SUBSTITUTE OPTION AGREEMENT UNDER THE DERBY TOPCO, INC. 2019 STOCK INCENTIVE PLAN
Exhibit 10.15
Execution Version
SUBSTITUTE
OPTION AGREEMENT
UNDER THE
DERBY TOPCO, INC.
2019 STOCK INCENTIVE PLAN
Pursuant to the terms and conditions of this Option Agreement (this “Option Agreement”) and the Derby TopCo, Inc. 2019 Stock Incentive Plan (the “Plan”), the Company hereby grants to the [NAME] (the “Participant”) the aggregate number of Options set forth in the table below (the “Substitute Options”). The Substitute Options granted hereunder are being granted (i) in connection with that certain Agreement and Plan of Merger by and among Derby Parent, Inc., Derby Merger Sub Inc. and BNVC Group Holdings, Inc., dated as of July 29, 2019 (the “Merger Agreement”), (ii) in substitution of the Vested Options (the “Company Options”) identified herein that would otherwise be cancelled and cashed out in accordance with Section 3.2.1 of the Merger Agreement; and (iii) in accordance with Section 2.1.1 of the Merger Agreement; the Participant acknowledges and agrees that the Substitute Options being granted hereunder are being granted in lieu of, and in full satisfaction of, (i) the cash consideration otherwise payable in respect of such Company Options under Section 3.2.1 of the Merger Agreement, and (ii) the Per Share Portion of the Additional Merger Consideration (each, as defined in the Merger Agreement), if any. Capitalized terms not otherwise defined herein shall have the same meaning as set forth in the Plan.
(a) | (b) | (c) | (d) = (b) * ($[39.16 + $0.41]1– (c)) | (e) | (f) =
(d)/ ($10.00-(g)) |
(g) = (25% * $10.00) | |
Tranche | Date
of Grant of Company Option |
Number
of Shares Subject to Company Option |
Exercise
Price Per Share of Company Option |
Aggregate Spread Value at Closing of Company Option |
Expiration Date of Company Option and Substitute Option |
Number
of Substitute Options |
Exercise
Price of Substitute Options |
1 | $2.50 | ||||||
2 | $2.50 |
1 Equal to the Closing Per Share Consideration plus Per Share Portion of Additional Merger Consideration (assuming full release of Escrow Amount and Representative Fund and maximum payout of the Overage Amount, which would be capped at the Escrow Amount)
2
The exchange of a Substitute Option for a Company Option is intended to qualify as an option substitution under Treasury Regulation Section 1.409A-1(b)(5)(v)(D) and will be construed accordingly. Each Substitute Option will expire not later than the latest date on which the corresponding Company Option would have expired.
2. Vesting. Substitute Options granted hereunder shall vest as follows:
(a) 98.95% of each tranche of Substitute Options granted hereunder shall be fully vested as of the Date of Grant.
(b) 0.50% of each tranche of Substitute Options granted hereunder are designated the “Escrow Fund Options” and shall be unvested as of the Date of Grant. Upon the date of determination of the Final Merger Consideration (as defined in the Merger Agreement), a percentage of the Escrow Fund Options equal to (i) the Remaining Escrow Funds (as defined in the Merger Agreement) divided by (ii) the Escrow Amount (as defined in the Merger Agreement) shall vest and become exercisable; provided, that any portion of the Escrow Fund Options that do not vest in accordance with this Section 2(b) shall immediately terminate one day after the date of determination of the Final Merger Consideration (as defined in the Merger Agreement).
(c) 0.50% of each tranche of Substitute Options granted hereunder are designated the “Adjusted Consideration Options” and shall be unvested as of the Date of Grant. Upon the date of determination of the Final Merger Consideration (as defined in the Merger Agreement), a percentage of the Adjusted Consideration Options equal to (i) the Positive Adjustment Amount (as defined in the Merger Agreement) divided by (ii) $10,000,000 shall vest and become exercisable; provided, that any portion of the Adjustment Consideration Options that do not vest in accordance with this Section 2(c) shall immediately terminate one day after the date of determination of the Final Merger Consideration (as defined in the Merger Agreement).
(d) 0.05% of each tranche of Substitute Options granted hereunder are designated the “Representative Fund Options” and shall be unvested as of the Date of Grant. Upon the date of the release of the Representative Fund Amount (as defined in the Merger Agreement) (or, if applicable, the date that the Equityholder Representative (as defined in the Merger Agreement) provides notice to BNVC Group Holdings, Inc. that no amount will be released to Equityholders (as defined in the Merger Agreement) from the Representative Fund (as defined in the Merger Agreement)), a percentage of the Representative Fund Options equal to (i) the aggregate amount released from the Representative Fund to the Equityholders (each as defined in the Merger Agreement) divided by (ii) the Representative Fund Amount (as defined in the Merger Agreement) shall vest and become exercisable; provided, that any portion of the Representative Fund Options that do not vest in accordance with this Section 2(d) shall immediately terminate one day after the release of the Representative Fund Amount (as defined in the Merger Agreement) (or, if applicable, the date such notice is received by BNVC Group Holdings, Inc.).
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(i) “Partnership Agreement” means the Amended and Restated Limited Partnership Agreement of Parent, dated October 22, 2019, as may be amended from time to time.
(ii) “Qualified Termination” means the Participant’s Termination for any reason other than for Cause.
(iii) [“Restrictive Covenant Agreement” means the agreement between the Participant and a member of the Company Group pursuant to which the Participant is subject to covenants of non-competition and non-solicitation, confidentiality, ownership of intellectual property and non-disparagement, attached as Exhibit A hereto.]2
(iv) [“Restrictive Covenant Breach” shall mean a breach by the Participant of any non-competition, non-interference, non-solicitation or no-hire covenant to which the Participant is bound under the Restrictive Covenant Agreement during the applicable restriction period set forth therein, or a material breach of any customary confidentiality, ownership of intellectual property or non-disparagement covenant to which the Participant is bound under the Restrictive Covenant Agreement.]3
(v) “Sponsor Group” means, collectively, (A) investment vehicles affiliated with EQT and their affiliates, (B) investment vehicles affiliated with Canada Pension Plan Investment Board and their affiliates and (C) investment vehicles associated with Xxxx Capital Private Equity and their affiliates.
(a) In the event of the Participant’s Termination for any reason, subject to Section 9, Substitute Options shall remain exercisable as provided in this Section 3.
(b) The Participant may not exercise any Substitute Options to any extent after the first to occur of the following events, and, upon the first to occur of the following events, such Substitute Options shall immediately terminate and expire (without payment of any consideration therefor) on, subject in each case to any extended exercise period provided for in Section 6(c)(ii) of the Plan following an Initial Public Offering:
(i) the Expiration Date of the Company Option for which the Substitute Option was granted in substitution of as set forth in Section 1 hereof (the “Final Exercise Date”);
(ii) in the event of the Participant’s Termination due to death or Disability, the first (1st) anniversary of the date of such Termination; or
2 Note to Draft: To be deleted in CEO agreement.
3 Note to Draft: To be deleted in CEO agreement.
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(iii) in the event of the Participant’s Termination by the Service Recipient without Cause or Participant’s voluntary resignation or retirement, ninety (90) days after the date of such Termination.
(a) Substitute Options may be exercised by the delivery of a notice of the number of Substitute Options that are being exercised and satisfaction of the Exercise Price in full pursuant to any permitted payment methodology applicable to the Substitute Options so exercised. Such notice shall be delivered either: (x) in writing to the Company at its principal office or at such other address as may be established by the Committee, to the attention of the Company Secretary; or (y) to a third-party plan administrator as may be arranged for by the Company or the Committee from time to time for purposes of the administration of outstanding Substitute Options under the Plan, in the case of either (x) or (y), as communicated to the Participant by the Company from time to time.
(b) The Exercise Price shall be payable, at the election of the Participant: (i) in cash or check; (ii) following a Qualified Termination, by delivery of a notice of “net exercise” to the Company, pursuant to which the Participant shall receive the number of shares of Common Stock underlying the Substitute Options so exercised reduced by a number of shares of Common Stock equal to the aggregate Exercise Price of the Substitute Options divided by the Fair Market Value on the date of exercise; (iii) by such other method as the Committee may permit in its sole discretion under Section 6(d) of the Plan; or (iv) any combination of cash and such other available method of exercise. In addition, following an Initial Public Offering, the Participant shall be permitted to “sell to cover” in order to satisfy the Exercise Price liability.
(c) Except as expressly provided for herein or in the Plan or the Stockholders’ Agreement, during the lifetime of the Participant, only the Participant (or such Participant’s Permitted Transferee or duly authorized legal representative) may exercise the Substitute Option or any portion thereof. After the death of the Participant, any exercisable portion of the Substitute Option may, prior to the time when the Substitute Option expires under Section 3 hereof, be exercised by the Participant’s Permitted Transferee, personal representative or by any Person empowered to do so under the Participant’s will or the laws of descent and distribution.
(a) The Participant acknowledges and agrees that as a condition of receipt of the grant of the Substitute Options, the Participant shall continue to be bound by the Restrictive Covenant Agreement, the provisions of which are hereby incorporated by reference.
(b) The Participant acknowledges that the Participant has read and understands the covenants described in the Restrictive Covenant Agreement, including, specifically, the scope and duration thereof, and acknowledges and agrees that the Substitute Options being granted under this Option Agreement are in consideration of the Participant’s continued compliance with the terms of such covenants.
5
4 Note to Draft: To be deleted in CEO agreement.
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10. [Right to Repurchase Converted Units.
(b) In the event the Call Right is exercised, the purchase price for the Converted Units subject to the exercised Call Right shall be the Fair Market Value (as defined in the Partnership Agreement) per unit on the closing date of the repurchase.
(c) In the event the Call Right is exercised, the aggregate purchase price for such Converted Units subject to the exercised Call Right will be payable by Parent (or, if applicable, a member of the Sponsor Group or one of their affiliates) in cash payable within thirty (30) days of the exercise of such repurchase right (the “Repurchase Date”); provided, that if Parent and the other members of the Sponsor Group are prohibited from paying in cash under any applicable financing arrangement, the purchase price may be paid by promissory note with a maturity not to exceed five years from the date of issuance of such promissory note. Any amounts not paid in full within thirty (30) days of the Repurchase Date will bear interest at the prime lending rate in effect as of the Repurchase Date and will be repaid in installments or, if earlier, as and when Parent is no longer prohibited under the applicable financing arrangement from paying the balance in cash or upon a Change of Control. Notwithstanding any other provision in this Agreement, Parent may elect to pay the purchase price hereunder in shares or other equity securities of one of its respective direct or indirect subsidiaries with a fair market value equal to the applicable purchase price; provided, that such subsidiary promptly repurchases such shares or other equity securities for cash equal to the applicable purchase price or a promissory note with a principal amount equal to the applicable purchase price with the same terms as described above.]5 Any repurchase by a Person other than a member of the Sponsor Group shall be paid in cash.
5 Note to Draft: Section 10 to be deleted in CEO agreement.
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16. Governing Law. This Option Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof; provided that the validity, construction and effect of the Restrictive Covenants Agreement appended hereto as Exhibit A shall be governed and construed in accordance with the laws of the jurisdiction specified therein, without regard to otherwise governing principles of conflicts of law.
* * *
THE UNDERSIGNED PARTICIPANT ACKNOWLEDGES RECEIPT OF THIS OPTION AGREEMENT, THE PLAN, THE STOCKHOLDERS’ AGREEMENT, AND THE PARTNERSHIP AGREEMENT, AND, AS AN EXPRESS CONDITION TO THE GRANT OF SUBSTITUTE OPTIONS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS OPTION AGREEMENT, THE PLAN, AND THE STOCKHOLDERS AGREEMENT, AND SOLELY WITH RESPECT TO THE CONVERTED UNITS, THE PARTNERSHIP AGREEMENT.
PARTICIPANT | |
Name: | |
DERBY TOPCO, INC. | |
By: | |
Title: | |
Solely with respect to Section 6 and Section 10 of the Option Agreement: | |
DERBY TOPCO PARTNERSHIP LP | |
By: | |
Title: |
[Signature Page to Option Agreement]
EXHIBIT A
Restrictive Covenant Agreement