Net MSCP IRR. Means the effective annual rate of interest which, when applied to all cash flows (as determined below) with respect to the Total MSCP Investments, makes the net present value of all such cash flows equal to zero; provided that (i) the cash outflow on June 1, 1998 shall be deemed to be $20,219,908 and (ii) the next succeeding cash outflow shall be deemed to be the sum of (A) $11,500,000 plus (B) the actual cash outflow on such date. All of the Total MSCP Investments are deemed
... to be cash outflows. Sales by the MSCP Entities of equity received in respect of the Total MSCP Investments and cash dividends or other cash amounts, if any, paid by the Company to the MSCP Entities in respect of the Total MSCP Investments will be deemed to be interim cash inflows with respect to the Total MSCP Investments. The Total MSCP Investments made, and distributions or proceeds received thereon, by the MSCP Entities consisting of property other than cash shall be valued at the fair market value thereof as determined as of the date such Total MSCP Investments were made or such distributions or proceeds were received. The final cash flow with respect to the Total MSCP Investments will be based on the total net proceeds that will be actually received by the MSCP Entities on the date of the consummation of a Liquidity Event in respect of the Remaining MSCP Shares, or, if such Liquidity Event is an IPO, on the total net proceeds that would be received upon the assumed sale of the Remaining MSCP Shares on the date of such IPO based on the IPO price per share of Common Stock (after underwriting discounts and commissions). For purposes of this definition, any non-cash consideration actually received by the MSCP Entities on the date of the consummation of a Liquidity Event shall be valued at the fair market value thereof as of such date. Notwithstanding the foregoing, the Net MSCP IRR will be calculated taking into account the full impact of (i) the dilution that will result from (x) the actual issuance of shares of Common Stock upon the exercise of all Options granted pursuant to this Plan and (y) (without duplication) the forfeiture by the MSCP Entities of all shares of Common Stock required to be forfeited by them in connection with such Liquidity Event pursuant to Section 2.08 of the Shareholders Agreement, (ii) the assumed exercise of any then outstanding stock options of the Company (including, without limitation, any options outstanding under the 1998 Stock Option Plan of the Company and any options -5- outstanding under the Non-qualified Initial Option Plan of the Company) to the extent that the per share consideration received, or that would be received upon the deemed exercise of such option, in connection with such Liquidity Event exceeds the exercise price of any such outstanding options at the date of such Liquidity Event, and (iii) any other dilution to any of the MSCP Entities resulting from any arrangement or transaction contemplated by Section 8.02 of the Subscription Agreement or any other similar arrangement or transaction. The Net MSCP IRR will be calculated on pre-tax cash flow amounts, with the timing of cash flows assumed to be on a monthly basis and with all specific cash flows during a month deemed to have occurred on the first day of such month. For the avoidance of doubt, Net MSCP IRR shall not include any investment banking, advisory or financing fees paid (or to be paid) at any time to any Affiliate of the MSCP Funds by the Company or any of its Subsidiaries or Affiliates.
View More
