Document:

Exhibit 10.18

 

EXECUTION VERSION

 

FTPS Holding, LLC
 (f/k/a Fifth Third Processing Solutions, LLC)
 Management Phantom Equity Plan

 

Phantom Unit Agreement

 

This PHANTOM UNIT AGREEMENT (the “Agreement”) is entered into as of June 30, 2009 (the “Grant Date”) by and between FTPS Holding, LLC (f/k/a Fifth Third Processing Solutions, LLC), a Delaware limited liability company (the “Company”), and Charles D. Drucker (the “Participant”) pursuant to the FTPS Holding, LLC (f/k/a Fifth Third Processing Solutions, LLC) Management Phantom Equity Plan (as in effect as of the Grant Date, the “Plan”).

 

Certain capitalized terms used in this Agreement are defined in Section 9.  Any capitalized terms used in this Agreement and not defined in Section 9 or elsewhere in this Agreement shall have the meanings ascribed to such terms in the Plan.

 

1.                                      Grant of Phantom Units.  The Company hereby grants to the Participant 1,902,173(1) Phantom Units, subject to the terms and conditions set forth herein and in the Plan.  A total of 815,217 Phantom Units shall vest based upon the occurrence of certain events, as described in Section 3 (the “Time Award”), and a total of 1,086,956 Phantom Units shall vest based upon achievement of specified performance goals, as described in Section 4 (the “Performance Award”).

 

2.                                      Base Price.  The Base Price of each Phantom Unit shall be $11.00.

 

3.                                      The Time Award.

 

(a)                                 Vesting.

 

(i)                                     The Time Award shall become immediately fully vested on the earliest of (A) the fifth anniversary of the Grant Date or (B) the date of the consummation of a Change of Control, subject in each case to the Participant’s continued Service through such date.

 

(ii)                                  Notwithstanding the provisions of Section 3(a)(i), upon the earlier of (A) an Initial Public Offering or (B) the Participant’s Qualified Termination of Service, in each case, prior to the fifth anniversary of the Grant Date or the date of the consummation of a Change of Control, the Time Award shall vest in an amount, if any, equal to the number of Phantom Units underlying the Time Award multiplied by a fraction, (1) the numerator of which is (A) four, plus (B) the number of whole calendar quarters of the Participant’s continued Service, if any, since the nine month anniversary of the Grant Date through the date of such event (but in no event more than 20 in total for this clause (1)) and (2) the denominator of which is 20.  Any portion of the Time Award that does not vest upon an Initial Public Offering shall be converted into Restricted Stock in accordance with Section 3(c).

 

(1)  Represents 1.75% of the fully diluted equity of the Company (without giving effect to the conversion of the Warrant).

 

 

(b)                                 Payments and Issuances.

 

(i)                                     Following an Initial Public Offering, the portion of the Time Award that becomes vested pursuant to Section 3(a)(ii)(A) shall convert into that number of shares of Unrestricted Stock equal to (A) the number of vested Phantom Units underlying the Time Award, multiplied by (B) a fraction, the numerator of which is the IPO Price minus the Base Price, and the denominator of which is the IPO Price, which issuance shall be made as soon as practicable, but in no event later than December 31 of the calendar year in which such Initial Public Offering occurs.

 

(ii)                                  Following a Participant’s Qualified Termination of Service prior to the date of the consummation of a Change of Control, the Company shall pay to the Participant cash in an amount equal to (or, at the election of the Board, if applicable, the Company or its successor shall issue that number of shares of stock or other securities of the Company or such successor valued at) the difference between (A) the greater of (x) the Fair Market Value of a Class A Unit as of the date on which such termination occurs and (y) the Fair Market Value of a Class A Unit as of the Payout Date and (B) the Base Price, for each Phantom Unit under the Time Award that is vested on the date of termination, which payment (or issuance) shall be made as soon as practicable on or after the Payout Date, but in no event later than December 31 of the calendar year in which the Payout Date occurs.

 

(iii)                               Following a termination of Service by the Participant without Good Reason on or after the third anniversary of the Grant Date (which shall be deemed to constitute a “Qualified Termination of Service” solely for purposes of determining the number of Phantom Units under the Time Award that have vested upon such termination pursuant to Section 3(a)(ii)) and prior to the date of the consummation of a Change of Control, the Company shall pay to the Participant cash in an amount equal to (or, at the election of the Board, if applicable, the Company or its successor shall issue that number of shares of stock or other securities of the Company or such successor valued at) the difference between (A) the lesser of (x) the Fair Market Value of a Class A Unit as of the date on which such termination occurs and (y) the Fair Market Value of a Class A Unit as of the Payout Date and (B) the Base Price, for each Phantom Unit that is vested on the date of termination, which payment (or issuance) shall be made as soon as practicable on or after the Payout Date, but in no event later than December 31 of the calendar year in which the Payout Date occurs.

 

(iv)                              Following a Change of Control, the Company shall pay to the Participant cash in an amount equal to (or, at the election of the Board, if applicable, the Company or its successor shall issue that number of shares of stock or other securities of the Company or such successor valued at) the difference between (A) the Fair Market Value of a Class A Unit as of the date of the consummation of the Change of Control and (B) the Base Price, for each Phantom Unit under the Time Award that becomes vested pursuant to Section 3(a)(i)(B), which payment (or issuance) shall be made as soon as practicable on or after the date of the consummation of the Change of Control, but in no event later than December 31 of the calendar year in which such Change of Control occurs.

 

(v)                                 If no amounts are paid pursuant to Sections 3(b)(i), (ii), (iii) or (iv), subject to the Participant’s continued Service, the Company shall pay to the Participant cash

 

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in an amount equal to (or, at the election of the Board, if applicable, the Company or its successor shall issue that number of shares of stock or other securities of the Company or such successor valued at) the difference between (A) the Fair Market Value of a Class A Unit as of the Payout Date and (B) the Base Price, for each Phantom Unit under the Time Award, which payment (or issuance) shall be made as soon as practicable on or after the seventh anniversary of the Grant Date, but in no event later than December 31 of the calendar year in which such anniversary date occurs.

 

(c)                                  Conversion Upon an Initial Public Offering.  Upon the consummation of an Initial Public Offering, any unvested portion of the Time Award determined pursuant to Section 3(a)(ii) shall convert into that number of shares of Restricted Stock equal to (i) the number of unvested Phantom Units underlying the Time Award, multiplied by (ii) a fraction, the numerator of which is the IPO Price minus the Base Price, and the denominator of which is the IPO Price.  The restrictions on such Restricted Stock shall lapse in equal installments over the number of whole calendar quarters equal to the difference between 20 and the numerator of the fraction determined under Section 3(a)(ii), subject to the Participant’s continued Service on each such vesting date (for the avoidance of doubt, no further vesting of such Restricted Stock shall occur following the termination for any reason of the Participant’s Service).  The installments provided for in the previous sentence shall be measured based on the same schedule that would have applied if the Restricted Stock vested in quarterly installments from the Grant Date.  Subject to the Participant’s continued Service, in the event that a Change of Control occurs following an Initial Public Offering, the restrictions on any remaining Restricted Stock shall lapse and become fully vested upon such Change of Control.

 

4.                                      The Performance Award.  Upon the earlier of the consummation of a Change of Control or the consummation of an Initial Public Offering, the Performance Award shall either (x) vest in the event of such earlier Change of Control or (y) convert into shares of Restricted Stock in the event of such earlier Initial Public Offering, in any such event, upon the following terms and conditions:

 

(a)                                 Vesting Upon a Change of Control.  Upon the consummation of a Change of Control prior to an Initial Public Offering:

 

(i)                                     if the holders of Class A Units of the Company as of June 30, 2009 receive Proceeds per Class A Unit in such Change of Control in an amount equal to or exceeding $22.588235, then up to 25% of the Performance Award shall vest;

 

(ii)                                  if the holders of Class A Units of the Company as of June 30, 2009 receive Proceeds per Class A Unit in such Change of Control in an amount equal to or exceeding $28.088235, then up to an additional 25% of the Performance Award shall vest;

 

(iii)                               if the holders of Class A Units of the Company as of June 30, 2009 receive Proceeds per Class A Unit in such Change of Control in an amount equal to or exceeding $33.588235, then up to an additional 25% of the Performance Award shall vest; and

 

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(iv)                              if the holders of Class A Units of the Company as of June 30, 2009 receive Proceeds per Class A Unit in such Change of Control in an amount equal to or exceeding $39.088235, then up to an additional 25% of the Performance Award shall vest.

 

For purposes of this Agreement, Proceeds received by a holder of Class A Units in a Change of Control on account of a share of common stock or other equity of TransActive Ecommerce Solutions Inc. (the “Transactive Shares”) shall be included in calculating the amount of Proceeds per Class A Unit received by such holder in a Change of Control.

 

The number of Phantom Units under the Performance Award that will vest upon the consummation of such Change of Control shall equal the maximum number of Phantom Units under the Performance Award that can vest and still result in Proceeds per Class A Unit equal to or exceeding the applicable “Proceeds per Class A Unit” thresholds described above, taking into account the Proceeds payable with respect to (x) all Units and Transactive Shares, (y) all vested, in-the-money Phantom Units granted under the Plan (including pursuant to this Agreement) and (z) all vested, in-the-money warrants and other rights to acquire equity in the Company; and, for the avoidance of doubt, all other performance-based awards granted under the Plan that have the same applicable “Proceeds per Class A Unit” thresholds as described above shall vest on a pro rata basis with the Performance Award under this Agreement, based on the total number of Phantom Units underlying such awards.  Any Performance Awards that do not vest upon such Change of Control shall be immediately forfeited for no consideration.  Each Performance Award that vests upon such Change of Control shall be paid in cash in an amount equal to the difference between (A) the Fair Market Value of a Class A Unit on the date of such Change of Control (which, for the sake of clarity, shall equal the value of the Proceeds per Class A Unit) and (B) the Base Price, which payment shall be made as soon as practicable, but in no event later than March 15 of the calendar year following the year in which such Change of Control occurs.

 

(b)                                 Conversion Upon, and Vesting Following, an Initial Public Offering.  Upon the consummation of an Initial Public Offering prior to a Change of Control, the Performance Award shall convert into that number of shares of Restricted Stock equal to (i) the number of Phantom Units underlying the Performance Award, multiplied by (ii) a fraction, the numerator of which is the IPO Price minus the Base Price, and the denominator of which is the IPO Price.  The restrictions on the resultant Restricted Stock shall lapse in one-third increments on the first, second and third anniversaries of such Initial Public Offering, subject to the Participant’s continued Service on each such vesting date (for the avoidance of doubt, no further vesting of such Restricted Stock shall occur following the termination for any reason of the Participant’s Service).  Subject to the Participant’s continued Service, in the event that a Change of Control occurs following an Initial Public Offering, the restrictions on any remaining Restricted Stock shall lapse and become fully vested upon such Change of Control.

 

5.                                      Forfeiture of Phantom Units.

 

(a)                                 Any Termination of Service.  Upon any termination of Service for any reason prior to a Change of Control or an Initial Public Offering, all unvested Phantom Units as of the date of termination shall be automatically and immediately forfeited for no consideration except as provided in Section 3(a)(ii).

 

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(b)                                 Bad Leaver.  If a Participant’s Service is terminated by the Company for Cause at any time or by the Participant without Good Reason before the third anniversary of the Grant Date, then all Phantom Units, whether vested or unvested, shall be automatically and immediately forfeited for no consideration.

 

6.                                      IPO Conversion.  For the avoidance of doubt, the provisions providing for the conversion of Phantom Units into Unrestricted Stock or Restricted Stock shall apply only in the event of an Initial Public Offering in which an IPO Conversion has occurred.

 

7.                                      Restricted Stock Agreements; Other Agreements.  In the event that any Phantom Units are required to be converted into shares of Restricted Stock pursuant to the terms of this Agreement, the Participant shall enter into a restricted stock agreement in form and substance (a) consistent in all material respects with the provisions of this Agreement and the Plan and (b) otherwise reasonably satisfactory to the Company.  The Participant agrees that, if requested by the Company in connection with an Initial Public Offering, the Participant will not sell, offer for sale, or otherwise dispose of the Common Stock for such period of time as is determined by the Board..  Any transfers of the Common Stock shall comply with all applicable securities laws.

 

8.                                      Adjustment of Phantom Units.  In the event of any change in the Units after the Grant Date or any other event described in Section 6 of the Plan occurring after the Grant Date, any adjustments to Phantom Units shall be made in accordance with the terms of Section 6 of the Plan.

 

9.                                      Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

(a)                                 “Change of Control” means any event or series of events that results in the occurrence of both (x) a Change of Control (as such term is defined in the LLC Agreement) and (y) any one or more of the following events:

 

(i)                                     a change in the ownership of the Company occurs on the date that any one Person (or more than one Person acting as a group, as defined in Final Treas. Reg. Section 1.409A-3(i)(5)(v)(B)), acquires on an arms-length basis, ownership of Units of the Company that, together with Units held by such Person or group, constitutes more than 50% of the total fair market value or total voting power of Units of the Company; provided, however, (A) if any one Person (or more than one Person acting as a group), is considered to own more than 50% of the total fair market value or total voting power of the Company’s Units, the acquisition of additional Units by the same Person or Persons is not considered to cause a change in the ownership of the Company; (B) an increase in the percentage of Units owned by one Person, or Persons acting as a group, as a result of a transaction in which the Company acquires its Units in exchange for property will be treated as an acquisition of Units for purposes of this paragraph (i); and (C) this paragraph (i) applies only when there is a transfer of Units of the Company (or an issuance of Units of the Company) and Units in the Company remains outstanding after such transaction; or

 

(ii)                                  a change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one Person, or more than one Person acting as a

 

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group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) assets from the Company that have a total gross fair market value more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided that, for this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets; or

 

(iii)                               a change in control of the Board occurs on the date individuals who, as of the Grant Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that (A) if the election, or nomination for election by the Company’s members, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered a member of the Incumbent Board; and (B) any reductions in the size of the Board that are instituted voluntarily by the Incumbent Board shall not constitute a Change of Control, and after any such reduction the “Incumbent Board” shall mean the Board as so reduced.

 

(b)                                 “Good Reason” shall have the meaning set forth in the Participant’s then-effective employment agreement with the Company or any Parent or Subsidiary, or, if there is no then effective agreement, then “Good Reason” shall mean: a material diminution by the Company or any Parent or Subsidiary in the Participant’s base salary and/or the Participant’s annual bonus potential other than as part of an across-the-board reduction applicable to all senior executives of the Company or any Parent or Subsidiary that results in a proportional reduction to the Participant equal to that of other senior executives; provided that no finding of Good Reason shall be effective unless and until the Participant has provided the Company, within sixty (60) calendar days of becoming aware of the facts and circumstances underlying the finding of Good Reason, with written notice thereof stating with specificity the facts and circumstances underlying the finding of Good Reason and that the Participant intends to terminate his or her employment for Good Reason no later than the 60th day following the delivery of such notice to the Company and, if the basis for such finding of Good Reason is capable of being cured by the Company, providing the Company or any Parent or Subsidiary with an opportunity to cure the same within thirty (30) calendar days after receipt of such notice.

 

(c)                                  “IPO Price” means the offering price to the public of one share of Common Stock issued in the Initial Public Offering.

 

(d)                                 “Payout Date” means (i) the date on which a Change of Control is consummated or, (ii) in the event of a Qualified Termination of Service, the seventh anniversary of the Grant Date, if earlier.

 

(e)                                  “Proceeds” means cash proceeds and any other assets (the value of which will be determined by the Board in good faith), net of actual expenses (other than underwriting discounts).

 

(f)                                   “Qualified Termination of Service” means the Participant’s termination of Service by the Company without Cause, by the Participant with Good Reason or by reason of the Participant’s death or Disability.

 

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(g)                                  “Restricted Stock” means Common Stock that is subject to forfeiture pursuant to, and in accordance with, provisions that are consistent with Sections 3 and 4 of this Agreement.

 

(h)                                 “Transfer” or “Transferred” means, with respect to any Units, a direct or indirect sale, assignment, disposition, exchange, pledge, encumbrance, hypothecation or other transfer of such Units or any participation or interest therein, or any agreement or commitment to do any of the foregoing.

 

(i)                                     “Unrestricted Stock” means Common Stock that is not subject to forfeiture pursuant to, and in accordance with, provisions that are consistent with Sections 3 and 4 of this Agreement.

 

10.                               Miscellaneous Provisions.

 

(a)                                 Management Phantom Equity Plan.  These Phantom Units are granted under and subject to the terms and conditions of the Plan, which is attached to this Agreement as Exhibit A and incorporated herein and made part hereof by this reference.  Notwithstanding anything to the contrary in the Plan, in the event of a conflict between the terms of the Plan and this Agreement, the terms of this Agreement shall govern.  The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content.  The Participant hereby acknowledges that all decisions, determinations and interpretations of the Board or the Committee in respect of the Plan and the Phantom Units shall be final and conclusive.

 

(b)                                 No Retention Rights.  Nothing in this Agreement or the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without Cause, subject to the terms of any applicable employment agreement between the Participant and the Company or any Parent or Subsidiary.  Nothing herein shall be interpreted or construed as treating the Participant as a member or partner of the Company.

 

(c)                                  Entire Agreement.  This Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof.  This Agreement and the Plan supersede any other agreements, representations or understandings (whether oral or written and whether express or implied) which relate to the subject matter hereof.

 

(d)                                 Waiver.  No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature.

 

(e)                                  Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State without reference to principles of conflict of law.

 

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(f)                                   Waiver of Jury Trial.  The Participant waives any right it may have to trial by jury in respect of any litigation based on, arising out of, under or in connection with this Agreement or the Plan.

 

(g)                                  Choice of Forum.

 

(i)                                     Jurisdiction.  The Company and the Participant, as a condition to the Participant’s receipt of the Phantom Unit, hereby irrevocably submit to the exclusive jurisdiction of any state or federal court located in Hamilton County, Ohio over any suit, action or proceeding arising out of or relating to or concerning the Plan or this Agreement.  The Company and the Participant, as a condition to the Participant’s receipt of the Phantom Unit, acknowledge that the forum designated by this Section 10(g)(i) has a reasonable relation to the Plan and this Agreement and to the relationship between the Participant and the Company.  Notwithstanding the foregoing, nothing herein shall preclude the Company from bringing any action or proceeding in any other court for the purpose of enforcing the provisions of Section 10(g).

 

(ii)                                  Acceptance of Jurisdiction.  The agreement by the Company and the Participant as to forum is independent of the law that may be applied in the action, and the Company and the Participant, as a condition to the Participant’s receipt of the Phantom Unit, (A) agree to such forum even if the forum may under applicable law choose to apply non-forum law, (B) hereby waive, to the fullest extent permitted by applicable law, any objection which the Company or the Participant now or hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or proceeding in any court referred to in Section 10(g)(i), (C) undertake not to commence any action arising out of or relating to or concerning the Plan or this Agreement in any forum other than the forum described in this Section 10(g) and (D) agree that, to the fullest extent permitted by applicable law, a final and non-appealable judgment in any such suit, action or proceeding in any such court shall be conclusive and binding upon the Company and the Participant.

 

(iii)                               Service of Process.  The Participant, as a condition to the Participant’s receipt of the Phantom Unit, hereby irrevocably appoints the General Counsel of the Company as the Participant’s agent for service of process in connection with any action, suit or proceeding arising out of or relating to or concerning the Plan or this Agreement, who shall promptly advise the Participant of any such service of process.

 

(iv)                              Confidentiality.  The Participant, as a condition to the Participant’s receipt of the Phantom Unit, agrees to keep confidential the existence of, and any information concerning, a dispute, controversy or claim described in Section 10(g), except that the Participant may disclose information concerning such dispute, controversy or claim to the court that is considering such dispute, controversy or claim or to the Participant’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute, controversy or claim).

 

(h)                                 Construction of Agreement.  Any provision of this Agreement (or portion thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this section, be ineffective to the extent of such invalidity, illegality or

 

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unenforceability, without affecting in any way the remaining provisions thereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction.

 

(i)                                     Non-Transferability.  This Agreement, and any rights or interests therein, shall not be Transferred by the Participant during the Participant’s lifetime, whether by operation of law or otherwise, except by beneficiary designation, will or the laws of descent and distribution.  Any attempt to Transfer this Agreement contrary to the terms of this Agreement and/or the Plan shall be null and void and without legal force or effect.

 

(j)                                    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

[The remainder of this page is left blank intentionally.]

 

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The Participant, by signing below, acknowledges and agrees as of the date first written above that these Phantom Units are granted under and governed by the terms, and subject to the conditions, of the FTPS Holding, LLC (f/k/a Fifth Third Processing Solutions, LLC) Management Phantom Equity Plan, which is attached to and made a part of this document.

 

	
Participant:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Charles D. Drucker
    	
 
    
	
 
    	
 
    	
 
    
	
Name:   
    	
Charles   D. Drucker
    	
 
    

 

 

[SIGNATURE PAGE TO DRUCKER PHANTOM EQUITY AWARD AGREEMENT]

 

 

	
FTPS   Holding, LLC
    	
 
    
	
(f/k/a   Fifth Third Processing Solutions, LLC)
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/ David Mussafer
    	
 
    
	
Name:
    	
David Mussafer
    	
 
    
	
Title:
    	
Director
    	
 
    

 

 

[SIGNATURE PAGE TO DRUCKER PHANTOM EQUITY AWARD AGREEMENT]

 

 

Exhibit A

 

FTPS Holding, LLC (f/k/a Fifth Third Processing Solutions, LLC)
  Management Phantom Equity PlanExhibit 10.19

 

Execution Version

 

STOCK TRANSFER AGREEMENT

 

THIS STOCK TRANSFER AGREEMENT (this “Agreement”) is made as of June 30, 2009, by and among certain investment funds affiliated with Advent International Corporation signatory thereto and hereto (the “Advent Funds”), Advent Kong Blocker Corp. (the “Company”) and Pamela Patsley (the “Transferee” and together with the Advent Funds, the “Investors”).  Capitalized terms used herein and not otherwise defined shall have the meaning assigned to such terms in the Master Investment Agreement (as defined below).

 

RECITALS

 

WHEREAS, pursuant to that certain Master Investment Agreement by and among the Company, Fifth Third Bank, a bank chartered under the laws of the State of Ohio (“Seller”), FTPS Holding, LLC (f/k/a Fifth Third Processing Solutions, LLC), a limited liability company formed under the laws of the State of Delaware (“Holdco”), and Fifth Third Processing Solutions, LLC (f/k/a FTPS Opco, LLC), a limited liability company formed under the laws of the State of Delaware, dated as of March 27, 2009 and amended as of June 30, 2009 (as amended from time to time, the “Master Investment Agreement”), the Company desires to purchase, and Seller desires to sell, an approximately 50.9% interest in Holdco upon the Closing Date (the “Transaction”);

 

WHEREAS, in connection with the performance of the Master Investment Agreement and the consummation of the Transaction, the Advent Funds invested cash in the Company in return for shares of common stock, $0.01 par value per share, of the Company (the “Common Stock”);

 

WHEREAS, pursuant to Section 2.3(c) of the Master Investment Agreement, the Company will use the cash invested by the Advent Funds to purchase from Seller Class A Units representing an approximately 50.9% interest in Holdco; and

 

WHEREAS, in connection with certain services the Transferee has provided to the Company, the Advent Funds desire to transfer on a pro rata basis to the Transferee an aggregate amount of 3,049 shares of Common Stock (the “Share Transfer”) and pay on a pro rata basis the Transferee $2,300,000 in cash (the “Cash Payment”) in full satisfaction of any and all success fees to which the Transferee is or may be entitled with respect to the Transaction.

 

NOW, THEREFORE, in consideration of the mutual promises and subject to the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I
 ISSUANCE OF SHARES

 

1.1          Transfer of Shares.  Subject to the terms and conditions of this Agreement, at the Closing, the Advent Funds shall, on a pro rata basis, transfer to the Transferee, an aggregate amount of 3,049 shares (the “Shares”) of Common Stock. The number of shares of Common Stock each of the Advent Funds shall transfer to Transferee is set forth on Exhibit A attached hereto.

 

1.2          Closing.  The closing of the transactions described in Section 1.1 above (the “Closing”) will occur on the date hereof at such place as the Advent Funds and the Transferee

 

 

mutually agree and shall be effective immediately before the Closing, as such term is defined in the Master Investment Agreement.

 

ARTICLE II
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

2.1          The Advent Funds hereby represent and warrant to the Transferee as follows:

 

(a)           Existence and Good Standing.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

 

(b)           Capital Stock. The authorized capital stock of the Company consists of 510,000 shares of Common Stock.  Following the consummation of the transactions contemplated hereby, there will be 509,305 shares of Common Stock issued and outstanding, all of which will be owned by the Investors.

 

(c)           Power.  The Advent Funds have the requisite power and authority to execute, deliver and perform fully its obligations under this Agreement.

 

(d)           Validity and Enforceability.  This Agreement has been duly executed and delivered by the Advent Funds and represents the legal, valid and binding obligation of the Advent Funds, enforceable against the Advent Funds in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar laws and principles of equity affecting creditors’ rights and remedies generally.

 

(e)           No Conflict.  Neither the execution of this Agreement nor the performance by the Advent Funds of its obligations hereunder will (i) violate or conflict with the Company’s Certificate of Incorporation or Bylaws or any applicable law or order, (ii) violate, conflict with or result in a breach or termination of, or otherwise give any person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time or both) a default under the terms of any note, deed, lease, instrument, security agreement, mortgage, commitment, contract, agreement, license or other instrument or oral understanding to which the Company is a party or (iii) result in the creation or imposition of any lien with respect to, or otherwise have an adverse effect upon, any of the assets or properties of the Company.

 

(f)            Consents.  No consent, approval or authorization of any person or governmental authority is required in connection with the execution and delivery by the Advent Funds of this Agreement or the consummation by the Advent Funds of the transactions contemplated by this Agreement.

 

(g)           Litigation.  There are no judicial or administrative actions, proceedings or investigations pending or, to the knowledge of the Advent Funds, threatened that question the validity of this Agreement or any of the transactions contemplated hereby.

 

(h)           Ownership of the Company.  Upon the issuance of all Shares to the Transferee at Closing, each issued and outstanding Share will be duly authorized, validly issued and fully paid and nonassessable.  The Company does not own equity securities of any other entity.

 

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(i)            Shareholder Rights.  Except as contemplated in that certain Amended and Restated Limited Liability Company Agreement of Holdco, dated as of the date first written above, and that certain Registration Rights Agreement by and among the Seller, the Company and Holdco, dated as of the date first written above, the Company has not granted preemptive, registration or similar rights with respect to any capital stock of the Company to any party.

 

ARTICLE III
 REPRESENTATION, WARRANTIES AND AGREEMENTS OF THE TRANSFEREE

 

3.1          Representations and Warranties of the Transferee.  The Transferee hereby represents and warrants to the Advent Funds and agrees with the Advent Funds as follows:

 

(a)           The Transferee has such knowledge and experience in financial and business matters that the Transferee is capable of protecting the Transferee’s own interests in connection with the acquisition of the Shares and evaluating the merits and risks of the Transferee’s investments in the Company.

 

(b)           The Transferee and the Transferee’s advisors have such knowledge and experience in financial, tax and business matters so as to enable the Transferee to utilize the information made available to the Transferee in connection with the investment contemplated hereby to evaluate the merits and risks of investments in the Company and to make an informed investment decision with respect thereto, and the Transferee is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  The Transferee is familiar with the type of investment that the Shares constitute and recognizes that an investment in the Company involves substantial risks, including risk of loss of the entire amount of such investment.  The Transferee can bear the economic risk of the acquisition of the Shares and of the loss of the entire amount of its investment in the Shares.

 

(c)           The Transferee is aware that there are limitations and restrictions on the circumstances under which the Transferee may offer to sell, transfer or otherwise dispose of the Shares.  The Transferee acknowledges that as a result of such limitations and restrictions, it might not be possible to liquidate an investment in the Shares readily and that it may be necessary to hold such investment for an indefinite period.

 

(d)           The Transferee and the Transferee’s advisors have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the terms and conditions of the offering of the Shares, have had all such questions answered to the Transferee’s satisfaction and have had access to, and been supplied with, all additional information deemed necessary by the Transferee to verify the accuracy of such information.

 

(e)           The Transferee is acquiring the Shares for the Transferee’s own account, for investment and not with a view to resale or distribution except in compliance with the Securities Act.  The Transferee agrees not to sell or otherwise transfer the Shares without registration under the Securities Act or applicable state securities laws or an exemption therefrom.  The Transferee acknowledges that the Shares have not been registered under the Securities Act or the securities laws of any state.

 

3

 

(f)            The Transferee has the requisite power and authority to enter into this Agreement and to undertake and complete the transactions contemplated herein.

 

(g)           Neither the execution of this Agreement nor the performance by the Transferee of the Transferee’s obligations hereunder will (a) violate or conflict with the Transferee’s organizational documents or any applicable law or order or (b) violate, conflict with or result in a breach or termination of, or otherwise give any person additional rights or compensation under, or the right to terminate or accelerate, or constitute (with notice or lapse of time or both) a default under the terms of any note, deed, lease, instrument, security agreement, mortgage, commitment, contract, agreement, license or other instrument or oral understanding to which the Transferee is a party.

 

(h)           No consent, approval or authorization of any person or governmental authority is required in connection with the execution and delivery by the Transferee of this Agreement or the consummation by the Transferee of the transactions contemplated by this Agreement.

 

(i)            This Agreement has been duly and validly executed and delivered by the Transferee and constitutes the legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and other similar laws and principles of equity affecting creditors’ rights and remedies generally.  No further corporate, partnership or limited liability company action on the part of the Transferee is or will be required in connection with the transactions contemplated hereby.

 

(j)            The Transferee acknowledges and agrees that, upon the Transferee’s receipt of the Cash Payment and upon the effectuation of the Share Transfer, all obligations of the Company and any and all of its affiliates and shareholders to pay any success fee in connection with the Transaction are satisfied in full.

 

(k)           The Transferee agrees to provide to the Company at the Closing a properly completed and executed Internal Revenue Service Form W-9, attesting to her taxpayer identification number (TIN) under penalties of perjury.  The Transferee acknowledges and agrees that she is an independent contractor and will receive an Internal Revenue Service Form 1099-MISC from the Company with respect to the Cash Payment and the Share Transfer, and that she is responsible for the payment of any taxes (including estimated taxes and self-employment taxes) that may be due with respect to the Cash Payment or the Share Transfer.  The Transferee agrees to report as ordinary compensation income for the 2009 tax year the aggregate amount of $5,779,903.22, representing the sum of the Cash Payment and the fair market value of the Shares at the time of the Share Transfer of $3,479,903.22, for all relevant federal, state, local or foreign income tax purposes.

 

4

 

ARTICLE IV
 MISCELLANEOUS

 

4.1          Governing Law.  The Agreement shall be governed by and construed, interpreted and enforced in accordance with the internal laws of the State of Delaware, without giving effect to principles of conflict of laws thereof.

 

4.2          Waiver.  Compliance with the provisions of this Agreement may be waived only by a written instrument specifically referring to this Agreement and signed by the party waiving compliance.  No course of dealing, nor any failure or delay in exercising any right, shall be construed as a waiver, and no single or partial exercise of a right shall preclude any other or further exercise of that or any other right.

 

4.3          Entire Agreement.  This Agreement is the exclusive statement of the agreement among the parties concerning the subject matter hereof.  All negotiations, disclosures, discussions and investigations relating to the subject matter of this Agreement are merged into this Agreement, and there are no representations, warranties, covenants, understandings or agreements, oral or otherwise, relating to the subject matter of this Agreement, other than those included or referenced herein.

 

4.4          Survival of Representations and Warranties.  All representations, warranties, covenants and agreements set forth in this Agreement shall survive the execution and delivery of this Agreement and the closing and the consummation of the transactions contemplated hereby.

 

4.5          Successors and Assigns.  This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

4.6          Severability.  In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected.

 

4.7          Consent to Jurisdiction.  Each of the parties to this Agreement consents to submit to the exclusive personal jurisdiction of any state or federal court located in Delaware in any action or proceeding arising out of or relating to this Agreement, agrees that all claims in respect of any such action or proceeding may be heard and determined in any such court and agrees not to bring any action or proceeding arising out of or relating to this Agreement in any other court.

 

4.8          Headings and Counterparts.  The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.  This Agreement may be executed in counterparts, each of which when so executed shall be deemed to be an original, and all of which when taken together shall constitute one and the same instrument.

 

4.9          Further Assurances.  Each party shall cooperate and take such action as may be reasonably requested by another party in order to carry out the provisions and purposes of this Agreement and the transactions contemplated hereby.

 

5

 

4.10        Expenses.  The Company shall pay all expenses of the Company and each of the Investors, including the fees and expenses of their respective legal counsel and other advisors, incurred on its behalf in connection with the preparation and negotiation of this Agreement, the Master Investment Agreement and consummation of the transactions contemplated hereby and thereby.

 

4.11        Certain Interpretive Matters.

 

(a)           Unless the context otherwise requires:  (i) all references to Sections, are to Sections of this Agreement; (ii) each term defined in this Agreement has the meaning assigned to it; (iii) each accounting term not otherwise defined in this Agreement has the meaning assigned to it in accordance with generally accepted accounting principles; (iv) words in the singular include the plural and vice-versa; and (v) the term “including” means “including without limitation.”  All references to laws in this Agreement will include any applicable amendments thereunder.  All references to $ or dollar amounts will be to lawful currency of the United States.  To the extent the term “day” or “days” is used, it will mean calendar days (unless referred to as a “business day”).

 

(b)           No provision of this Agreement shall be interpreted in favor of, or against, any of the parties hereto by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof.

 

[Signatures on Following Page]

 

6

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
ADVENT-KONG   BLOCKER CORP.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Christopher Pike
    
	
 
    	
Name:
    	
Christopher   Pike
    
	
 
    	
Title:
    	
President
    
					

 

[SIGNATURE PAGE TO PATSLEY SPA]

 

 

	
 
    	
Advent International GPE VI Limited Partnership
    
	
 
    	
Advent International GPE VI-A Limited Partnership
    
	
 
    	
Advent International GPE VI-B Limited Partnership
    
	
 
    	
Advent International GPE VI-F Limited Partnership
    
	
 
    	
Advent International GPE VI-G Limited Partnership
    
	
 
    	
 
    
	
 
    	
By:
    	
GPE VI GP Limited Partnership, General Partner
    
	
 
    	
By:
    	
Advent International LLC, General Partner
    
	
 
    	
By:
    	
Advent International Corporation, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Christopher Pike
    	
, Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
Advent International GPE VI-C Limited Partnership
    
	
 
    	
Advent International GPE VI-D Limited Partnership
    
	
 
    	
Advent International GPE VI-E Limited Partnership
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GPE VI GP (Delaware) Limited Partnership, General 
    
	
 
    	
Partner
    
	
 
    	
By:
    	
Advent International LLC, General Partner
    
	
 
    	
By:
    	
Advent International Corporation, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Christopher Pike
    	
, Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
Advent Partners GPE VI 2009 Limited Partnership
    
	
 
    	
Advent Partners GPE VI 2008 Limited Partnership
    
	
 
    	
Advent Partners GPE VI — A Limited Partnership
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
Advent International LLC, General Partner
    
	
 
    	
By:
    	
Advent International Corporation, Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Christopher Pike
    	
, Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
GPE VI FT Co-Investment Limited Partnership
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
GPE VI FT Co-Investment GP Limited Partnership;
    
	
 
    	
By:
    	
Advent International LLC, General Partner;
    
	
 
    	
By:
    	
Advent International Corporation, Manager,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Christopher Pike
    	
, Vice President
    
					

 

 

[SIGNATURE PAGE TO PATSLEY TRANSFER AGREEMENT]

 

 

[Signatures continued on next page]

 

 

[SIGNATURE PAGE TO PATSLEY TRANSFER AGREEMENT]

 

 

	
 
    	
Pamela   Patsley
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Pamela Patsley
    

 

 

[SIGNATURE PAGE TO PATSLEY TRANSFER AGREEMENT]

 

 

EXHIBIT A

 

TRANSFERRED SHARES

 

	
Advent Fund
    	
 
    	
No. of Shares of Common
   Stock
    	
 
    
	
Advent International GPE VI Limited Partnership
    	
 
    	
1,234
    	
 
    
	
Advent International GPE VI-A Limited Partnership
    	
 
    	
721
    	
 
    
	
Advent International GPE VI-B Limited Partnership
    	
 
    	
62
    	
 
    
	
Advent International GPE VI-C Limited Partnership
    	
 
    	
64
    	
 
    
	
Advent International GPE VI-D Limited Partnership
    	
 
    	
51
    	
 
    
	
Advent International GPE VI-E Limited Partnership
    	
 
    	
154
    	
 
    
	
Advent International GPE VI-F Limited Partnership
    	
 
    	
232
    	
 
    
	
Advent International GPE VI-G Limited Partnership
    	
 
    	
146
    	
 
    
	
Advent Partners GPE VI 2008 Limited Partnership
    	
 
    	
45
    	
 
    
	
Advent Partners GPE VI 2009 Limited Partnership
    	
 
    	
1
    	
 
    
	
Advent Partners GPE VI-A Limited Partnership
    	
 
    	
4
    	
 
    
	
GPE VI FT Co-Investment Limited Partnership
    	
 
    	
334
    	
 
    
	
Total
    	
 
    	
3,049

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