Document:

Exhibit 10.18

 

Employee Stock Option Agreement
 (Matching Options and Position Options)

 

This Employee Stock Option Agreement, dated as of May 25, 2011, between CDRT Holding Corporation, a Delaware corporation, and the Employee whose name appears on the signature page hereof, is being entered into pursuant to the CDRT Holding Corporation Stock Incentive Plan.  The meaning of capitalized terms may be found in Section 7.

 

The Company and the Employee hereby agree as follows:

 

Section 1.              Grant of Options

 

(a)                 Confirmation of Grant.  The Company hereby evidences and confirms, effective as of the date hereof, its grant to the Employee of Options to purchase the number of shares of Common Stock specified on the signature page hereof.  The Options are not intended to be incentive stock options under the Code.  This Agreement is entered into pursuant to, and the terms of the Options are subject to, the terms of the Plan.  If there is any inconsistency between this Agreement and the terms of the Plan, the terms of the Plan shall govern.

 

(b)                Option Price.  Each share covered by an Option shall have the Option Price specified on the signature page hereof.

 

Section 2.              Vesting and Exercisability

 

(a)                 Vesting.  Except as otherwise provided in Section 6(a) or Section 2(b) of this Agreement, the Options shall become vested in five equal annual installments, with the first installment becoming vested on December 31, 2011, and the subsequent installments becoming vested on December 31 of each of the four subsequent calendar years; provided that if the Employee’s employment with the Company is terminated in a Special Termination (i.e., by reason of the Employee’s death or Disability), any Options held by the Employee shall immediately vest as of the effective date of such Special Termination.

 

(b)                Discretionary Acceleration.  The Board, in its sole discretion, may accelerate the vesting or exercisability of all or a portion of the Options, at any time and from time to time.

 

(c)                 Exercise.  Once vested in accordance with the provisions of this Agreement, the Options may be exercised at any time and from time to time prior to the date such Options terminate

 

 

pursuant to Section 3.  Options may only be exercised with respect to whole shares of Common Stock and must be exercised in accordance with Section 4.

 

(d)                No Other Accelerated Vesting.  The vesting and exercisability provisions set forth in this Section 2 or in Section 6, or expressly set forth in the Plan, shall be the exclusive vesting and exercisability provisions applicable to the Options and shall supersede any other provisions relating to vesting and exercisability, unless such other such provision expressly refers to the Plan by name and this Agreement by name and date.

 

Section 3.              Termination of Options

 

(a)                 Normal Termination Date.  Unless earlier terminated pursuant to Section 3(b) or Section 6, the Options shall terminate on the tenth anniversary of the Grant Date (the “Normal Termination Date”), if not exercised prior to such date.

 

(b)                Early Termination.  If the Employee’s employment with the Company terminates for any reason, any Options held by the Employee that have not vested before the effective date of such termination of employment or that do not become vested on such date in accordance with Section 2 shall terminate immediately upon such termination of employment and, if the Employee’s employment is terminated for Cause, all Options (whether or not then vested or exercisable) shall automatically terminate immediately upon such termination.  All vested Options held by the Employee following the effective date of a termination of employment shall remain exercisable until the first to occur of (i) the 90th day following the effective date of the Employee’s termination of employment (or the 180th day in the case of a Special Termination or a Retirement), (ii) the Normal Termination Date or (iii) the cancellation of the Options pursuant to Section 6(a), and if not exercised within such period the Options shall automatically terminate upon the expiration of such period.

 

Section 4.              Manner of Exercise

 

(a)                 General.  Subject to such reasonable administrative regulations as the Board may adopt from time to time, the Employee may exercise vested Options by giving at least 15 business days prior written notice to the Secretary of the Company specifying the proposed date on which the Employee desires to exercise a vested Option (the “Exercise Date”), the number of whole shares with respect to which the Options are being exercised (the “Exercise Shares”) and the aggregate Option Price for such Exercise Shares (the “Exercise Price”); provided that following a Public Offering

 

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notice may be given within such lesser period as the Board may permit.  The Exercise Shares shall be subject to the Subscription Agreement to which the Employee is then a party, or, if the Employee is not then a party to a Subscription Agreement, the Company and the Employee shall enter into the Subscription Agreement attached to this Agreement as Exhibit A.  Except as provided in Section 4(c) or as otherwise determined by the Board, and subject to such other terms, representations and warranties as may be provided for in the Subscription Agreement, (i) on or before the Exercise Date the Employee shall deliver to the Company full payment for the Exercise Shares in United States dollars in cash, or cash equivalents satisfactory to the Company, in an amount equal to the Exercise Price plus any required withholding taxes or other similar taxes, charges or fees and (ii) the Company shall register the issuance of the Exercise Shares on its records (or direct such issuance to be registered by the Company’s transfer agent).  The Company may require the Employee to furnish or execute such other documents as the Company shall reasonably deem necessary (i) to evidence such exercise, (ii) to determine whether registration is then required under the Securities Act or other applicable law or (iii) to comply with or satisfy the requirements of the Securities Act, applicable state or non-U.S. securities laws or any other law.

 

(b)                Restrictions on Exercise.  Notwithstanding any other provision of this Agreement, the Options may not be exercised in whole or in part, and no certificates representing Exercise Shares shall be delivered, unless (A) all requisite approvals and consents of any governmental authority of any kind shall have been secured, (B) the purchase of the Exercise Shares shall be exempt from registration under applicable U.S. federal and state securities laws, and applicable non-U.S. securities laws, or the Exercise Shares shall have been registered under such laws, and (C) all applicable U.S. federal, state and local and non-U.S. tax withholding requirements shall have been satisfied.  The Company shall use its commercially reasonable efforts to obtain any consents or approvals referred to in clause (A) of the preceding sentence, but shall otherwise have no obligations to take any steps to prevent or remove any impediment to exercise described in such sentence.

 

(c)                 Exercise by Net Issuance.  Except to the extent limited by any of the Financing Agreements, at the election of the Employee made upon exercise of the Options following a termination of the Employee’s employment prior to a Public Offering in a Special Termination, by the Company without Cause or by the Employee with Good Reason, and in lieu of the Employee being required to pay the Exercise Price plus any required withholding taxes or other similar taxes, charges or fees in United States dollars in cash or cash

 

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equivalents satisfactory to the Company, the Company shall deliver to the Employee a lesser number of shares of Common Stock having a Fair Market Value on the date of exercise equal to the amount by which the Fair Market Value of the Exercise Shares exceeds the Exercise Price plus any required withholding taxes or other similar taxes, charges or fees.  In no event shall this Section 4(c) be construed to permit net issuance in excess of the applicable portion of the exercise price and minimum required withholding taxes.

 

Section 5.              Employee’s Representations; Investment Intention.  The Employee represents and warrants that the Options have been, and any Exercise Shares will be, acquired by the Employee solely for the Employee’s own account for investment and not with a view to or for sale in connection with any distribution thereof.  The Employee represents and warrants that the Employee understands that none of the Exercise Shares may be transferred, sold, pledged, hypothecated or otherwise disposed of unless the provisions of the Subscription Agreement shall have been complied with or have expired.

 

Section 6.              Change in Control

 

(a)                 Vesting and Cancellation.  In the event of a Change in Control, all then-outstanding unvested Options shall automatically vest in full such that all Options outstanding hereunder shall, immediately prior to the effective date of the Change in Control, be fully vested and exercisable.  Subject to Section 6(b), upon the Change in Control, all Options then outstanding shall be canceled in exchange for a payment having a value equal to the excess, if any, of (i) the product of the Change in Control Price multiplied by the aggregate number of shares covered by all such Options immediately prior to the Change in Control over (ii) the aggregate Option Price for all such shares, to be paid as soon as reasonably practicable, but in no event later than 30 days following the Change in Control.

 

(b)                Alternative Award.  Notwithstanding Section 6(a), no cancellation, termination, or settlement or other payment shall occur with respect to any Option pursuant to Section 6(a) if the Board reasonably determines prior to the Change in Control that the Employee shall receive an Alternative Award meeting the requirements of the Plan.

 

Section 7.              Certain Definitions.  As used in this Agreement, capitalized terms that are not defined herein have the respective meaning given in the Plan, and the following additional terms shall have the following meanings:

 

“Agreement” means this Employee Stock Option Agreement, as amended from time to time in accordance with the terms hereof.

 

“Code” means the United States Internal Revenue Code of 1986, as

 

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amended, and any successor thereto.

 

“Company” means CDRT Holding Corporation, provided that for purposes of determining the status of Employee’s employment with the “Company,” such term shall include the Company and/or any of its Subsidiaries that employ the Employee.

 

“Employee” means the grantee of the Options, whose name is set forth on the signature page of this Agreement; provided that for purposes of Section 4 and Section 8, following such person’s death “Employee” shall be deemed to include such person’s beneficiary or estate and following such Person’s Disability, “Employee” shall be deemed to include such person’s legal representative.

 

“Exercise Date” has the meaning given in Section 4(a).

 

“Exercise Price” has the meaning given in Section 4(a).

 

“Exercise Shares” has the meaning given in Section 4(a).

 

“Grant Date” means the date hereof, which is the date on which the Options are granted to the Employee.

 

“Normal Termination Date” has the meaning given in Section 3(a).

 

“Option” means the right granted to the Employee hereunder to purchase one share of Common Stock for a purchase price equal to the Option Price subject to the terms of this Agreement and the Plan.

 

“Option Price” means, with respect to each share of Common Stock covered by an Option, the purchase price specified in Section 1(b) for which the Employee may purchase such share of Common Stock upon exercise of an Option.

 

“Plan” means the CDRT Holding Corporation Stock Incentive Plan.

 

Section 8.              Miscellaneous.

 

(a)                 Withholding.  Subject to the terms of Section 4(c), the Company or one of its Subsidiaries may require the Employee to remit to the Company an amount in cash sufficient to satisfy any applicable U.S. federal, state and local and non-U.S. tax withholding or other similar charges or fees that may arise in connection with the grant, vesting, exercise or purchase of the Options.

 

(b)                No Rights as Stockholder; No Voting Rights.  The Employee shall have no rights as a stockholder of the Company with respect to any shares covered by the Options until the exercise of the Options and delivery of the shares.  Except as provided in Section 3.3

 

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of the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the delivery of the shares.  Any shares delivered in respect of the Options shall be subject to the Subscription Agreement and the Employee shall have no voting rights with respect to such shares until such time as specified in the Subscription Agreement.

 

(c)                 No Right to Continued Employment.  Nothing in this Agreement shall be deemed to confer on the Employee any right to continue in the employ of the Company or any Subsidiary, or to interfere with or limit in any way the right of the Company or any Subsidiary to terminate such employment at any time.

 

(d)                Non-Transferability of Options.  The Options may be exercised only by the Employee, or, following the Employee’s death, by his designated beneficiary or by his estate in the absence of a designated beneficiary.  The Options are not assignable or transferable, in whole or in part, and they may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including, but not limited to, by gift, operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of the Employee upon the Employee’s death or with the Company’s consent.

 

(e)                 Notices.  All notices and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given if delivered personally or sent by certified or express mail, return receipt requested, postage prepaid, or by any recognized international equivalent of such delivery, to the Company or the Employee, as the case may be, at the following addresses or to such other address as the Company or the Employee, as the case may be, shall specify by notice to the other:

 

(i)         if to the Company, to it at:

 

CDRT Holding Corporation
 c/o Clayton, Dubilier & Rice, LLC
 375 Park Avenue
 18th Floor
 New York, New York  10152
  Attention:  Theresa Gore
 Fax:  (212) 407-5252

 

(ii)        if to the Employee, to the Employee at his or her most recent address as shown on the books and records of the Company or Subsidiary employing the Employee; and

 

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with copies (which shall not by itself constitute notice hereunder) to:

 

	
Debevoise &   Plimpton LLP
    
	
919 Third Avenue
    
	
New York, New York 10022
    

 

	
Attention:
    	
Paul S.   Bird, Esq.
    
	
 
    	
Jonathan E. Levitsky, Esq.
    

 

	
Fax: (212) 909-6836
    

 

All such notices and communications shall be deemed to have been received on the date of delivery if delivered personally or on the third business day after the mailing thereof.

 

(f)                 Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

 

(g)                Waiver; Amendment.

 

(i)       Waiver.  Any party hereto or beneficiary hereof may by written notice to the other parties (A) extend the time for the performance of any of the obligations or other actions of the other parties under this Agreement, (B) waive compliance with any of the conditions or covenants of the other parties contained in this Agreement and (C) waive or modify performance of any of the obligations of the other parties under this Agreement.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party or beneficiary, shall be deemed to constitute a waiver by the party or beneficiary taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto or beneficiary hereof of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach and no failure by a party or beneficiary to exercise any right or privilege hereunder shall be deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise the same at any subsequent time or times hereunder.

 

(ii)      Amendment.  This Agreement may not be amended, modified or supplemented orally, but only by a written instrument

 

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executed by the Employee and the Company.

 

(h)                Assignability.  Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Company or the Employee without the prior written consent of the other party.

 

(i)                  Applicable Law.  This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

 

(j)                  Waiver of Jury Trial.  Each party hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any suit, action or proceeding arising out of this Agreement or any transaction contemplated hereby.  Each party (i) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges that it and the other parties have been induced to enter into the Agreement by, among other things, the mutual waivers and certifications in this Section 8(j).

 

(k)                 Section and Other Headings, etc.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

 

(l)                  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company and the Employee have executed this Agreement as of the date first above written.

 

 

	
 
    	
CDRT HOLDING CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE EMPLOYEE
    
	
 
    	
 
    
	
 
    	
«Name»
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
as Attorney-in-Fact
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address of the Employee:
    
	
 
    	
 
    
	
 
    	
«Address»
    

 

	
Total Number of
   Shares
   for the Purchase
   of Which
   Options have been
   Granted
    	
 
    	
Option Price
    	
 
    
	
«Total_Options»   Shares
    	
 
    	
$
    	
64
    	
 
    
					

 

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Exhibit A

 

Form of Subscription Agreement

 

10Exhibit 10.19

 

ROLLOVER AGREEMENT

 

This ROLLOVER AGREEMENT (this “Agreement”), dated as of May     , 2011, is entered into by and among the undersigned individual (the “Executive”), CDRT Holding Corporation, a Delaware corporation (“Parent”), and CDRT Acquisition Corporation (“Intermediate Parent”), a Delaware corporation and a wholly owned subsidiary of Parent.  Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Merger Agreement (as defined below).

 

RECITALS

 

WHEREAS, under the Emergency Medical Services L.P Equity Option Plan and the Emergency Medical Services Corporation Amended and Restated 2007 Long-Term Incentive Plan (the “Plans”), the Executive was previously granted options to purchase shares of common stock, par value $0.01 per share, of Emergency Medical Services Corporation, a Delaware corporation (the “Company”, and such options, the “Company Options”);

 

WHEREAS, the number of Company Options and related exercise prices of the Company Options held by the Executive as the date of this Agreement are set forth under the heading “Total Company Options” on Schedule A hereto;

 

WHEREAS, as of February 13, 2011, the Company, Intermediate Parent, and CDRT Merger Sub, Inc., a Delaware Corporation and a wholly owned subsidiary of Parent and Intermediate Parent (“Merger Sub”), entered into that certain Agreement and Plan of Merger (as the same may be amended, amended and restated or otherwise modified from time to time, the “Merger Agreement”), pursuant to which, at the Effective Time, Merger Sub will merge with and into the Company (such merger, the “Merger”);

 

WHEREAS, the Merger Agreement provides that, at the Effective Time, each unvested Company Option will vest and become fully exercisable pursuant to the terms of the applicable Plan and related option agreement, and either (x) each Company Option will be cancelled for an amount in cash, without interest, equal to the amount produced by the formula set forth in the first sentence of Section 3.04(a) of the Merger Agreement or (y) if Parent and the holder of the Company Option mutually agree, such Company Option shall be converted at the Effective Time, pursuant to the formula contained in the third sentence of Section 3.04(a) of the Merger Agreement, into a fully vested and exercisable option to purchase common stock of Intermediate Parent, on the same terms and conditions as were applicable under such Company  Option and such other terms as may be mutually agreed by Intermediate Parent and the holder thereof;

 

WHEREAS, Parent and the Executive intend hereby to evidence and set forth their mutual agreement as to the terms and conditions of the conversion, at the Effective Time, of the number of Company Options set forth on Schedule A hereto under the heading “Converting Company Options” (the “Converting Company Options”) into the number of options to purchase common stock of Parent, par value $0.01 per share (the “Parent Common Stock”), as set forth on Schedule A hereto under the heading “Rollover Options” (such options to purchase Parent Common Stock, the “Rollover Options”, and such conversion, the “Rollover”); and

 

 

WHEREAS, Parent, Intermediate Parent and the Executive also intend hereby to evidence and set forth their mutual agreement that Intermediate Parent is assigning to Parent its rights and obligations under Section 3.04(a) of the Merger Agreement with respect to the Converting Company Options and the Rollover Options, and Parent’s acceptance of such assignment.

 

NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

Section 1.               The Rollover.

 

1.1.        Rollover and Grant of Matching Options.

 

(a)           On the terms and conditions set forth herein and subject to Section 1.3, at the Effective Time, the Converting Company Options shall automatically, and without further action, be converted into that number of Rollover Options as set forth on Schedule A hereto, with a per share exercise price as set forth opposite such number of Rollover Options.  The Rollover Options shall be subject to the same terms and conditions as in effect immediately prior to the Rollover, but giving effect to the Rollover.

 

(b)           Effective immediately following the Rollover, Parent and the Executive agree that the Rollover Options shall be evidenced by the Parent Stock Incentive Plan in the form attached as Exhibit B hereto and the form of Employee Stock Option Agreement attached as Exhibit C-1 hereto (the “Rollover Stock Option Agreement”).

 

(c)           The Executive acknowledges and agrees that from and after the Rollover, the Executive shall have no right, title or interest in or to the Converting Company Options, including without limitation, any right to receive the cash payment contemplated by the first sentence of Section 3.04(a) of the Merger Agreement with respect thereto.

 

(d)           In consideration of the agreement of the Executive to the Rollover, Parent shall, as of the Effective Time, grant the Executive additional options to purchase Parent Common Stock in the number set forth on Schedule A hereto under the heading “Matching Options” (the “Matching Options”).  The Matching Options shall be evidenced by the Parent Stock Incentive Plan in the form attached as Exhibit B hereto and the form of Employee Stock Option Agreement attached as Exhibit C-2 hereto (the “Matching Stock Option Agreement”).

 

(e)           The Company and the Executive intend that this Agreement satisfy the requirements of Treasury Regulation §1.409A-1(b)(5)(v)(D) (including, without limitation, the requirements of Treasury Regulation §1.424-1 referenced therein) and, as such, immediately following the Rollover, the Rollover Options shall not provide the Executive with any additional benefits that he or she did not have under the Converting Company Options and shall contain all terms of the Converting Company Options, except to the extent such terms are rendered inoperative by reason of the corporate transaction giving rise to the grant of the Rollover Options.  The foregoing notwithstanding, the post-employment exercise terms of the Rollover Options shall, effective as of the date of this Agreement but following the Rollover, be modified 

 

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(as permitted by Treasury Regulation §1.409A-1(b)(5)(v)(B)) to reflect the terms as set forth in Section 3 of the Rollover Option Agreement; provided, however, that in no event will such modification extend the term of the Rollover Options beyond the Normal Termination Date (as such term is defined in the Rollover Option Agreement).

 

1.2.        Rollover Closing.  The closing of the Rollover (the “Rollover Closing”) shall occur at the Effective Time on the Closing Date.  The Rollover Closing shall take place at the offices of Debevoise & Plimpton LLP, 919 Third Avenue, New York, New York, or such other place as the parties hereto may mutually agree upon in writing.

 

1.3.        Failure to Consummate the Merger.  In the event that the Merger fails to be consummated for any reason whatsoever and the Merger Agreement is terminated, the parties hereto agree that concurrently with the termination of the Merger Agreement, automatically and without any action of the parties hereto, the rights and obligations of the parties under this Agreement shall cease to be of any force or effect (and, for avoidance of doubt, the Rollover shall not occur).  In such event, each party hereto shall provide all such cooperation as the other party may reasonably request in order to ensure that the foregoing has been made effective.

 

1.4.        Conditions to Closing.  The Rollover Closing shall be subject to the satisfaction of the following conditions unless waived in writing by Parent and the Executive (in the case of clause (a)) or by Parent (in the case of clause (b)) or by the Executive (in the case of clause (c)):

 

(a)           Merger Agreement Conditions.  The conditions set forth in Article VII of the Merger Agreement shall have been satisfied or waived, and none of the parties to the Merger Agreement shall have given notice to the other parties that it does not intend to consummate the Merger at the Effective Time.

 

(b)           Representations, Warranties and Covenants of the Executive.  The representations and warranties contained in Section 3 of this Agreement shall be true and correct in all material respects as of the Closing Date (or, if given as of a specific date, at and as of such date), and the Executive shall have performed and complied with and observed in all material respects all covenants and agreements required by this Agreement to be performed or complied with by the Executive on or prior to the Closing Date.

 

(c)           Representations, Warranties and Covenants of Parent.  The representations and warranties contained in Section 2 of this Agreement shall be true and correct in all material respects as of the Closing Date (or, if given as of a specific date, at and as of such date), and Parent shall have performed and complied with and observed in all material respects all covenants and agreements required by this Agreement to be performed or complied with by Parent on or prior to the Closing Date.

 

1.5.        Parent Deliveries.  On the Closing Date and prior to the Rollover Closing, Parent shall deliver to the Executive the Rollover Stock Option Agreement and the Matching Stock Option Agreement, each duly executed by Parent.

 

1.6.        Executive Deliveries.  On the Closing Date and prior to the Rollover Closing, the Executive shall deliver to Parent the Rollover Stock Option Agreement and the Matching Stock Option Agreement, each duly executed by the Executive.

 

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Section 2.               Representations and Warranties of Parent.  Parent hereby represents and warrants to the Executive that (i) Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, (ii) Parent has all requisite corporate power and authority to enter into this Agreement and to perform all of its obligations hereunder, to carry out the transactions contemplated hereby and to issue the Rollover Options and the Matching Options; (iii) the execution and delivery of this Agreement, the performance of Parent’s obligations hereunder and the consummation by Parent of the transactions contemplated hereby have been duly and validly authorized by all requisite corporate action on the part of Parent, (iv) this Agreement has been duly executed by Parent and, assuming due authorization, execution and delivery of this Agreement by the Executive, constitutes a legal, valid and binding obligation of Parent enforceable against Parent in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law); (v) the issuance of the Rollover Options and the Matching Options has been duly and validly authorized by all requisite corporate action on the part of Parent; and (vi) Parent is an “accredited investor” as such term is defined by Rule 501(a).

 

Section 3.               Representations and Warranties of the Executive.  The Executive hereby represents and warrants to Parent as follows:

 

3.1.        Ownership of the Company Options.  The Executive is the valid holder of the Company Options set forth under the heading “Total Company Options” on Schedule A hereto, and as of the Closing Date all such Company Options listed in Schedule A hereto are unexercised.

 

3.2.        No Agreements.  Except for this Agreement, the Executive has not entered into or agreed to be bound by any other arrangements or agreements of any kind with any other Person with respect to the Company Options, including, but not limited to, arrangements or agreements with respect to the acquisition or disposition thereof.

 

3.3.        Place of Residence  The principal residence of the Executive is as shown on the signature page hereof.

 

3.4.        Authority.  The Executive has all requisite power and authority to execute and deliver this Agreement, to perform his or her obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been, assuming the due authorization, execution and delivery by Parent, duly and validly executed and delivered by the Executive and constitutes a legal, valid and binding obligation of the Executive, enforceable against the Executive in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

3.5.        No Conflicts; No Consents.  The execution and delivery by the Executive of this Agreement, the consummation by the Executive of the transactions contemplated hereby and the performance of the Executive’s obligations hereunder do not and will not (a) materially conflict with or result in a material violation or breach of applicable Law or (b) assuming the due authorization, execution and delivery of this Agreement by Parent, violate in any material respect, conflict with in any material respect or result in any material breach of, or constitute 

 

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(with or without notice or lapse of time or both) a material default under, or require the Executive to obtain any consent, approval or action of, make any filing with or give any notice to any Person as a result or under the terms of, any contract, agreement, instrument, commitment, arrangement or understanding to which the Executive is a party or to which any of the Company Options are subject.

 

3.6.        Investment Intention; Restriction on Dispositions.  The Executive is acquiring the Rollover Options and the Matching Options solely for the Executive’s own account for investment and not on behalf of any other person or with a view to, or for sale in connection with, any distribution thereof.  The Executive acknowledges that the Rollover Options and the Matching Options are not transferable except as provided in the Rollover Stock Option Agreement or the Matching Stock Option Agreement.  The Executive further agrees that the Executive will not, directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose of any of the shares of Parent Common Stock subject to the Rollover Options or the Matching Options (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of any such shares of Parent Common Stock), except in compliance with (i) the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the Securities and Exchange Commission thereunder, (ii) applicable state and non-U.S. securities or “blue sky” laws and (iii) the provisions of this Agreement, the Rollover Option Agreement, the Matching Option Agreement and any applicable subscription agreement to which the Executive is a party (a “Subscription Agreement”).  The Executive further understands, acknowledges and agrees that none of the shares of Parent Common Stock acquired upon exercise of the Rollover Options and the Matching Options or any interest therein or any rights relating thereto may be transferred, sold, pledged, hypothecated or otherwise disposed of unless (i) the provisions of the applicable Subscription Agreement shall have been complied with and (ii) such disposition is exempt from the provisions of Section 5 of the Securities Act or is pursuant to an effective registration statement under the Securities Act and is exempt from (or in compliance with) applicable state securities or “blue sky” laws.  Any attempt by the Executive, directly or indirectly, to offer, transfer, sell, pledge, hypothecate or otherwise dispose of any such shares of Parent Common Stock, or any interest therein, or any rights relating thereto, without complying with the provisions of this Agreement and the applicable Subscription Agreement, shall be void and of no effect.

 

3.7.        Securities Laws Matters.  The Executive acknowledges receipt of advice from the Company that (i) neither the Rollover Options, nor the Matching Options, nor the shares of Parent Common Stock received on exercise thereof have been registered under the Securities Act or qualified under any state securities or “blue sky” laws or non-U.S. securities laws, (ii) it is not anticipated that there will be any public market for the Rollover Options, the Matching Options or the shares of Parent Common Stock acquired on the exercise thereof, (iii) the Executive must continue to bear the economic risk associated with the Rollover Options, the Matching Options and the shares of Parent Common Stock acquired on the exercise thereof unless such shares are subsequently registered under the Securities Act and such state or non-U.S. securities laws or an exemption from such registration is available, (iv) a restrictive legend shall be placed on any certificates representing shares of Parent Common Stock that makes clear that the shares of Parent Common Stock are subject to the restrictions on transferability set forth in this Agreement and the applicable Subscription Agreement, and (v) a notation shall be made in the appropriate records of Parent or any transfer agent indicating that the shares of Parent Common Stock are subject to such restrictions.

 

5

 

3.8.        Ability to Bear Risk.  The Executive understands that (i) the transfer restrictions that apply to the shares of Parent Common Stock may effectively preclude the transfer of any of the shares of Parent Common Stock prior to a Public Offering; (ii) the financial situation of the Executive is such that he or she can afford to bear the economic risk of holding the Rollover Options, the Matching Options and the shares of Parent Common Stock acquired on the exercise thereof for an indefinite period; (iii) Parent’s financing agreements may restrict the ability of Parent to repurchase any shares of Parent Common Stock pursuant to the applicable Subscription Agreement and that Parent and its Subsidiaries may enter into or amend, refinance or enter into new financing agreements without regard to the impact on Parent’s ability to repurchase shares of Parent Common Stock.  The Executive can afford to suffer the complete loss of his or her investment in the Rollover Options, the Matching Options and the shares of Parent Common Stock acquired on the exercise thereof.

 

3.9.        Access to Information; Sophistication; Lack of Reliance.  The Executive is familiar with the business and financial condition, properties, operations and prospects of Parent and the Executive has been granted the opportunity to ask questions of, and receive answers from, representatives of Parent concerning Parent and the terms and conditions of the Rollover Options and to obtain any additional information that the Executive deems necessary to verify the accuracy of the information so provided.  The Executive’s knowledge and experience in financial and business matters is such that the Executive is capable of evaluating the merits and risk of the Executive’s investment in the Rollover Options, the Matching Options and the shares of Parent Common Stock acquired on the exercise thereof.  The Executive has carefully reviewed the terms and provisions of this Agreement and the Schedule and Exhibits hereto and has evaluated the restrictions and obligations contained therein.  In furtherance of the foregoing, the Executive represents and warrants that, as of the Effective Time, (i) no representation or warranty, express or implied, whether written or oral, as to the financial condition, results of operations, prospects, properties or business of Parent or as to the desirability or value of an investment in Parent has been made to the Executive by or on behalf of Parent, except for those representations and warranties expressly set forth in Section 2 of this Agreement, (ii) the Executive has relied upon the Executive’s own independent appraisal and investigation and the advice of the Executive’s own counsel, tax advisors and other advisors regarding the risks of an investment in Parent and (iii) the Executive will continue to bear sole responsibility for making his or her own independent evaluation and monitoring of the risks of his or her investment in Parent.

 

3.10.      Accredited Investor.  The Executive is an “accredited investor” as such term is defined by Rule 501(a) promulgated under the Securities Act.

 

Section 4.               Binding Effect; Benefits.  This Agreement shall be binding upon the successors, heirs, executors and administrators of the parties hereto.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement and their respective successors or permitted assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

 

Section 5.               Waiver.  Any term or provision of this Agreement may be waived at any time by the party which is entitled to the benefits thereof, but only in writing signed by such party.  Except as provided in the preceding sentence, no action taken pursuant to this Agreement, including, without limitation, any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representations, warranties, covenants or agreements contained herein.  The waiver by any party hereto of a 

 

6

 

breach of any provision of this Agreement shall not operate or be construed as a waiver of any preceding or succeeding breach, and no failure by any party to exercise any right or privilege hereunder shall be deemed a waiver of such party’s rights or privileges hereunder or shall be deemed a waiver of such party’s rights to exercise the same at any subsequent time or times hereunder.

 

Section 6.               Tax Treatment.  The parties agree to treat the Rollover as a transaction that does not result in taxable income to the Executive and that has been effected in compliance with Treasury Regulation § 1.409A-1(b)(5)(v)(D).

 

Section 7.               Amendments.  This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by Parent and the Executive.

 

Section 8.               Assignability.  Effective as of immediately prior to the Effective Time, Intermediate Parent hereby assigns to Parent all of its rights and obligations under Section 3.04(a) of the Merger Agreement with respect to the Converting Company Options and the Rollover Options, and Parent accepts such assignment and agrees to perform Intermediate Parent’s obligations thereunder with respect to the Rollover Options.  The Executive acknowledges and consents to such assignment.  Except as set forth in the preceding sentence, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Executive without the prior written consent of Parent.

 

Section 9.               Governing Law.  This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the laws of the State of Delaware, without giving effect to its principles or rules of conflict of laws to the extent such principles or rules are not mandatorily applicable by statute and would require or permit the application of the laws of another jurisdiction.

 

Section 10.             Jurisdiction.  Except as otherwise expressly provided in this Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the any state court (or, in the case of any claim as to which the federal courts have exclusive subject matter jurisdiction, the federal court of the United States of America) sitting in the State of New York, and each of the parties hereby consents to the exclusive jurisdiction of those courts (and of the appropriate appellate courts therefrom) in any suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding in any of those courts or that any suit, action or proceeding which is brought in any of those courts has been brought in an inconvenient forum.  Process in any suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any of the named courts.  Without limiting the foregoing, each party agrees that service of process on it by notice as provided in Section 12 shall be deemed effective service of process.

 

Section 11.             Enforcement.  Each party agrees that, subject to Section 1.3, the parties shall be entitled to specific performance of the terms hereof.  Notwithstanding any other term or condition of this Agreement, the Executive’s liability under this Agreement shall be limited to a willful and material breach of this Agreement and under no circumstances shall his or her maximum liability for any reason, including the Executive’s willful and material breach of any 

 

7

 

of his or her commitments set forth herein, extend beyond the Executive’s obligation to effect the Rollover, nor shall the Executive be liable for any special, indirect, or consequential damages.

 

Section 12.             Notices.  All notices, requests, demands, letters, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered personally, (ii)  sent by next-day or overnight mail or delivery or (iii) sent by facsimile, as follows:

 

(A)          If to Parent or Intermediate Parent:

 

	
CDRT Holding Corporation
    
	
c/o Clayton, Dubilier & Rice, LLC
    
	
375 Park Avenue, 18th Floor
    
	
New York, New York 10152
    
	
Attention: Theresa Gore
    
	
Facsimile No.: (212) 407-5252
    
	
 
    
	
With copies to (which shall not constitute   notice):
    
	
 
    
	
Debevoise & Plimpton LLP
    
	
919 Third Avenue
    
	
New York, New York 10022
    

 

	
Attention:
    	
Paul   S. Bird, Esq.
    
	
 
    	
Jonathan   E. Levitsky, Esq.
    

 

	
Facsimile No.: (212) 909-6836
    

 

(B)           If to the Executive, to the address set forth on the signature page hereof.

 

All such notices, requests, demands, letters, waivers and other communications shall be deemed to have been received (x) if by personal delivery, on the day delivered, (y) if by next-day or overnight mail or delivery, on the day delivered, or (z) if by facsimile, on the day delivered; provided that in the case of (z) such delivery is confirmed by one of the other methods of delivery provided in clause (x) or (y) above.

 

Section 13.             Headings.  The headings contained herein are for convenience and shall not control or affect the meaning or interpretation of any provision hereof.

 

Section 14.             Counterparts.  This Agreement may be executed by facsimile and in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

Section 15.             Severability.  In case any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, the validity and enforceability of the remaining provisions shall not in any way be affected thereby.

 

Section 16.             Entire Agreement.  This Agreement, together with the Schedule and Exhibits hereto, shall constitute the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede all prior agreements, arrangements, understandings, documents, instruments and communications, whether written or oral, with respect to such subject matter.

 

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Section 17.             Termination of Agreement.  This Agreement may be terminated by the mutual written consent of Parent and the Executive.  This Agreement shall terminate automatically without any action of the parties hereto upon termination of the Merger Agreement.  Upon such termination, this Agreement shall not have any further force and effect; provided that termination of this Agreement shall not relieve any party from liability for (i) any willful breach of this Agreement occurring prior to such termination or (ii) such party’s obligations under Section 1.3 of this Agreement.

 

Section 18.             Further Assurances.  Subject to the terms and conditions provided herein, each party hereto covenants and agrees to use commercially reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable, whether under applicable Law or otherwise, in order to consummate and make effective the transactions contemplated by this Agreement.

 

[signature page follows]

 

9

 

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

 

 

	
 
    	
PARENT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INTERMEDIATE   PARENT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Facsimile:
    	
 
    
				

 

10

 

SCHEDULE A*

 

Name of Executive:  [                    ]

 

	
Total Company Options
    	
 
    	
Converting Company
   Options
    	
 
    	
Rollover Options
    	
 
    
	
Number of
   Options
    	
 
    	
Exercise
   Price
    	
 
    	
Number of
   Options
    	
 
    	
Exercise
   Price
    	
 
    	
Number of
   Options
    	
 
    	
Exercise
   Price
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
Matching Options and
   Position Options
    	
 
    
	
Number of
   Options
    	
 
    	
Exercise
   Price
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

* To be completed on the Executive’s behalf and in accordance with the Executive’s instructions pursuant to the Power of Attorney granted by the Executive in connection with the Rollover.

 

11

 

EXHIBIT B

 

PARENT STOCK INCENTIVE PLAN

 

(See attached.)

 

 

EXHIBIT C-1

 

FORM OF EMPLOYEE STOCK OPTION AGREEMENT
 (Rollover Options)

 

(See attached.)

 

 

EXHIBIT C-2

 

FORM OF EMPLOYEE STOCK OPTION AGREEMENT
 (Matching Options and Position Options)

 

(See attached.)

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