Exhibit 10.16
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE
2014 GATES INDUSTRIAL CORPORATION PLC STOCK INCENTIVE PLAN
THIS AGREEMENT (the “Agreement”) by and between Gates Industrial Corporation
plc, a company registered in England and Wales (the “Company”), and the
individual named on the Participant Master Signature Page hereto (the
“Participant”) is made on the date set forth on such Participant Master
Signature Page.
R E C I T A L S:
WHEREAS, the Company has adopted the Plan (as defined below), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and
WHEREAS, the Committee (as defined in the Plan) has determined that it would be
in the best interests of the Company and its stockholders to grant the Options
(as defined below) provided for herein to the Participant pursuant to the Plan
and the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:
1. Definitions. Whenever the following terms are used in this Agreement, they
shall have the meanings set forth below. Capitalized terms not otherwise defined
or specified herein shall have the same meanings as in the Plan.
(a) Cause: “Cause” shall have the meaning ascribed to such term in any
employment, consulting or severance agreement then in effect between the
Participant and the Company or any of its Subsidiaries or, if no such agreement
containing a definition of “Cause” is then in effect or if such term is not
defined therein, “Cause” shall mean (A) the Participant’s continued failure
substantially to perform the Participant’s duties (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 Participant of such
failure, (B) an act or acts on the Participant’s part constituting (x) a felony
under the laws of the United States or any state thereof or any indictable
offense or crime which could result in imprisonment or (y) a misdemeanor or
other violation or offense involving moral turpitude, (C) the Participant’s
dishonesty, willful malfeasance or willful misconduct in connection with the
Participant’s duties or any act or omission which is injurious to the financial
condition or business reputation of the Company or any of its Subsidiaries or
Affiliates or (D) the Participant’s material breach of any provision of this
Agreement or any other agreement between the Participant and the Company or its
Affiliates.
(b) Cost: The price per Share paid by the Participant, if any, as
proportionately adjusted for all subsequent share dividends or other
distributions of Shares and other recapitalizations and less the amount of any
dividends or distributions received (or deemed received) by the Participant with
respect to the Shares; provided that “Cost” may not be less than zero.
(c) Date of Grant: The “Date of Grant” specified on the Participant Master
Signature Page.
(d) Disability: “Disability” shall have the same meaning ascribed to such term
in any employment, consulting or severance agreement then in effect between the
Participant and the Company or any of its Subsidiaries, or, if no such agreement
containing a definition of “Disability” is then in effect or if such term is not
defined therein, “Disability” shall exist at such time that, as determined by
the Committee in good faith, the Participant becomes physically or mentally
incapacitated and remains unable for a period of six (6) consecutive months or
for an aggregate of nine (9) months in any twenty-four (24) consecutive month
period to perform the Participant’s duties.
(e) Expiration Date: The tenth anniversary of the Date of Grant.

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(f) Good Reason: “Good Reason” shall have the meaning ascribed to such term in
any employment, consulting or severance agreement then in effect between the
Participant and the Company or any of its Subsidiaries or, if no such agreement
containing a definition of “Good Reason” is then in effect or if such term is
not defined therein, “Good Reason” shall mean without the Participant’s consent,
(A) the failure of the Company or one of its Subsidiaries, as applicable, to pay
or cause to be paid the Participant’s base salary or annual bonus when due,
(B) any material diminution in the Participant’s authority or responsibilities
or (C) the relocation of the Participant’s primary place of employment to a
location more than 50 miles from the Participant’s principle place of
business; provided that any of the events described above shall constitute Good
Reason only if the Company or one of its Subsidiaries, as applicable, fails to
cure such event within 30 days after notice is given by the Participant
specifying in reasonable detail the event which constitutes Good
Reason; provided, further, that “Good Reason” shall cease to exist for an event
on the 60th day following the later of its occurrence or the Participant’s
knowledge thereof, unless the Participant has given the Company notice thereof
prior to such date.
(g) Liquidity Event: Prior to July 3, 2022, (i) each date, if any, when the
Sponsor has, in one or more transactions, sold at least 25% of the maximum
number of Shares held by it from time to time to any Person or Group (other than
the Sponsor, the Company or any of their respective Affiliates) or (ii) the date
of the sale or disposition, in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries to any
Person or Group (other than the Sponsor, the Company or any of their respective
Affiliates) (the transactions described in clause (ii), an “Asset Sale”).
(h) Options: Collectively, the Tier I Option, the Tier II Option, the Tier III
Option and the Tier IV Option granted under this Agreement.
(i) Plan: The 2014 Gates Industrial Corporation plc Stock Incentive Plan, as it
may be amended or supplemented from time to time.
(j) Restrictive Covenant Violation: The Participant’s breach of Section 5(c),
Section 5(d), Section 5(e), Section 5(f) or Section 5(g) of this Agreement or
any similar provision to which the Participant has agreed to be bound.
(k) Shareholders Agreement: The Shareholders Agreement substantially in the form
attached hereto as Exhibit A, as amended or supplemented from time to time in
accordance with the terms thereof.
(l) Sponsor Outflows: Without duplication, the aggregate amount of ordinary and
extraordinary cash dividends, cash distributions, and in-kind dividends or
distributions (but only to the extent any cash proceeds are received in respect
of such in-kinddividends or distributions which proceeds shall be counted at the
time cash is actually received by the Sponsor) received by the Sponsor or an
Affiliate of the Sponsor (other than the Company or a Subsidiary of the Company)
with respect to a Share. For the avoidance of doubt, for purposes determining
vesting pursuant to Sections 3(b) and 3(c) of this Agreement, (x) only the
Sponsor Outflows in respect of Shares actually sold by the Sponsor through the
date of the applicable Liquidity Event based on clause (i) of such definition
shall be counted and (y) all Sponsor Outflows through the date of a Liquidity
Event based on clause (ii) of such definition shall be counted.
(m) Subscription Agreement: The Management Equity Subscription Agreement
substantially in the form attached hereto as Exhibit B, as amended or
supplemented from time to time in accordance with the terms thereof.
(n) Tier I Option: An option with respect to which the terms and conditions are
set forth in Section 3(a) of this Agreement.
(o) Tier II Option: An option with respect to which the terms and conditions are
set forth in Section 3(b) of this Agreement.
(p) Tier III Option: An option with respect to which the terms and conditions
are set forth in Section 3(c) of this Agreement.
(q) Tier IV Option: An option with respect to which the terms and conditions are
set forth in Section 3(b) of this Agreement.
(r) Vested Portion: At any time, the portion of an Option which has become and
remains vested in accordance with the terms of Section 3 of this Agreement.
(s) Vesting Reference Date: The “Vesting Reference Date” specified on the
Participant Master Signature Page.
2. Grant of Options. The Company hereby grants to the Participant the right and
option to purchase, on the terms and conditions hereinafter set forth, all or
any part of the number of Shares subject to the Tier I Option, the Tier II
Option, the Tier III Option and the Tier IV Option, in each case, as set forth
on the Participant Master Signature Page, subject to adjustment as set forth in
the Plan and this Agreement, and subject to the terms and conditions set forth
in this Agreement

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and the Plan. Subject to adjustment as set forth in the Plan, the exercise price
per Share subject to each Option shall be the “Exercise Price” specified on the
Participant Master Signature Page. The Options are intended to be nonqualified
stock options, and are not intended to be treated as an option that complies
with Section 422 of the Code.
3. Vesting of the Options; Expiration of Unvested Options.
(a) Vesting of the Tier I Option.
(i) In General. Subject to the Participant’s continued Employment through each
applicable vesting date, the Tier I Option shall vest and become exercisable
with respect to twenty percent (20%) of the Shares subject to such Tier I Option
on each of the first five anniversaries of the Vesting Reference Date.
(ii) Change in Control. Notwithstanding the foregoing, in the event of a Change
in Control during the Participant’s continued Employment, the Tier I Option
shall, to the extent not then vested or previously forfeited or cancelled,
become fully vested and exercisable.
(b) Vesting of the Tier II Option and the Tier IV Option. Subject to the
Participant’s continued Employment through the applicable vesting date, each of
the Tier II Option and the Tier IV Option shall vest if, on or after a Liquidity
Event and on or prior to July 3, 2022, Sponsor shall have received net cash
proceeds generated together with all Sponsor Outflows received, in each case, in
respect of all Shares sold by it or in connection with an Asset Sale, as
applicable, that results in either (i) a return of at least 2.0 times the amount
of the Sponsor’s cumulative invested capital in respect of such sold Shares or
(ii) an annual internal rate of return of at least fifteen percent (15%) on the
Sponsor’s cumulative invested capital in respect of such sold Shares. For the
avoidance of doubt, following July 3, 2022, each of the Tier II Option and the
Tier IV Option, to the extent not then vested, shall not be eligible to become
vested and shall automatically be immediately canceled without consideration. In
connection with any Liquidity Event in which the Tier II Option and the Tier IV
Option are expected to become vested, the Committee may permit the Participant
to deliver a conditional exercise election, in a form approved by the Committee,
whereby the Participant irrevocably elects to exercise the Tier II Option and/or
the Tier IV Option as of such Liquidity Event, subject to the conditions
precedent that (x) the Liquidity Event actually occurs and (y) the Tier II
Option and Tier IV Option become vested upon such Liquidity Event.
(c) Vesting of the Tier III Option. Subject to the Participant’s continued
Employment through the applicable vesting date, the Tier III Option shall vest
if, on or after a Liquidity Event and on or prior to July 3, 2022, Sponsor shall
have received net cash proceeds generated together with all Sponsor Outflows
received, in each case, in respect of all Shares sold by it or in connection
with an Asset Sale, as applicable, that results in either (A) a return of at
least 2.5 times the amount of the Sponsor’s cumulative invested capital in
respect of such sold Shares or (B) an annual internal rate of return of at least
twenty percent (20%) on the Sponsor’s cumulative invested capital in respect of
such sold Shares. For the avoidance of doubt, following July 3, 2022, the Tier
III Option, to the extent not then vested, shall not be eligible to become
vested and shall automatically be immediately canceled without consideration. In
connection with any Liquidity Event in which the Tier III Option is expected to
become vested, the Committee may permit the Participant to deliver a conditional
exercise election, in a form approved by the Committee, whereby the Participant
irrevocably elects to exercise the Tier III Option as of such Liquidity Event,
subject to the conditions precedent that (x) the Liquidity Event actually occurs
and (y) the Tier III Option becomes vested upon such Liquidity Event.
(d) Termination of Employment.
(i) Subject to Sections 3(d)(ii), 3(d)(iii) and 3(d)(iv) below, if the
Participant’s Employment terminates for any reason, the Options, to the extent
not then vested and exercisable, shall automatically be immediately canceled
without consideration and the Vested Portion of an Option shall remain
exercisable for the period set forth in Section 4(a).
(ii) If the Participant’s Employment is terminated (A) by the Company or any of
its Subsidiaries without Cause, (B) by the Participant for Good Reason or
(C) due to the Participant’s death or Disability (each, a “Good Leaver
Termination”) then, to the extent not already vested, an additional portion of
the Tier I Option shall become vested as of immediately prior to the
Participant’s termination of Employment such that the total portion of the Tier
I Option that has become vested as of such date is equal to the percentage under
the heading “Specified Portion” as set forth in the table below and based on the
date of such Good Leaver Termination.

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(iii) If the Participant’s Employment terminates as a result of a Good Leaver
Termination on or prior to July 3, 2022, a portion equal to the “Specified
Portion” (set forth in the table below) of each of the Tier II Option, the Tier
III Option and the Tier IV Option (each such portion, an “Outstanding Portion”)
shall remain outstanding and remain eligible to vest for a period ending on the
earlier of (x) the date that is twenty four (24) months following the date of
termination of the Participant’s Employment and (y) July 3, 2022 (such period
the “Extension Period”), and shall become vested if at all when the applicable
vesting criteria set forth in Section 3(b) or Section 3(c), as applicable, are
satisfied during the Extension Period. To the extent the Outstanding Portion of
the Tier II Option, the Tier III Option or the Tier IV Option does not vest
during the Extension Period, such unvested Options shall automatically be
cancelled at the end of such period without consideration; provided that if the
Company enters into a definitive agreement during the Extension Period and the
consummation of the transactions contemplated by such definitive agreement,
which occurs after the expiration of the Extension Period (the “New Transaction
Closing”), would have resulted in the vesting of the Outstanding Portion of the
Tier II Option, the Tier III Option or the Tier IV Option had such Outstanding
Portion of the Options remained outstanding and eligible to vest, then such
Outstanding Portion of the Options shall become vested upon the New Transaction
Closing notwithstanding that such New Transaction Closing occurs after the
expiration of the Extension Period. Any portion of each of the Tier II Option,
the Tier III Option and the Tier IV Option that does not constitute the
Outstanding Portion shall automatically be canceled on the date of termination
of the Participant’s Employment without consideration.
Date of Good Leaver Termination
 
Specified
Portion
Prior to July 3, 2015
 
20%
On or after July 3, 2015 and prior to July 3, 2016
 
40%
On or after July 3, 2016 and prior to July 3, 2017
 
60%
On or after July 3, 2017 and prior July 3, 2018
 
80%
On or after July 3, 2018
 
100%

(iv) Retirement. If the Participant’s Employment is terminated by the
Participant (other than when grounds existed for a termination for Cause at the
time thereof) on or after July 3, 2017 and the Participant is at least age 62
and has completed at least 3 years of Employment with the Company or any of its
Subsidiaries (including any predecessor entities), then the Committee may, in
its sole discretion, treat such termination of Employment as a Good Leaver
Termination with respect to the Tier II Option, Tier III Option and Tier IV
Option.
(e) Exit by Blackstone. Notwithstanding any provision of Section 3(b),
Section 3(c) or Section 3(d) to the contrary, if the Sponsor shall cease to own
any Shares, each of the Tier II Option, the Tier III Option and the Tier IV
Option, to the extent not then vested and exercisable, shall automatically be
immediately canceled without consideration.
4. Exercise of Options.
(a) Period of Exercise. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise all or any part of the Vested Portion of
an Option at any time prior to the Expiration Date. Notwithstanding the
foregoing, if the Participant’s Employment terminates prior to the Expiration
Date, the Vested Portion of an Option (or any portion of an Option which is not
then vested, but is eligible to become vested and exercisable after such
termination of Employment) shall remain exercisable for the period set forth
below:
(i) Death or Disability. If the Participant’s Employment terminates due to the
Participant’s death or Disability, the Participant may exercise the Vested
Portion of an Option for a period ending on the earlier of (x) the one year
anniversary of such termination of Employment and (y) the Expiration Date (or,
if the Option becomes vested and exercisable after such a termination of
Employment, then the Participant may exercise the Vested Portion of such Option
during the period ending on the earlier of (A) the 60th day following the date
on which the Option became vested and exercisable and (B) the Expiration Date);
(ii) Termination by the Company Other than for Cause and Other than Due to Death
or Disability or by the Participant for Good Reason. If the Participant’s
Employment is terminated (x) by the Company or any of its Subsidiaries other
than for Cause and not due to the Participant’s death or Disability or (y) by
the Participant for Good Reason, in each case, the Participant may exercise the
Vested Portion of an Option for a period ending on the earlier of (A) the
90th day following such termination of Employment and (B) the Expiration Date
(or, if the Option becomes vested and exercisable after such a termination of
Employment, then the Participant may exercise the Vested Portion of such Option
during the period ending on the earlier of (I) the 60th day following the date
on which the Option became vested and exercisable and (II) the Expiration Date);

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(iii) Termination by the Participant without Good Reason When Grounds for Cause
Do Not Exist. If the Participant’s Employment is terminated by the Participant
without Good Reason at a time when grounds do not exist for a termination by the
Company or any of its Subsidiaries for Cause, the Participant may exercise the
Vested Portion of an Option for a period ending on the earlier of (A) the
30th day following such termination of Employment and (B) the Expiration Date;
and
(iv) Termination by the Company for Cause; Resignation by the Participant
without Good Reason when Grounds for Cause Exist; Restrictive Covenant
Violation. If the Participant’s Employment is terminated by the Company or any
of its Subsidiaries for Cause or by the Participant without Good Reason at a
time when grounds exist for a termination by the Company or any of its
Subsidiaries for Cause or in the event of a Restrictive Covenant Violation, the
Vested Portion of an Option shall immediately terminate in full and cease to be
exercisable.
(b) Method of Exercise.
(i) Subject to Section 4(a) of this Agreement and Section 6(d) of the Plan, the
Vested Portion of an Option may be exercised by delivering to the Company at its
principal office written notice of intent to so exercise; provided that, the
Option may be exercised with respect to whole Shares only. Such notice shall
specify the number of Shares for which the Option is being exercised and shall
be accompanied by payment in full of the Exercise Price. The payment of the
Exercise Price may be made at the election of the Participant (A) in cash or its
equivalent (e.g., by check or, if permitted by the Committee, a full-recourse
promissory note), (B) to the extent permitted by the Committee in its sole
discretion, (1) in Shares having a Fair Market Value equal to the aggregate
Exercise Price for the Shares being purchased and satisfying such other
requirements as may be imposed by the Committee; provided, that such Shares have
been held by the Participant for any period as established from time to time by
the Committee in order to avoid adverse accounting treatment applying generally
accepted accounting principles, (2) if there is a public market for the Shares
at such time, subject to such rules as may be established by the Committee,
through the delivery of irrevocable instructions to a broker to sell Shares
obtained upon the exercise of the Option and to deliver promptly to the Company
an amount out of the proceeds of such sale equal to the aggregate exercise price
for the Shares being purchased, (3) using a net settlement mechanism whereby the
number of Shares delivered upon the exercise of the Option will be reduced by a
number of Shares that has a Fair Market Value equal to the Exercise Price, or
(4) using any combination of the permitted exercise methods, or (C) following
the date of a Change in Control or a Liquidity Event, using a net settlement
mechanism whereby the number of Shares delivered upon the exercise of the Option
will be reduced by a number of Shares that has a Fair Market Value equal to the
Exercise Price provided that, for the avoidance of doubt, the Participant
tenders cash or its equivalent to pay any applicable withholding or other
applicable taxes. The Participant shall not have any rights to dividends or
other rights of a stockholder with respect to Shares subject to an Option until
the Participant has given written notice of exercise of the Option, paid in full
for such Shares and, if applicable, has satisfied any other conditions imposed
by the Committee pursuant to the Plan, provided, in each case, that the
Participant tenders cash or its equivalent to pay any applicable withholding or
other applicable taxes (unless otherwise permitted by the Committee).
(ii) Notwithstanding any other provision of the Plan or this Agreement to the
contrary, absent an available exemption to registration or qualification, an
Option may not be exercised prior to the completion of any registration or
qualification of an Option or the Shares under applicable state and federal
securities or other laws, or under any ruling or regulation of any governmental
body or national securities exchange that the Committee shall in its sole
discretion determine to be necessary or advisable; provided, that the Company
shall use commercially reasonable efforts to take such actions as are necessary
and appropriate to register or qualify the Shares subject to the Option so it
may be exercised.
(iii) Upon the Company’s determination that an Option has been validly exercised
as to any of the Shares, the Company may issue certificates in the Participant’s
name for such Shares or the Company may cause the appropriate entries to be made
in the register of members of the Company in respect of the issuance of such
shares. However, neither the Committee nor the Company shall be liable to the
Participant for damages relating to any delays in issuing the certificates to
the Participant or making the entries in the register of members of the Company,
any loss by the Participant of the certificates or entries, or any mistakes or
errors in the issuance of the certificates or in the certificates themselves or
entries.
(iv) In the event of the Participant’s death, the Vested Portion of an Option
shall remain exercisable by the Participant’s executor or administrator, or the
person or persons to whom the Participant’s rights under this Agreement shall
pass by will or by the laws of descent and distribution as the case may be, to
the extent set forth in Section 4(a) of this Agreement. Any heir or legatee of
the Participant shall take rights herein granted subject to the terms and
conditions hereof.

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(v) As a condition to the exercise of any Option evidenced by this Agreement,
the Participant shall execute the Shareholders Agreement and the Subscription
Agreement (provided that, if the Participant is already a party to the
Shareholders Agreement and the Subscription Agreement, then the Shares acquired
under the Option shall automatically become subject to such agreements without
any further action).
5. Confidential Information; Post-Employment Restrictive Covenants.
(a) This Agreement. The terms of this Agreement constitute confidential
information, which the Participant shall not disclose to anyone other than the
Participant’s spouse, attorneys, tax advisors, or as required by law. The
Company may disclose the terms of this Agreement subject to applicable law. The
terms of this Section 5 shall supplement, but not supersede or replace, any
similar restrictive covenants to which the Participant has otherwise agreed to
be bound.
(b) Company Property. All written materials, records, data, and other documents
prepared or possessed by the Participant during the Participant’s Employment are
the Company’s property. All memoranda, notes, records, files, correspondence,
drawings, manuals, models, specifications, computer programs, maps, and all
other documents, data, or materials of any type embodying such information,
ideas, concepts, improvements, discoveries, and inventions are the Company’s
property.
(i) All information, ideas, concepts, improvements, discoveries, and inventions
that are conceived, made, developed, or acquired by the Participant individually
or in conjunction with others during the Participant’s Employment (whether
during business hours and whether on the Company’s or any of its Subsidiaries’
premises or otherwise) which relate to the Company’s or any of its Subsidiaries’
business, products, or services are the Company’s property. The Participant
agrees to make prompt and full disclosure to the Company or its Subsidiaries, as
the case may be, of all ideas, discoveries, trade secrets, inventions,
innovations, improvements, developments, methods of doing business, processes,
programs, designs, analyses, drawings, reports, data, software, firmware, logos
and all similar or related information (whether or not patentable and whether or
not reduced to practice) that relate to the Company’s or its Subsidiaries’
actual or anticipated business, research and development, or existing or future
products or services and that are conceived, developed, acquired, contributed
to, made, or reduced to practice by the Participant (either solely or jointly
with others) during the Participant’s Employment and for a period of one
(1) year thereafter (collectively, “Work Product”). Any copyrightable work
falling within the definition of Work Product shall be deemed a “work made for
hire” under the copyright laws of the United States, and ownership of all rights
therein shall vest in the Company or one or more of its Subsidiaries. To the
extent that any Work Product is not deemed to be a “work made for hire,” the
Participant hereby assigns and agrees to assign to the Company or such
Subsidiary all right, title and interest, including without limitation, the
intellectual property rights that the Participant may have in and to such Work
Product. The Participant shall promptly perform all actions reasonably requested
by the Committee (whether during or after the Employment period) to establish
and confirm the Company’s or such Subsidiary’s ownership (including, without
limitation, providing testimony and executing assignments, consents, powers of
attorney, and other instruments).
(ii) At the termination of the Participant’s Employment with the Company or any
of its Subsidiaries for any reason, the Participant shall return all of the
Company’s or any of its Subsidiaries’ property to the Company.

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(c) Confidential Information; Non-Disclosure. The Participant acknowledges that
the business of the Company and its Subsidiaries is highly competitive and that
the Company has provided and will provide the Participant with access to
Confidential Information relating to the business of the Company and its
Subsidiaries. “Confidential Information” means and includes the Company’s
confidential and/or proprietary information and/or trade secrets that have been
developed or used and/or will be developed and that cannot be obtained readily
by third parties from outside sources. Confidential Information includes, by way
of example and without limitation, the following: information regarding
customers, employees, contractors, and the industry not generally known to the
public; strategies, methods, books, records, and documents; technical
information concerning products, equipment, services, and processes; procurement
procedures and pricing techniques; the names of and other information concerning
customers, investors, and business affiliates (such as contact name, service
provided, pricing for that customer, amount of services used, credit and
financial data, and/or other information relating to the Company’s relationship
with that customer); pricing strategies and price curves; plans and strategies
for expansion or acquisitions; budgets; customer lists; research; weather data;
financial and sales data; trading terms; evaluations, opinions, and
interpretations of information and data; marketing and merchandising techniques;
prospective customers’ names and marks; grids and maps; electronic databases;
models; specifications; computer programs; internal business records; contracts
benefiting or obligating the Company; bids or proposals submitted to any third
party; technologies and methods; training methods and training processes;
organizational structure; salaries of personnel; payment amounts or rates paid
to consultants or other service providers; and other such confidential or
proprietary information. The Participant acknowledges that this Confidential
Information constitutes a valuable, special, and unique asset used by the
Company or its Subsidiaries in their business to obtain a competitive advantage
over their competitors. The Participant further acknowledges that protection of
such Confidential Information against unauthorized disclosure and use is of
critical importance to the Company and its Subsidiaries in maintaining their
competitive position.
(i) The Participant also will have access to, or knowledge of, Confidential
Information of third parties, such as actual and potential customers, suppliers,
partners, joint venturers, investors, financing sources and the like, of the
Company and its Subsidiaries.
(ii) The Participant agrees that the Participant will not, at any time during or
after the Participant’s Employment with the Company, make any unauthorized
disclosure of any Confidential Information of the Company or its Subsidiaries,
or make any use thereof, except in the carrying out responsibilities related to
the Participant’s Employment or as may be lawfully required by a court or other
governmental authority. The Participant also agrees to preserve and protect the
confidentiality of third party Confidential Information to the same extent, and
on the same basis, as the Company’s Confidential Information.
(d) Non-Competition Obligations. The Participant acknowledges that the Company
is providing the Participant with access to Confidential Information. The
Participant’s non-competition obligations are ancillary to the Participant’s
Employment, this Agreement and agreement to disclose Confidential Information to
the Participant. In order to protect the Confidential Information described
above, and in consideration for the Participant’s receiving access to this
Confidential Information and receiving the Options and other related benefits
provided in this Agreement and elsewhere, the Company and the Participant agree
to the following non-competition provisions:
(i) During the Participant’s Employment and during the twelve (12) month period
following the Participant’s date of termination of Employment for any reason (or
such longer period as the Participant is eligible to receive severance payments
pursuant to any other written agreement with the Company or its Affiliates) (the
“Post-Termination Period”), directly or indirectly, in any capacity, compete
with, be employed or engaged by, have a financial interest in any capacity other
than as a passive investor of less than 5% of the outstanding stock of any
public corporation, advise, lend Participant’s name to or otherwise be involved
in, provide services to or participate in any business which competes with the
businesses of the Company and its Subsidiaries within the geographic areas in
which business is conducted by the Company or its Subsidiaries (including,
without limitation, North America, Europe, Russia, the Middle East, Africa,
China, India, Japan, Korea, Thailand, Indonesia, Singapore, Australia and South
America and businesses and geographies which the Company or its Subsidiaries
have specific plans to conduct in the future and as to which the Participant is
aware of such planning).
(ii) The terms of this Section 5(d) shall not apply to any Participant whose
primary place of Employment is located in the State of California (or any other
jurisdiction in which such terms are unlawful).

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(e) Non-Solicitation of Customers. During the Participant’s Employment and
during the Post-Termination Period following the termination of such Employment
for any reason, the Participant shall not, directly or indirectly, solicit,
attempt to solicit, call upon or accept the business of any firm, person or
company who is or was a customer, client or supplier of any business of the
Company and its Affiliates in respect of which the Participant had received
proprietary or confidential information if such solicitation or acceptance of
business could result in the diversion of business away from the Company or any
such Affiliate or operate to prejudice the Company or any such Affiliate.
(f) Non-Solicitation of Employees. During the Participant’s Employment and
during the Post-Termination Period following the termination of such Employment
for any reason, the Participant shall not solicit, attempt to solicit or
communicate in any way with employees of the Company or any of its Subsidiaries
for the purpose of having such employees employed or in any way engaged by
another person, firm, corporation or other entity.
(g) Non-Disparagement. The Participant agrees that during the Participant’s
Employment with the Company and after termination of that Employment for any
reason, the Participant shall not make public statements or public comments
intended to be (or having the effect of being) of defamatory or disparaging
nature (including any statements or comments likely to be harmful to the
business, business reputation or personal reputation of) regarding the Company
or any of its Subsidiaries or Affiliates and/or the Sponsor or any such Person’s
businesses, shareholders, agents, officers, directors or contractors (it being
understood that comments made in the Participant’s good faith performance of his
duties hereunder shall not be deemed disparaging or defamatory for purposes of
this Agreement); provided that the Participant shall be permitted to make
truthful disclosures that are required by applicable law, regulations or order
of a court or government agency.
6. Repayment of Proceeds. If the Participant engages in Detrimental Activity
(for these purposes, clause (i) of such definition shall be subject to
materiality) while employed by the Company or any of its Subsidiaries or during
the Post-Termination Period and such activity is, or could reasonably be
expected to be, injurious to the financial condition or business reputation of
the Company or any of its Subsidiaries or Affiliates, then the Participant shall
be required to pay to the Company, within 10 business days’ of the Company’s
request to the Participant therefor, an amount equal to the excess, if any, of
(A) the aggregate after-tax proceeds (taking into account all amounts of tax
that would be recoverable upon a claim of loss for payment of such proceeds in
the year of repayment) the Participant received upon the sale or other
disposition of, or distributions in respect of, Shares acquired under any Option
over (B) the aggregate Cost of such Shares. Any reference in this Agreement or
the Plan to grounds existing for a termination with Cause shall be determined
without regard to any notice period, cure period or other procedural delay or
event required prior to finding of, or termination for, Cause. The foregoing
remedy shall not be exclusive. Before the Committee determines that the
Participant has engaged in Detrimental Activity, it shall provide to the
Participant and the opportunity to be heard, at a meeting of the Committee
(which may be in-person or telephonic, as determined by the Committee).
7. No Right to Continued Employment; Other Employment Terms.
(a) Neither the Plan nor this Agreement shall be construed as giving the
Participant the right to be retained in the employ of, or in any consulting
relationship to, the Company or any of its Subsidiaries or Affiliates. Further,
the Company or any of its Subsidiaries or Affiliates, as applicable, may at any
time dismiss the Participant or discontinue any consulting relationship, free
from any liability or any claim under the Plan or this Agreement, except as
otherwise expressly provided herein.
(b) The Participant acknowledges and agrees that, notwithstanding anything to
the contrary in the Participant’s employment agreement or offer letter with the
Company or any of its Subsidiaries or The Annual Bonus Incentive Plan of
Pinafore Holdings B.V., as amended from time to time (the “ABIP”), or any other
similar agreement, plan or arrangement, (i) any amendment to or modification or
termination of the ABIP on and after July 3, 2014 and (ii) the transactions and
events and any changes or modifications to the terms and conditions of the
Participant’s Employment and/or to the amount, terms or conditions of the
Participant’s compensation, rights and benefits, in each case, in connection
with, arising out of or related to the consummation of the transactions
contemplated by that certain Share Purchase Agreement, dated as of April 4,
2014, among Pinafore Holdings B.V., Omaha Acquisition Inc., Pinafore Coöperatief
U.A., and the other parties thereto, as it may be amended or supplemented from
time to time (the “SPA”), this Agreement or any other agreement referenced
herein, shall not constitute grounds for good reason, constructive termination,
severance or any other similar termination provision or right, to the extent
applicable, under the Participant’s employment agreement, offer letter or other
similar agreement with the Company or any of its Subsidiaries. For the avoidance
of doubt, this Section 7(b)(ii) shall not apply to changes to the terms and
conditions of the Participant’s Employment and/or changes to the amount, terms
or conditions of the Participant’s compensation, rights and benefits, in each
case, that may arise on and after the date of this Agreement other than in
connection with, arising out of or relating to the consummation of the
transactions contemplated by the SPA, this Agreement or any other agreement
referenced herein.

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8. Legend on Certificates. The certificates or entries in the register of
members of the Company, as applicable, representing the Shares acquired by
exercise of an Option shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares are listed or quoted or market to
which the Shares are admitted for trading and, any applicable federal or state
or any other applicable laws and the Company’s memorandum and articles of
association (as may be amended from time to time), and the Committee may cause a
legend or legends to be put on any such certificates or entries in the register
of members of the Company to make appropriate reference to such restrictions.
9. Transferability. An Option may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Participant otherwise than by
will or by the laws of descent and distribution, and any such purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall
be void and unenforceable against the Company or any Affiliate; provided that
the designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of
an Option to heirs or legatees of the Participant shall be effective to bind the
Company unless the Committee shall have been furnished with written notice
thereof and a copy of such evidence as the Committee may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions thereof. During the Participant’s
lifetime, an Option is exercisable only by the Participant.
10. Withholding. No Shares shall be delivered pursuant to any exercise of the
Vested Portion of an Option until payment in full of the Exercise Price therefor
is received by the Company and the Participant has paid to the Company an amount
equal to any Federal, state, local and non-U.S. income and employment taxes and
other applicable taxes required to be withheld in accordance with the terms of
this Agreement and the Plan. The Participant shall be required to pay to the
Company or any Affiliate and the Company or its Affiliates shall have the right
and are authorized to withhold any applicable withholding or other applicable
taxes in respect of an Option, its exercise, or any payment or transfer under or
with respect to an Option and to take such other action as may be necessary in
the opinion of the Committee to satisfy all obligations for the payment of such
withholding or other applicable taxes.
11. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise
of an Option, the Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.
12. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given when personally delivered,
telecopied (with confirmation of receipt), one day after deposit with a
reputable overnight delivery service (charges prepaid) and three days after
deposit in the U.S. Mail (postage prepaid and return receipt requested) to the
address set forth below or such other address as the recipient party has
previously delivered notice to the sending party.
(a) If to the Company:
Gates Industrial Corporation plc
c/o Gates Corporation
1144 Fifteenth Street, Suite 1400
Denver, Colorado 80202
Attention: General Counsel
Fax: (303) 744-4500
 
with a copy (which shall not constitute notice) to:
c/o The Blackstone Group, L.P.
345 Park Avenue
New York, New York 10154
Attention: Neil P. Simpkins
Fax: (212) 583-5257
and
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017-3954
Attn: Gregory Grogan

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Fax: (212) 455-2502
(b) If to the Participant, to the address as shown on the personnel records of
the Company.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Cayman Islands without regard to conflicts of
laws (except that the provisions of Sections 5 and 6 shall be governed by the
law of the state of Colorado). Any suit, action or proceeding with respect to
this Agreement, or any judgment entered by any court in respect of any thereof,
shall be brought exclusively in any court of competent jurisdiction in Denver,
Colorado, and each of the Company and the Participant hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment. The Participant and the Company hereby irrevocably
waives (i) any objections which it may now or hereafter have to the laying of
the venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in Denver, Colorado,
(ii) any claim that any such suit, action or proceeding brought in any such
court has been brought in any inconvenient forum and (iii) any right to a jury
trial.
14. Option Subject to Plan, Shareholders Agreement and Subscription Agreement.
By entering into this Agreement the Participant agrees and acknowledges that the
Participant has received and read a copy of the Plan, the Shareholders Agreement
and the Subscription Agreement. The Options and the Shares received upon
exercise of an Option are subject to the Plan, the Shareholders Agreement and
the Subscription Agreement. The terms and provisions of the Plan, the
Shareholders Agreement and the Subscription Agreement, as each may be amended
from time to time are hereby incorporated by reference. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the Shareholders Agreement or the Subscription Agreement, the
applicable terms and provisions of the Plan, the Shareholders Agreement or the
Subscription Agreement will govern and prevail. In the event of a conflict
between any term or provision of the Plan and any term or provision of the
Shareholders Agreement or the Subscription Agreement, the applicable terms and
provisions of the Shareholders Agreement or the Subscription Agreement, as
applicable, will govern and prevail.
15. Amendment. The Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate this Agreement,
but no such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination shall be materially adverse to the Participant
hereunder without the consent of the Participant unless such action is made in
accordance with the terms of the Plan.
16. Entire Agreement. This Agreement and the documents referred to herein or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof, provided that if the Company or its Affiliates is a party to one or
more agreements with the Participant related to the matters subject to Sections
5 and 6, such other agreements shall remain in full force and effect and
continue in addition to this Agreement. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings with respect to
the subject matter hereof other than those expressly set forth herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter, other than as
specifically provided for herein.
17. Signature in Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
[The remainder of this page intentionally left blank.]

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*    *    *    *    *
This Nonqualified Stock Option Agreement between the
Company and the Participant named on the Participant
Master Signature Page hereto is dated and executed as of the
date set forth on such Participant Master Signature Page.
*    *    *    *    *

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Exhibit A
Shareholders Agreement
(Distributed Separately)

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Exhibit B
Subscription Agreement
(Distributed Separately)