SAR Exchange Agreement
Exhibit
10.38
July
30,
2007
[Name]
Dear
[Name]:
As
you
may know, 180 Connect Inc. (the “180
Connect”)
has
entered into an Arrangement Agreement by and among Ad.Venture Partners, Inc.
(“Ad.Venture”),
6732097 Canada Inc., an indirectly wholly-owned subsidiary of Ad.Venture
(“Purchaser”),
and
180 Connect, pursuant to which Purchaser will acquire all of outstanding shares
of 180 Connect (the “Arrangement”).
In
connection with the Arrangement, Ad.Venture agreed to assume all of 180
Connect’s obligations under its outstanding share appreciation rights. The
Arrangement is expected to close on or about August ___, 2007 (the “Closing
Date”).
You
currently hold one or more outstanding share appreciation rights to acquire
common shares of 180 Connect (the “180
Connect SARs”)
purportedly granted to you under 180 Connect’s “Long Term Share Compensation
Plan” and an “Award Agreement.” Because 180 Connect never adopted such a plan or
award agreement, your 180 Connect SARs are evidenced only by a Notice of Grant
of Share Appreciation Rights, dated December 6, 2006 (the “Grant
Notice”).
Accordingly, in order to consummate the exchange of your 180 Connect SARs for
new Ad.Venture stock appreciation rights, you will also need to enter into
the
attached Stock Appreciation Rights Agreement (the “SAR
Agreement”)
with
Ad.Venture to document the missing terms, conditions, and definitions applicable
to your exchanged 180 Connect SARs. Any terms not defined herein will have
the
meaning as provided in the SAR Agreement.
Pursuant
to the Arrangement Agreement, Ad.Venture will exchange all unexercised 180
Connect SARs outstanding on the Closing Date for stock appreciation rights
to
acquire Ad.Venture common stock. This SAR Exchange Agreement (this “Exchange
Agreement”)
evidences the terms of Ad.Venture’s exchange of your 180 Connect SARs, including
the necessary adjustments for the exchange of 180 Connect SARs that are required
by the Arrangement.
The
table
below summarizes your stock appreciation rights immediately before and after
the
Arrangement:
|
180
CONNECT SARs
|
EXCHANGED
SARs
|
||||||||||||
|
Grant
Date
|
|
No.
of SARs
|
|
Strike
Price per Share
|
|
No.
of Ad.Venture SARs
|
|
Strike
Price per Share
|
|||||
|
12/6/2006
|
|
US$1.50
|
$
|
US2.40
|
|||||||||
The
post-Arrangement adjustments are based on the “Exchange
Ratio”
of
0.6
set forth in the Arrangement Agreement and are intended to: (i) assure that
the
total spread of your exchanged 180 Connect SARs (i.e.,
the
difference between the aggregate fair market value of the underlying securities
and the aggregate strike price immediately after the exchange) does not exceed
the total spread that existed in respect of your 180 Connect SARs immediately
prior to the exchange; and (ii) to preserve, on a per share basis, the ratio
of
strike price to fair market value that existed immediately prior to the
Arrangement. The number of shares of Ad.Venture common stock subject to your
exchanged 180 Connect SARs was determined by multiplying the Exchange Ratio
by
the number of shares remaining subject to your 180 Connect SARs on the Closing
Date and rounding the resulting product down to the nearest whole number of
shares of Ad.Venture common stock. The strike price per share of your exchanged
180 Connect SARs was determined by dividing the strike price per share of your
180 Connect SARs by the Exchange Ratio and rounding the resulting quotient
up to
the nearest whole cent.
Following
the exchange of your 180 Connect SARs, any references in the Grant Notice to:
(i) the “Award
Agreement”
means
the SAR Agreement, (ii) the “Corporation”
means
Ad.Venture, and (iii) “Plan”
means
the SAR Agreement. All references in the Grant Notice relating to your
employment status with 180 Connect will now refer to your employment status
with
Ad.Venture or any present or future Ad.Venture affiliate.
The
vesting schedule, exercise dates, and expiry date of your exchanged 180 Connect
SARs remain the same as set forth in the Grant Notice (with the number of shares
subject to each vesting and exercise installment and the strike price per share
adjusted to reflect the effect of the Exchange Ratio). Note that the occurrence
of the Arrangement will not result in a “Change of Control Transaction” as set
forth in the Grant Notice because 180 Connect shareholders will hold a majority
of the voting interests of Ad.Venture following the Arrangement.
All
other
provisions which govern either the exercise or the termination of your exchanged
180 Connect SARs will be governed by your Grant Notice and the attached SAR
Agreement which will govern and control your rights to purchase shares of
Ad.Venture common stock pursuant to your exchanged 180 Connect SARs. Upon
termination of your employment any of your exchanged 180 Connect SARs that
have
not vested will expire and not become exercisable for shares of Ad.Venture
common stock.
Nothing
in the Grant Notice, the attached SAR Agreement, or this Exchange Agreement
interferes in any way with your right and your employer’s right, which rights
are expressly reserved, to terminate your employment at any time for any reason.
Future equity awards, if any, you may receive from Ad.Venture will be governed
by the terms of the Ad.Venture equity incentive plan under which such equity
awards are granted, and such terms may be different from the terms of your
exchanged 180 Connect SARs.
[Remainder
of Page Intentionally Left Blank,
Signature
Page Follows]
-2-
Until
your fully executed Acknowledgment is received by Ad.Venture, your exchanged
180
Connect SARs will not be exercisable for shares of Ad.Venture common
stock.
If you
have any questions regarding this Exchange Agreement or your exchanged 180
Connect SARs, please contact Xxxx Xxxxxxxx at (000) 000-0000.
| Ad.Venture Partners, Inc. | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title | ||
Acknowledgment
The
undersigned acknowledges receipt of this Exchange Agreement and the attached
SAR
Agreement and understands and agrees that all rights and liabilities with
respect to the exchanged 180 Connect SARs listed on the table above are hereby
assumed by Ad.Venture, and are as set forth in the Grant Notice for such
exchanged 180 Connect SARs, the SAR
Agreement, and
this
Exchange Agreement, and agrees to all of the terms set forth in such
agreements.
| |
|
|
| Dated: July ___, 2007 | ||
|
Name |
||
|
·
|
Stock
Appreciation Right
Agreement
|
-3-
Stock
Appreciation Right Agreement
Pursuant
to your Notice of Grant of Share Appreciation Rights, dated December 6, 2006
(“Grant
Notice”),
the
SAR Exchange Agreement between you and Ad.Venture Partners, Inc. (the
“Exchange
Agreement”),
and
this Stock Appreciation Right Agreement (the “SAR
Agreement”),
Ad.Venture Partners, Inc. (the “Corporation”)
has
agreed to exchange your share appreciation rights to acquire shares of 180
Connect Inc. for stock appreciation rights to acquire shares of Common Stock
pursuant to the terms and conditions specified herein (collectively, the
“Award”).
The
details of your Award are as follows:
1. Administration.
Your
Award shall be administered by the Board or a committee of the Board designated
by the Board to administer your Award. The Board shall have the discretionary
authority to construe and interpret your Award and any benefits granted
herewith, to establish rules for its administration, to correct any defect
or
supply any omission or reconcile any inconsistency in your Award or in any
benefit granted herewith, and to make all other determinations which it deems
necessary or advisable for administration of your Award. The decisions,
determinations, and interpretations made by the Board shall be binding and
conclusive on you and your legal representatives, heirs, and beneficiaries.
2. Vesting.
Subject
to the conditions and limitations contained herein, your Award shall vest as
provided in your Grant Notice, provided that vesting shall cease upon the
termination of your Continuous Service.
3. Number
of Shares and Strike Price.
The
number of shares of Common Stock subject to your Award and your strike price
per
share (as originally set forth in your Grant Notice and subsequently adjusted
in
your Exchange Agreement) may be adjusted from time to time for Capitalization
Adjustments.
4. Term.
Your
Award (or portions thereof) shall expire upon the earliest of the
following:
(a) to
the
extent not vested at the time of termination of your Continuous Service, such
portion of your Award shall expire immediately;
(b) to
the
extent vested and exercised on your behalf in accordance with your Grant Notice,
such portion of your Award shall expire concurrently therewith;
(c) to
the
extent not exercised immediately following a Change of Control Transaction;
or
(d) December
6, 2011.
5. Automatic
Exercises. Your
Award shall be automatically exercised on your behalf by the Corporation as
provided in your Grant Notice.
In
addition, your Award, shall be automatically exercised upon a Change of Control
Transaction, to the extent vested and outstanding at such time.
-4-
6. Calculation
of Appreciation.
The
amount payable upon exercise of each vested stock appreciation right shall
be
equal to the excess of (i) the Fair Market Value per share of Common Stock
on
the date of exercise, over (ii) the Fair Market Value per share of Common Stock
on the date of grant of your Award (as originally set forth in your Grant Notice
and subsequently adjusted in your Exchange Agreement).
7. Payment.
Subject
to Section 11,
the
amount payable upon exercise of your Award shall be settled in whole shares
of
Common Stock (rounded down to the nearest whole share) based on the Fair Market
Value of such shares at the time of exercise, and any fractional shares
remaining shall be paid in cash. However, in order to avoid such payment from
being subject to the provisions of Section 409A(a)(1) of the Code, if at the
time of such payment, (i) you are a “specified employee” as defined in Section
409A(a)(2)(B)(i) of the Code, and (ii) you have a experienced a “separation from
service” with the Corporation or an Affiliate within the meaning of Treasury
Regulation §1.409A-1(h), then such payment shall be delayed until the earlier of
(x) six (6) months, or (y) your death.
8. Securities
Law Compliance.
Notwithstanding anything to the contrary contained herein, your Award will
not
be exercised unless either (i) the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act, or (ii) the Corporation
has determined that such exercise and issuance would be exempt from the
registration requirements of the Securities Act. The exercise of your Award
also
must comply with other applicable laws and regulations governing your Award,
and
you may not exercise your Award if the Corporation determines that such exercise
would not be in material compliance with such laws and regulations.
9. Transferability.
Your
Award is not transferable, except by will or by the laws of descent and
distribution.
10. Award
not a Service Contract.
Your
Award is not an employment or service contract, and nothing in your Award shall
be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Corporation or any Affiliate, or of the
Corporation or an Affiliate to continue your employment or service. In addition,
nothing in your Award shall obligate the Corporation or an Affiliate, their
respective stockholders, boards of directors, officers or employees to continue
any relationship that you might have as a director or consultant for the
Corporation or any Affiliate.
11. Withholding
Obligations.
(a) At
the
time your Award is exercised, in whole or in part, or at any time thereafter
as
requested by the Corporation, you hereby authorize withholding from payroll
and
any other amounts payable to you, and otherwise agree to make adequate provision
for, any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Corporation or an Affiliate, if any, which arise
in connection with the exercise of your Award.
-5-
(b) Subject
to any applicable legal conditions or restrictions, the Corporation may withhold
from shares of Common Stock otherwise issuable to you upon the exercise of
your
Award a number of whole shares of Common Stock having a Fair Market Value,
determined by the Corporation as of the date of exercise, not in excess of
the
minimum amount of tax required to be withheld by law (or such lesser amount
as
may be necessary to avoid classification of your Award as a liability for
financial accounting purposes).
12. Corporate
Transactions.
In the
event of a Corporate Transaction that is not a Change of Control Transaction,
any surviving corporation or acquiring corporation (or the surviving or
acquiring corporation’s parent company) may assume or continue your Award or may
substitute a similar stock award for your Award (including but not limited
to,
awards to acquire the same consideration paid to the stockholders of the
Corporation pursuant to the Corporate Transaction). Such assumption,
continuation, or substitution shall preserve the existing value of your Award
at
the time of the Corporate Transaction and shall provide for subsequent payout
in
accordance with the same vesting and exercise schedule applicable to your Award.
13. Personal
Data.
You
understand that your employer, the Corporation, or an Affiliate hold certain
personal information about you, including but not limited to your name, home
address, telephone number, date of birth, national social insurance number,
salary, nationality, job title, and details of all shares of Common Stock
granted, cancelled, vested, unvested, or outstanding (the “Personal
Data”).
Certain Personal Data may also constitute “Sensitive
Personal Data”
within
the meaning of applicable local law. Such data include but are not limited
to
Personal Data and any changes thereto, and other appropriate personal and
financial data about you. You hereby provide express consent to the Corporation
or an Affiliate to process any such Personal Data and Sensitive Personal Data.
You also hereby provide express consent to the Corporation and/or an Affiliate
to transfer any such Personal Data and Sensitive Personal Data outside the
country in which you are employed or retained, including the United States.
The
legal persons for whom such Personal Data are intended are the Corporation
and
any broker company providing services to the Corporation in connection with
the
administration of your Award. You have been informed of your right to access
and
correct your Personal Data by applying to the Corporation representative
identified on the Exchange Agreement.
14. Additional
Agreements and Acknowledgements.
You
hereby agree and acknowledge that:
(a) The
rights and obligations of the Corporation with respect to your Award shall
be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Corporation’s successors and assigns.
(b) You
agree
upon request to execute any further documents or instruments necessary or
desirable in the sole determination of the Corporation to carry out the purposes
or intent of your Award.
-6-
(c) You
have
reviewed your Award in its entirety, have had an opportunity to obtain the
advice of counsel prior to executing and accepting your Award and fully
understand all provisions of your Award.
(d) You
will
not question or contest in any way, whether pursuant to legal proceedings or
otherwise, the Board’s determination of the Fair Market Value of Common Stock,
whether for purposes of determining the strike price of your Award, or the
number of shares of Common Stock payable on exercise of your Award.
(e) This
SAR
Agreement shall be subject to all applicable laws, rules, and regulations,
and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
(f) All
obligations of the Corporation under this SAR Agreement shall be binding on
any
successor to the Corporation, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise,
of
all or substantially all of the business and/or assets of the
Corporation.
(g) Participation
in the Award is voluntary, and therefore, you must accept the terms and
conditions of this Award as a condition to receive this Award.
(h) This
Award is voluntary and occasional and does not create any contractual or other
right to receive future awards or other benefits in lieu of future awards,
even
if similar awards have been granted repeatedly in the past.
(i) All
determinations with respect to any such future awards, including, but not
limited to, the time or times when such awards are made, the number of shares
of
Common Stock, and performance and other conditions applied to the awards, will
be at the sole discretion of the Corporation.
(j) The
value
of the shares of Common Stock and this Award is an extraordinary item of
compensation, which is outside the scope of your employment or service contract,
if any.
(k) The
shares of Common Stock, this Award, or any income derived therefrom are a
potential bonus payment not paid in lieu of any cash salary compensation and
not
part of normal or expected compensation or salary for any purposes, including,
but not limited to, calculating any termination, severance, resignation,
redundancy, end of service payments, bonuses, long-service awards, life or
accident insurance benefits, pension or retirement benefits or similar
payments.
(l) Except
as
provided in the Grant Notice, in the event of the termination of your Continuous
Service, your eligibility to receive shares of Common Stock or payments under
this Award, if any, will terminate effective as of the date that you are no
longer actively employed or retained regardless of any reasonable notice period
mandated under local law, except as expressly provided in this
Award.
-7-
(m) The
future value of the shares of Common Stock is unknown and cannot be predicted
with certainty.
(n) No
claim
or entitlement to compensation or damages arises from the termination of this
Award or diminution in value of the shares of Common Stock and you irrevocably
release the Corporation and its Affiliates, from any such claim that may
arise.
(o) The
Grant
Notice, the Exchange Agreement, and this SAR Agreement set forth the entire
understanding between you, the Corporation and any Affiliate regarding the
acquisition of the shares of Common Stock and supersede all prior oral and
written agreements pertaining to this Award.
15. Notices.
Any
notices provided for in your Award shall be given in writing and shall be deemed
effectively given upon receipt or, in the case of notices delivered by mail
by
the Corporation to you, five (5) days after deposit in the United States mail,
postage prepaid, addressed to you at the last address you provided to the
Corporation.
16. Headings.
The
headings of the Sections in this SAR Agreement are inserted for convenience
only
and shall not be deemed to constitute a part of this SAR Agreement or to affect
the meaning of this SAR Agreement.
17. Severability.
If all
or any part of this SAR Agreement is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall
not
invalidate any portion of this SAR Agreement not declared to be unlawful or
invalid. Any Section of this SAR Agreement (or part of such a Section) so
declared to be unlawful or invalid shall, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to
the
fullest extent possible while remaining lawful and valid.
18. Governing
Law.
This
SAR Agreement, the Grant Notice, and the Exchange Agreement shall be governed
by
and construed in accordance with the laws of the state of Colorado, without
regard to that state’s conflict of laws principles. Any legal action related to
this SAR Agreement, the Grant Notice, and the Exchange Agreement shall be
brought only in a federal or state court located in Colorado.
19. Definitions.
For
purposes of this SAR Agreement, the Grant Notice, and the Exchange Agreement,
the following definitions shall apply:
(a) “Affiliate”
shall
mean, at the time of determination, any “parent” or “majority-owned subsidiary”
of the Corporation, as such terms are defined in Rule 405 of the Securities
Act.
The Board shall have the authority to determine the time or times at which
“parent” or “majority-owned subsidiary” status is determined within the
foregoing definition.
(b) “Arrangement”
shall
mean the consummation of the series of transactions contemplated by that certain
Arrangement Agreement dated March 13, 2007, by and among the Corporation,
6732097 Canada Inc., and 180 Connect Inc., pursuant to which 6732097 Canada
Inc.
acquired all of the outstanding shares of 180 Connect Inc.
(c) “Board”
shall
mean the board of directors of the Corporation.
-8-
(d) “Capitalization
Adjustments”
shall
mean any change affecting the number, class, market price, or terms of the
Common Stock by reason of stock dividend, stock split, recapitalization,
reorganization, merger, consolidation, spin-off, disaffiliation of a Subsidiary,
combination of shares, exchange of shares, stock rights offering, or other
similar event, or any distribution to the holders of Common Stock other than
a
regular cash dividend, (any of which is referred to herein as an “equity
restructuring”), pursuant to which the Board shall make an equitable
substitution or adjustment in order to equalize an award’s intrinsic and fair
value before and after such equity restructuring.
(e) “Cause”
shall
mean the occurrence of any of the following events: (i) your commission of
any
felony or any crime involving fraud, dishonesty or moral turpitude under the
laws of the United States, Canada, or any state thereof; (ii) your attempted
commission of, or participation in, a fraud or act of dishonesty against the
Corporation; (iii) your intentional, material violation of any contract or
agreement between you and the Corporation of any statutory duty owed to the
Corporation; (iv) your unauthorized use or disclosure of the Corporation’s
confidential information or trade secrets; or (v) your gross misconduct. The
determination that a termination of your Continuous Service is either for Cause
or without Cause shall be made by the Corporation in its sole discretion. Any
determination by the Corporation hereunder shall have no effect upon any
determination of the rights or obligations of the Corporation or you for any
other purpose.
(f) “Change
of Control Transaction”
shall
mean the occurrence of any of the following events after the
Arrangement:
(i) The
acquisition, by a person or persons acting as a group, of the stock of the
Corporation that, together with other stock held by such person or group,
constitutes more than fifty percent (50%) of the total fair market value or
total voting power of the Corporation; provided,
however,
(i) if
a person or persons acting as a group is considered to own more than fifty
percent (50%) of the total voting power of the Corporation, the acquisition
of
additional stock by the same person or persons shall not constitute a Change
of
Control Transaction; (ii) an increase in the percentage of stock owned by a
person or persons acting as a group as a result of a transaction in which the
Corporation acquires its own stock in exchange for property shall be treated
as
an acquisition of stock for purposes of this Section 19(f)(i);
(iii)
such acquired stock of the Corporation shall remain outstanding after the
transaction; and (iv) for purposes of this Section 19(f)(i),
“persons acting as a group” shall be determined by reference to Treasury
Regulation § 1.409A-3(i)(5)(v)(B).
(ii) The
acquisition, within a twelve (12)-month period ending on the date of the most
recent acquisition, by a person or persons acting as a group, of the stock
of
the Corporation possessing thirty percent (30%) or more of the total voting
power of the stock of the Corporation; provided,
however,
for
purposes of this Section 19(f)(ii),
“persons acting as a group” shall be determined by reference to Treasury
Regulation § 1.409A-3(i)(5)(vi)(D).
(iii) The
replacement, during any twelve (12)-month period, of a majority of the members
of the Board by directors whose appointment or election is not endorsed by
a
majority of the members of the Board prior to the date of such appointment
or
election.
-9-
(iv) The
acquisition, within a twelve (12)-month period ending on the date of the most
recent acquisition, by a person or persons acting as a group, of the
Corporation’s assets having a total gross fair market value (determined without
regard to any liabilities associated with such assets) of forty percent (40%)
or
more of the total gross fair market value of all of the assets of the
Corporation (determined without regard to any liabilities associated with such
assets) immediately prior to such acquisition or acquisitions; provided,
however,
that a
Change of Control Transaction shall not occur (i) upon a transfer to an entity
that is controlled by the Corporation’s stockholders immediately after the
transfer; (ii) if such assets are transferred to a stockholder of the
Corporation immediately before the asset transfer in exchange for Corporation
stock; (iii) if such assets are transferred to an entity of which fifty percent
(50%) or more of the total value or voting power is owned, directly or
indirectly, by the Corporation (as determined immediately after the transfer
of
such assets); (iv) if such assets are transferred to a person or persons acting
as a group, that owns, directly or indirectly, fifty percent (50%) or more
of
the total value or voting power of all of the outstanding stock of the
Corporation (as determined immediately after the transfer of such assets);
or
(v) if such assets are transferred to an entity of which at least fifty percent
(50%) of the total value or voting power is owned, directly or indirectly,
by a
person described in foregoing clause (iv) (as determined immediately after
the
transfer of such assets); provided,
further,
that
for purposes of this Section 19(f)(iv),
“persons acting as a group” shall be determined by reference to Treasury
Regulation § 1.409A-3(i)(5)(vii)(C).
(g) “Code”
shall
mean the Internal Revenue Code of 1986, as amended.
(h) “Common
Stock”
shall
mean the common stock of the Corporation.
(i) “Continuous
Service”
shall
mean that your service with the Corporation or an Affiliate, whether as an
employee, director or consultant, is not interrupted or terminated. A change
in
the capacity in which you render service to the Corporation or an Affiliate
as
an employee, director, or consultant or a change in the Entity for which you
render such service, provided that there is no interruption or termination
of
your service with the Corporation or an Affiliate, shall not terminate your
Continuous Service; provided,
however,
if the
Entity for which you are rendering service ceases to qualify as an Affiliate,
as
determined by the Board in its sole discretion, your Continuous Service shall
be
considered to have terminated on the date such Entity ceases to qualify as
an
Affiliate.
(j) “Corporate
Transaction”
means
the occurrence, in a single transaction or in a series of related transactions,
of any one or more of the following events after the Arrangement:
(i) the
consummation of a sale or other disposition of all or substantially all, as
determined by the Board in its sole discretion, of the consolidated assets
of
the Corporation and its Subsidiaries;
(ii) the
consummation of a sale or other disposition of at least ninety percent (90%)
of
the outstanding securities of the Corporation;
-10-
(iii) the
consummation of a merger, consolidation or similar transaction following which
the Corporation is not the surviving corporation; or
(iv) the
consummation of a merger, consolidation or similar transaction following which
the Corporation is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation
or
similar transaction into other property, whether in the form of securities,
cash
or otherwise.
(k) “Entity”
means
a
corporation, partnership, limited liability company or other
entity.
(l) “Fair
Market Value”
shall
mean the fair market value of shares of the Common Stock at any time determined
in such manner as the Board may deem equitable, or as required by applicable
law
or regulation.
(m) “Securities
Act”
shall
mean the Securities Act of 1933, as amended.
(n) “Subsidiary”
shall
mean any corporation or other entity in which a fifty percent (50%) or greater
interest is at the time directly or indirectly owned by the Corporation.
-11-
