 

 

 

 

 

 

SCHEDULE B

Notwithstanding his membership on the Company's Executive Committee or the Severance Pay Schedule set forth in Section 7, if Raymond E. Winborne's employment with the Company is terminated for an Eligible Termination Reason at anytime, Mr. Winborne shall be eligible to receive 18 months of severance under this Policy if he satisfies all other eligibility requirements (e.g., timely execution of an Agreement and Release). 

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL INFORMATION

The details on the following chart are provided to you for your information and your possible use.

Name of PolicyType of PolicyPolicy Year:

First Data Corporation Severance PolicyWelfare1/1 - 12/31

(Executive Level)

Type of Policy Administration

Self-Administered

Policy Sponsor

First Data Corporation

6200 S. Quebec Street

Greenwood Village, CO 80111

Policy Administrator

First Data Corporation

Employee Benefits Committee

6200 S. Quebec Street

Greenwood Village, CO 80111

Agent for Service of Legal Process

First Data Corporation

General Counsel

6200 S. Quebec Street

Greenwood Village, CO 80111

In addition, service of legal process may be made upon the Policy Administrator.

Identification Number (Policy Sponsor)

47-0731996

Identification Number (Policy)

518

THIS DESCRIPTION OF THE FIRST DATA CORPORATION SEVERANCE POLICY SERVES AS THE OFFICIAL PLAN DOCUMENT AND AS THE LEGAL SUMMARY PLAN DESCRIPTION FOR EXECUTIVE-LEVEL PARTICIPANTS ONLY.Exhibit 4

Exhibit 10.4

FORM OF STOCK OPTION AGREEMENT

FOR U.S. EMPLOYEES

EFFECTIVE APRIL 2010 

 

THIS AGREEMENT, is made by and between First Data Holdings Inc., a Delaware corporation (hereinafter referred to as the "Company"), and the individual whose name is set forth on the signature page hereof, who is an employee of the Company or a Subsidiary or Affiliate of the Company (hereinafter referred to as the "Optionee").  Any capitalized terms herein not otherwise defined in Article I shall have the meaning set forth in the 2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates (the "Plan").

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

WHEREAS, the Compensation Committee of the Board of the Company (or, if no such committee is appointed, the Board) (the "Committee") has determined that it would be to the advantage and best interest of the Company and its shareholders to grant the Option 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 Option;

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 below unless the context clearly indicates to the contrary.

Section 1.1.Base Price 

"Base Price" shall mean $3.00.

Section 1.2. Cause

"Cause" shall have the meaning ascribed to it in any employment, severance or change in control agreement between the Optionee and the Company or any of its Affiliates, or, if there is no such agreement, "Cause" shall mean (a) the Optionee's continued failure substantially to perform the Optionee's duties with the Company or any Subsidiary or Affiliate thereof (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 10 days following written notice by the Company to the Optionee of such failure, (b) the Optionee's conviction of, or plea of nolo contendere to a crime constituting (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude, (c) the Optionee's willful malfeasance or willful misconduct in connection with the Optionee's duties with the Company or any of its Subsidiaries or Affiliates or any willful misrepresentation, willful act or willful omission which is injurious to the financial condition or business reputation of the Company or its Affiliates or (d) the Optionee's material breach of the provisions of Section 23 of the Management Stockholder's Agreement.  For purposes hereof, no act, or failure to act, by the Optionee will be deemed "willful" unless done, or omitted to be done, by the Optionee not in good faith and without reasonable belief the Optionee's act, or failure to act, was in the best interest of the Company, and under no circumstances will the failure to meet performance targets, after a good faith attempt to do so, in and of itself constitute Cause.  

Section 1.3.Closing Date

"Closing Date" shall have the same meaning as that term is defined in the Merger Agreement.

Section 1.4.Time Option

"Time Option" shall mean the right and option to purchase, on the terms and conditions set forth herein, all or any part of an aggregate of the number of shares of Common Stock set forth on the signature page hereof opposite the term Time Option, having a per share exercise price equal to the Base Price.

Section 1.5.Disability

"Disability" shall have the meaning ascribed to it in any employment agreement between Optionee and the Company or any of its Subsidiaries, or, if there is no such employment agreement, "Disability" as defined in the long-term disability plan of the Company. 

Section 1.6.Family Transferees

"Family Transferees" shall mean (i) an Optionee's spouse or children (collectively, "relatives") and (ii) a trust of which there are no beneficiaries other than such Optionee and the relatives of such Optionee.

Section 1.7.Fiscal Year

"Fiscal Year" shall mean each fiscal year of the Company through December 31, 2013.

Section 1.8.Good Reason

"Good Reason" shall have the meaning ascribed to it any employment agreement between the Optionee and the Company or any of its subsidiaries or Affiliates, or, if there is no such employment agreement, "Good Reason" shall mean (i) a reduction in the Optionee's base salary or the Optionee's annual incentive compensation opportunity (other than a general reduction in base salary or annual incentive compensation opportunities that affects all members of senior management of the Company and its subsidiaries equally); (ii) a relocation of Optionee's primary workplace by more than fifty (50) miles from the current workplace; or (iii) a substantial reduction in or demotion of Optionee's duties, responsibilities or title (other than a change in title that is the result of a broad restructuring of the Company's titling of officers), in each case other than any isolated, insubstantial and inadvertent failure by the Company that is not in bad faith and is cured within ten (10) business days after the Optionee gives the Company notice of such event; provided that "Good Reason" shall cease to exist for an event on the 60th day following the later of its occurrence or the Optionee's knowledge thereof, unless the Optionee has given the Company written notice thereof prior to such date.

Section 1.9. Liquidity Event

"Liquidity Event" shall mean, in one or a series of transactions, a merger, recapitalization or other sale by the Sponsor or its Affiliates (including through a Public Offering) of Common Stock or other voting securities of the Company that results in the Sponsor no longer owning 90% of the number of shares of Common Stock or other voting securities of the Company (or any resulting company after a merger) owned, directly or indirectly, by the Sponsor, determined by measuring such number of shares as of that point in time that the Sponsor held its largest number of shares of Common Stock or other voting securities of the Company (or such resulting company after a merger).  

Section 1.10.Management Stockholder's Agreement

"Management Stockholder's Agreement" shall mean that certain Management Stockholder's Agreement between the Optionee and the Company.

Section 1.11.Measurement Date

"Measurement Date" shall mean any date upon which a Change in Control or a Liquidity Event occurs. 

Section 1.12.Merger Agreement

"Merger Agreement" shall mean the Agreement and Plan of Merger by and among New Omaha Holdings L.P., Omaha Acquisition Corporation and First Data Corporation, dated April 1, 2007, as the same may be amended from time to time.

Section 1.13.Option

"Option" shall mean the aggregate of the Time Option and the Performance Option granted under Section 2.1 of this Agreement.

Section 1.14.Performance Option

"Performance Option" shall mean the right and option to purchase, on the terms and conditions set forth herein, all or any part of an aggregate of the number of shares of Common Stock set forth on the signature page hereof opposite the term Performance Option, having a per share exercise price equal to the Base Price.  

Section 1.15.Secretary

"Secretary" shall mean the Secretary of the Company.

Section 1.16.Sponsor      

"Sponsor" shall mean the investment funds affiliated with Kohlberg Kravis Roberts & Co. L.P.  

Section 1.17.Sponsor IRR

 "Sponsor IRR" shall mean, on any given date, a pretax compounded annual internal rate of return, based on the passage of time from the Closing Date, of at least 25% realized, directly or indirectly, by the Sponsor after the Closing Date on any Shares held by the Sponsor, on a per Share, fully diluted basis, based on the amount invested by the Sponsor in the equity securities of the Company.  For the avoidance of doubt, (a) any calculation of Sponsor IRR will for purposes of Section 3.1(d) be calculated solely with respect to Sponsor Shares actually sold or otherwise disposed of in the applicable transaction (but including cash dividends or other cash distributions paid on Sponsor Shares), and (b) Sponsor IRR will not be calculated taking into account the receipt by the Sponsor or any of its affiliates of any management, monitoring, transaction or other fees payable to such parties by the Company or any of its Subsidiaries; provided that any management fees received by such parties in excess of those contemplated in the management agreement between the Sponsor and the Company (including any stipulated or specified increases increase mechanisms) shall be included in Sponsor Return.

Section 1.18.Sponsor Return

"Sponsor Return" shall mean, on any given date, all cash proceeds actually received, directly or indirectly, by the Sponsor after the Closing Date, including the receipt of any cash dividends or other cash distributions thereon, on a per Share, fully diluted basis, in an amount that equals or exceeds the product of 2.5 and the Base Price.  For the avoidance of doubt, (a) any calculation of Sponsor Return will for purposes of Section 3.1(d) be calculated solely with respect to Sponsor Shares actually sold or otherwise disposed of in the applicable transaction, and (b) Sponsor Return will not be calculated taking into account the receipt by the Sponsor or any of its affiliates of any management, monitoring, transaction or other fees payable to such parties by the Company or any of its Subsidiaries; provided that any management fees received by such parties in excess of those contemplated in the management agreement between the Sponsor and the Company (including any stipulated or specified increases increase mechanisms) shall be included in Sponsor Return.

 

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 the following Stock Options:  (a) the Time Option and (b) the Performance Option, in each case on 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 Option (the "Exercise Price") shall be equal to the Base Price.

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, subject to the applicable provisions of, if any, the Optionee's employment agreement with the Company or offer letter provided by the Company to the Optionee.

Section 2.4. - Adjustments to Option

The Options shall be subject to the adjustment provisions of Sections 8 and 9 of the Plan, provided, however, that in the event of the payment of an extraordinary dividend by the Company to its stockholders, then: the Exercise Prices of the Options shall be reduced by the amount of the dividend paid, but only to the extent the Committee determines it to be permitted under applicable tax laws and not have adverse tax consequences to the Optionee under Section 409A of the Code; and, if such reduction cannot be fully effected due to such tax laws and it will not have adverse tax consequences to the Optionee, then the Company shall pay to the Optionee a cash payment, on a per Share basis, equal to the balance of the amount of the dividend not permitted to be applied to reduce the Exercise Price of the applicable Option as follows: (a) for each Share subject to a vested Option, immediately upon the date of such dividend payment; and (b), for each Share subject to an unvested Option, on the date on which such Option becomes vested and exercisable with respect to such Share.

ARTICLE III

PERIOD OF EXERCISABILITY

Section 3.1. - Commencement of Exercisability

(a)So long as the Optionee continues to be employed by the Company or any other Service Recipients, the Options shall become exercisable pursuant to the following schedules:

(i)Time Options.  Each of the Time Options shall become vested and exercisable with respect to 20% of the Shares subject to each such Option on each of the first five anniversaries of January 1, 2010.

(ii)Performance Option.   A portion of the Performance Options shall become eligible to vest and become exercisable in accordance with the vesting schedule and EBITDA Targets (each an "EBITDA Target") set forth in Schedule A attached hereto;

(b)Notwithstanding any of Section 3.1(a) above, upon the earlier occurrence of a Measurement Date:

(i)the Time Options shall become immediately exercisable as to 100% of the shares of Common Stock subject to such Option immediately prior to a Measurement Date (but only to the extent such Option has not otherwise terminated or become exercisable); and

(ii)the Performance Option shall (1) become immediately exercisable as to 100% of the shares of Common Stock subject to such Option immediately prior to a Measurement Date (but only to the extent such Option has not otherwise terminated or become exercisable) if as a result of the event constituting the Measurement Date, (x) the Sponsor IRR is achieved on 100% of the Sponsors' aggregate investment, directly or indirectly, in the equity securities of the Company (the "Sponsor Shares") or (y) the Sponsor Return is earned on 100% of the Sponsor Shares and (2) become vested as to the percentage of the Shares of Common Stock subject to such Option immediately prior to a Measurement Date (but only to the extent such Option has not otherwise terminated or become exercisable) that will result in, as a result of the Measurement Date, (x) the achievement of the Sponsor IRR on 100% of the Sponsors' aggregate investment, directly or indirectly, in the equity securities of the Company (the "Sponsor Shares") or (y) the achievement of the Sponsor Return on 100% of the Sponsor Shares, in each case taking into account the vesting of such Shares of Common Stock subject to Option that so vest.

(iii)In the event that the Sponsors receive marketable securities in an event constituting a Measurement Date (including, in the case of a Liquidity Event following a Public Offering, shares of Common Stock), (1) Sponsor IRR and Sponsor Return shall be initially calculated at the time of the Measurement Date without regard to the value of the marketable securities so received and such resulting Sponsor Return and Sponsor IRR shall be used to determine vesting of Shares of Common Stock subject to Performance Options in accordance with Section 3.1(b)(ii) above; and (2) if the Sponsor Return and/or Sponsor IRR as calculated in (1) above do not result in 100% vesting of the outstanding exercisable Shares of Common Stock subject to such Option immediately prior to the Measurement Date, Sponsor Return and Sponsor IRR shall be recalculated upon each direct or indirect disposition of such marketable securities by the Sponsor for cash, discounting the cash received to determine its present value at the time of the Measurement Date.  If such recalculated Sponsor IRR and/or Sponsor Return would have resulted in 100% vesting of all Shares of Common Stock subject to Performance Options at the time of the Measurement Date, then all such Options shall immediately vest; provided, however, that any Optionee whose Performance Options have been forfeited or cancelled between the occurrence of the Measurement Date and the subsequent vesting of such Performance Options, in accordance with this Section 3.1(b)(iii), shall be entitled to the difference between the price per Share paid in the Measurement Date and the strike price of the Performance Options that were so cancelled or forfeited.  

(c)Notwithstanding the foregoing, no Option shall become exercisable as to any additional shares of Common Stock following the termination of employment of the Optionee for any reason and any Option, which is unexercisable as of the Optionee's termination of employment, shall immediately expire without payment therefor; provided that following a termination of employment of the Optionee by reason of the Optionee's death or Disability, or as result of a termination by the Company without Cause or a resignation by the Optionee with Good Reason, (i) the unvested Time Options that would have vested on the next anniversary of the Closing Date shall vest pro rata as determined by multiplying the number of Shares of Common Stock subject to Option that would have so vested by a fraction, the numerator of which corresponds to the number of completed months of employment since the anniversary of the Closing Date immediately preceding the date of the Optionee's termination of employment and the denominator of which is 12 (the "Time Pro Rata Fraction") and (ii) the unvested Performance Options shall immediately expire without payment therefor.  For the avoidance of doubt, the numerator of the Time Pro Rata Fraction shall in all cases be a whole number.  

Section 3.2. - Expiration of Option

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, as indicated on the Master Signature Page; 

(b)The first anniversary of the date of the Optionee's termination of employment with the Company and all Service Recipients, if the Optionee's employment is terminated by reason of death or Disability (unless earlier terminated as provided in Section 3.2(h) below); 

(c)Immediately upon the date of the Optionee's termination of employment by the Company and all Service Recipients for Cause; 

(d)Immediately upon the date of the Optionee's termination of employment by the Company and all Service Recipients by the Optionee without Good Reason (except due to death or Disability); 

(e)One hundred and eighty (180) days after the date of an Optionee's termination of employment by the Company and all Service Recipients without Cause (for any reason other than as set forth in Section 3.2(b));

(f)One hundred and eighty (180) days after the date of an Optionee's termination of employment with the Company and all Service Recipients by the Optionee for Good Reason; 

(g)The date the Options are terminated pursuant to Section 5 or 6 of the Management Stockholder's Agreement; or

(h)At the discretion of the Company, if the Committee so determines pursuant to Section 9 of the Plan.

Notwithstanding the foregoing, the time periods set forth in this Section 3.2 shall not begin to run with respect to Performance Options that vest in accordance with Section 3.1(a)(ii) until the time at which the Board certifies the financial statements for the Company for the Fiscal Year immediately preceding the Fiscal Year in which, or for the Fiscal Year in which, termination of employment occurs.  

ARTICLE IV

EXERCISE OF OPTION

Section 4.1. - Person Eligible to Exercise

During the lifetime of the Optionee, only the Optionee (or his or her duly authorized legal representative) 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:

(a)Notice in writing signed by the Optionee or the other person then entitled to exercise an 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)(i) Full payment (in cash or by check or by a combination thereof) for the shares with respect to which such Option or portion thereof is exercised or (ii) indication that the Optionee elects to have the number of Shares that would otherwise be issued to the Optionee reduced by a number of Shares having an equivalent Fair Market Value to the payment that would otherwise be made by Optionee to the Company pursuant to clause (i) of this subsection (b);

(c)Full payment (in cash or by check or by a combination thereof) to satisfy the minimum withholding tax obligation with respect to which such Option or portion thereof is exercised, unless the Committee permits the Optionee to elect to have the number of Shares that would otherwise be issued to the Optionee reduced by a number of Shares having an equivalent Fair Market Value to the payment that would otherwise be made by Optionee to the Company in respect of such tax obligation, such permission not to be unreasonably withheld by the Committee;

(d)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 Common 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; 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 (d) above and the agreements herein. The written representation and agreement referred to in subsection (d) 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 (if certified, or if not certified, register the issuance of such shares on its books and records) upon the exercise of an Option or portion thereof prior to fulfillment of all of the following conditions:

(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; 

(b)The execution by the Optionee of the Management Stockholder's Agreement and a Sale Participation Agreement; and 

(c)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 or as may otherwise be required by applicable law.

Section 4.5.- Rights as Stockholder

Except as otherwise provided in Section 2.4 of this Agreement, 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 Options or any portion thereof unless and until certificates representing such shares shall have been issued by the Company to such holder or the Shares have otherwise been recorded in the records of the Company as owned by such holder.

ARTICLE V

MISCELLANEOUS

Section 5.1. - Option Not Transferable

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 5.1 shall not prevent transfers by will or by the applicable laws of descent and distribution.

Section 5.2. - 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 5.2, 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 5.2.  Any notice shall have been deemed duly given when (i) delivered in person, (ii) 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, or (iii) enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with fees prepaid) in an office regularly maintained by FedEx, UPS, or comparable non-public mail carrier.

Section 5.3. - Titles; Pronouns

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.  The masculine pronoun shall include the feminine and neuter, and the singular shall include the plural, where the context so indicates.

Section 5.4. - Applicability of Plan, Management Stockholder's Agreement and Sale Participation 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, the Management Stockholder's Agreement and a Sale Participation Agreement, to the extent applicable to the Options and such Shares.  

Section 5.5. - Amendment

Subject to Section 10 of the Plan, this Agreement may be amended only by a writing executed by the parties hereto, which specifically states that it is amending this Agreement.

Section 5.6. - 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 5.7. - Arbitration

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 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.  Such arbitration process shall take place within the New York, New York metropolitan area.  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.  Each party shall bear its own legal fees and expenses, unless otherwise determined by the arbitrator.  

 

[Signatures on next page.]

 

 

 

 

 

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

By: ________________________

Title: ________________________

Option Grants:

Aggregate number of shares of Common Stock 

for which the Time Option granted hereunder is 

exercisable:

Aggregate number of shares of Common Stock

for which the Performance Option 

granted hereunder is exercisable: 

 

Grant Date:_________, 200__

 

 
OPTIONEE:

________________________

Name: 

________________________

Address

________________________

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page of Stock Option Agreement]

 

 

 

 

 

 

 

 

 

 

 

 

Schedule A

Performance Targets

The below vesting schedule is based on the Company's achievement of the corresponding EBITDA Target in any Fiscal Year commencing January 1, 2010 and ending on or before December 31, 2013.

	
EBITDA Target
	
Vesting

	
$2.8B
	
25%

	
$3.1B
	
75%

	
$3.4B
	
100%

"EBITDA" shall mean earnings before interest, taxes, depreciation and amortization (excluding any transaction, management and/or similar fees paid to the Sponsor and/or its Affiliates, and earnings from the IPS business), as previously provided by the Sponsor to the officers of the Company. The Board shall, fairly and appropriately, adjust the calculation of EBITDA to reflect, to the extent not contemplated in the Sponsor projections, the following: acquisitions, divestitures, non-recurring costs required to achieve cost saving initiatives, non-cash compensation expense and any change required by GAAP relating to share-based compensation or for other changes in GAAP promulgated by accounting standard setters that, in each case, the Board in good faith determines require adjustment of EBITDA. The Board's determination of such adjustment shall be based on the Company's accounting as set forth in its books and records and on the financial plan of the Company pursuant to which the Annual Performance Targets were originally established.

If the Company makes an acquisition in any year, the EBITDA Target will be adjusted, fairly and appropriately, by the amount of EBITDA in the plan for the target presented to the Board at the time the acquisition is approved by the Board. The EBITDA Target will also be fairly and appropriately adjusted by the Board, in consultation with management, to the extent not contemplated in the plan for the following: any divestitures, major capital investment programs, any change required by GAAP relating to share-based compensation or other changes in GAAP promulgated by accounting standard setters. In the event that any of the foregoing action is taken, such adjustment shall be only the amount deemed reasonably necessary by the Board, in the exercise of its good faith judgment, after consultation of the Company's accountants, to accurately reflect the direct and measurable effect such event has on such EBITDA Target. The intent of such adjustments is to keep the probability of achieving the EBITDA Target the same as if the event triggering such adjustment had not occurred. The Board's determination of such necessary adjustment shall be made within 60 days following the completion or closing of such event, and shall be based on the Company's accounting as set forth in its books and records and on the Company's financial plan pursuant to which the EBITDA Target was originally established.

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