EXHIBIT 10.7
ROLLOVER AGREEMENT
ROLLOVER AGREEMENT dated as of November 13, 2000 (the "Agreement") between
New SAC, a limited company incorporated in the Cayman Islands (the "Company"),
Seagate Technologies SAN Holdings, and the individual listed on Schedule I
hereto (the "Senior Manager").
WHEREAS, Seagate Technology, Inc. ("Seagate"), Seagate Software Holdings,
Inc. and Suez Acquisition Company (Cayman) Limited ("SAC") have entered into the
Stock Purchase Agreement dated as of March 29, 2000 (as amended, the "Stock
Purchase Agreement");
WHEREAS, prior to the consummation of the transactions pursuant to the
Stock Purchase Agreement, SAC has assigned or will assign all of its rights and
obligations under the Stock Purchase Agreement to the Company; and
WHEREAS, pursuant to the Stock Purchase Agreement, as of the Closing which
occurs on the Closing Date (each as defined in the Stock Purchase Agreement),
the Company will, subject to certain exclusions, acquire all of the shares of
various subsidiaries of Seagate and, indirectly, substantially all of the
operating assets of Seagate; and
WHEREAS, the Senior Manager and other members of Seagate management
(together with the Senior Manager, the "Seagate Management") currently hold
unvested options to acquire shares of Seagate common stock ("Seagate Options")
and/or unvested restricted shares of Seagate common stock ("Seagate Restricted
Shares") and have agreed that, as of the Closing Date, Seagate Options and
Seagate Restricted Shares with a Rollover Value (as defined below) of between
$150,000,000 and $250,000,000 (the "Commitment Amount") shall be converted into
(i) deferred compensation and (ii) restricted preferred shares, par value $.0001
per share, of the Company (the "Restricted Preferred Shares"), in an aggregate
amount equal to the Commitment Amount; and
WHEREAS, in respect of the Restricted Preferred Shares received by the
Senior Manager, the Senior Manager shall receive restricted ordinary shares, par
value $.0001, of the Company (the "Restricted Ordinary Shares"); and
WHEREAS, the Senior Manager also agrees to subscribe for vested restricted
preferred shares, par value $.0001 per share, of the Company (the "Restricted
Vested Preferred Shares") and vested restricted ordinary shares , par value
$.0001 per share, of the Company (the "Restricted Vested Ordinary Shares") as
set forth herein;
NOW THEREFORE, in consideration of the foregoing, and the covenants and
promises and representations set forth herein, and for other good and valuable
consideration the receipt and sufficiency of which is hereby acknowledged and
accepted, the parties hereto agree as follows:
1. The Senior Manager agrees to the conversion, at the time of Closing,
of unvested Seagate Options and/or unvested Seagate Restricted Shares held by
such Senior Manager with an aggregate Rollover Value (as defined below) equal to
at least the Applicable Percentage (as defined below) of the total Rollover
Value represented by all unvested Seagate
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Options and Seagate Restricted Shares held by such Senior Manager as of the
Closing, into (i) pursuant to the terms of the Suez Acquisition Company
Restricted Share Plan (substantially in the form attached hereto as Exhibit A)
(the "Restricted Share Plan"), the Restricted Share Agreement (substantially in
the form attached hereto as Exhibit B) (the "Restricted Share Agreement"), the
Management Shareholders Agreement (substantially in the form attached hereto as
Exhibit C (the "Management Shareholders Agreement," which reference shall
include the applicable provisions of the Shareholders Agreement (substantially
in the form attached hereto as Exhibit D (the "Investor Shareholders
Agreement")), Restricted Preferred Shares having an aggregate liquidation
preference equal to fifty percent of the Subscribed Value (as defined below) and
(ii) a deferred compensation account pursuant to a deferred compensation plan
(substantially in the form attached hereto as Exhibit E), which shall be subject
to all the terms (including the subordination terms) of such plan, equal to the
excess of the Converted Value over the aggregate liquidation perference of the
Restricted Preferred Shares (the "Deferred Value").
2. In addition, with respect to the Restricted Preferred Shares received
pursuant to the preceding sentence, the Senior Manager shall receive, pursuant
to the terms of the Restricted Share Plan, the Restricted Share Agreement and
the Management Shareholders Agreement, a number of Restricted Ordinary Shares
sufficient to provide the Senior Manager, as of the Closing, with a percentage
ownership of the total outstanding Ordinary Shares of the Company as of the
Closing equal to the Converted Value divided by the sum of (i) the Commitment
Amount and (ii) the balance of the total equity investment in the Company as of
the Closing Date (including all amounts contributed by the Seagate Management
for Restricted Vested Preferred Shares (as defined below)). For purposes of this
Agreement, "Rollover Value" shall mean (i) with respect to Seagate Options, the
excess of (x) the fair market value per share of Seagate common stock (using the
average of Seagate's closing selling prices for the five consecutive trading
days ending two trading days immediately preceding the Closing (the "FMV") times
the number of Seagate shares subject to the Seagate Option, over (y) the
aggregate exercise price of the Seagate Option and (ii) with respect to Seagate
Restricted Shares, the FMV times the number of Seagate Restricted Shares. For
purposes of this Agreement, "Converted Value" shall equal the Rollover Value of
the unvested Seagate Options and/or unvested Seagate Restricted Shares actually
converted. For purposes of this Agreement, "Applicable Percentage" shall mean,
with respect to a Senior Manager who is a Senior Vice President or higher, 50%,
and with respect to any other Senior Manager, 25%.
3. The Senior Manager agrees to convert additional Seagate Options and/or
Seagate Restricted Shares such that the total Converted Value shall equal the
maximum percentage, as set forth on Schedule I hereto, of the total Rollover
Value represented by all unvested Seagate Options and Seagate Restricted Shares
held by such Senior Manager as of the Closing (such total value, the "Committed
Value"). In the event that the total Committed Value of the Seagate Management
exceeds $213,750,000 (or such lesser amount, but not below $180,500,000, as
determined by Silver Lake Partners, L.P.) such total Committed Value shall be
allocated pro rata among the Seagate Management, based, first, on the respective
Committed Values of the Seagate Management in excess of the minimum percentage
specified in paragraph 1 hereof and then based on the minimum percentage of each
member of Seagate management (including the Senior Manager).
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4. In consideration for the establishment of the deferred compensation
account and the Restricted Preferred Shares, the Senior Manager agrees to the
cancellation and/or the forfeiture of a number of Seagate Options and/or Seagate
Restricted Shares equal to the Converted Value. The Seagate Options and/or
Seagate Restricted Shares shall be cancelled and/or forfeited in accordance with
their respective parachute payment values as determined under Section 280G of
the Internal Revenue Code of 1986, as amended, and the proposed Treasury
Regulations thereunder, with the Seagate Options and/or Seagate Restricted
Shares with the highest such parachute payment value to be the first cancelled
and/or forfeited.
5. The Senior Manager agrees to subscribe for a number of Restricted Vested
Preferred Shares having an aggregate liquidation preference equal to 5.264% of
the Converted Value (the "Subscribed Value"), for which the Senior Manager will
make a cash payment at Closing in the per share amount equal to the same as is
paid by the Investors (as defined in the Management Shareholders Agreement) for
the Preferred Shares of the Company purchased by the Investors. The Senior
Manager will receive at Closing, in respect of each Restricted Vested Preferred
Share paid for by the Senior Manager, one Restricted Vested Ordinary Share
subject to the terms of the Management Shareholders Agreement. In addition to
the cash payment required to pay for the Restricted Vested Preferred Shares set
forth above, the Senior Manager agrees to pay cash at Closing for the Restricted
Vested Ordinary Shares equal to $.0001 times the total number of such Restricted
Vested Ordinary Shares.
6. With respect to Senior Managers who are party to the Management
Participation Agreement dated as of March 29, 2000 (the "Management
Participation Agreement") among Seagate Technology, Inc. ("Seller"), SAC and
certain management employees of Seller listed on the signature page thereof. The
parties hereto hereby agree and acknowledge that:
(a) All references to "Purchaser" and the "Company" in the operative
provisions of the Management Participation Agreement shall be deemed to
constitute references to Seagate Technologies SAN Holdings;
(b) The references in Section 2(c) of the Management Participation
Agreement to Rollover Options and Purchaser Restricted Shares shall be deemed to
constitute references to Restricted Preferred Shares and Restricted Ordinary
Shares; and
(c) The transactions contemplated by this Agreement shall be in
satisfaction of the parties' obligation under Section 3 of the Management
Participation Agreement regarding Rollover Equity.
7. In the case of Senior Managers who are Vice Presidents, the Company
reserves the right to advance the cash subscription price payable pursuant to
this Agreement on behalf of such Vice Presidents in the event the wire transfer
of such funds by such Vice Presidents is not completed on a timely basis. Any
funds so advances by the Company will be required to be repaid within 10 days of
the advance, with interest at 7% per annum.
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8. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
9. This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement, it being understood that all parties need
not sign the same counterpart.
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SCHEDULE I
Name of Senior Manager:
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Address of Senior Manager:
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Maximum percentage of total Rollover Value with respect to the Senior
Manager which the Senior Manager agrees to convert: ____________%
By executing this Schedule, the undersigned Senior Manager accepts and
agrees to be bound by and subject to the terms and conditions of, and makes the
representations, warranties and agreements set forth in (i) this Agreement, (ii)
the Management Shareholders Agreement, (iii) the Restricted Share Agreement
between the Company and the undersigned Senior Manager. By signing and returning
this Schedule, the undersigned Senior Manager also accepts and agrees to be
bound by and subject to the terms and conditions set out in the relevant
sections of the Investor Shareholders Agreement. The parties to each such
agreement shall treat the execution and delivery hereof by the undersigned
Senior Manager as the execution and delivery of such agreement by the
undersigned Senior Manager, and, upon receipt and acceptance of this Schedule by
such parties, the signature of the undersigned Senior Manager set forth below
shall constitute a counterpart to the signature page of each such agreement.
NEW SAC
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Senior Manager
By:
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Name:
Title:
SEAGATE TECHNOLOGIES SAN HOLDINGS
By:
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Name:
Title:
Dated: November 13, 2000
