Common use of New Option Plan Clause in Contracts

New Option Plan. An option plan representing 10% of the fully-diluted post-closing equity of New Holdings at closing will be adopted. Options would be issued with a strike price equal to fair market value at time of grant (i.e., for options granted at closing, the price per share paid by Apax (the “Closing Price”)). Apax would expect to issue at closing options representing 1.95% of the fully-diluted equity to Xxxxxx Xxxxxx and 7.05% of the fully-diluted equity to other members of management, and would reserve the remainder of the pool for later grant in connection with promotions and new hires. Apax would work with Xxxxxx to determine together the initial option allocation amounts to individual managers. For each option grant: two-thirds of the options will be subject solely to time-based vesting in equal annual increments over a five year period from date of grant while the holder remains employed; one-sixth of the options will be subject to this time-based vesting and to Apax receiving a 2x return on its investment; one-twelfth of the options will be subject to the time-based vesting and to Apax receiving a 2.5x return on its investment; and one-twelfth of the options will be subject to the time-based vesting and to Apax receiving a 3x return on its investment. Upon termination of employment, time-based vesting (for both performance options and for solely time-based options) will cease and the options that have not vested under the time-based vesting will be forfeited (performance options that have time-vested will remain subject to the return thresholds being met). The vested portion of performance options will remain outstanding and become exercisable if the performance condition is met. In the case of an exit transaction in the first two years in which Apax achieves a 2x return, the board of directors of New Holdings (“Board”) will consider whether it is appropriate to vest the 2.5x and 3x performance options in the exit transaction. In the case of an exit transaction in the third through fifth years in which Apax achieves a 2x return, the Board will consider whether it is appropriate to ratably vest a portion of the 2.5x and 3x performance options. In either case, the Board will consider all relevant factors, particularly including the IRR achieved by Apax. Time-based vesting (for both performance options and for solely time-based options) will accelerate upon a “change of control,” which will be deemed to occur if, after giving effect to the applicable transaction, (i) the stockholders of New Holdings immediately prior to such transaction collectively hold less than a majority of the outstanding stock of New Holdings or the surviving entity immediately after the transaction and (ii) Apax does not retain the right to elect or cause the election of a majority of the Board or the surviving entity immediately after the transaction. Apax’s return, for purposes of determining whether a minimum return threshold has been met, will be measured at the earlier of (i) when Apax has received cash proceeds sufficient to meet the threshold on its entire investment, or (ii) when there has been a change of control and Apax has received cash proceeds for at least 50% of its investment. Where Apax retains any equity in New Holdings (other than following an IPO, which is treated below) or the surviving entity of such transaction, this stub equity would be treated as proceeds received by Apax in the Exit and valued as set forth below. In addition, in the case of an IPO, if at any time after the second anniversary of the IPO, the trailing twenty-day average closing price implies a value of the equity held by Apax such that, if it were sold, it would result in Apax having achieved a minimum return threshold, then that return threshold will be deemed to have been met. If Apax receives non-cash proceeds: (i) securities for which a trading market exists and that are freely saleable would be valued based upon a trailing twenty-day average closing price basis and (ii) other securities and non-cash assets would be valued in good faith by the Board. For purposes of computing Apax’s return, all fees (including management and closing fees) received by Apax and its affiliates will be considered proceeds of its investment. Transferability: Rollover equity and shares purchased under options will not be transferable, except: (i) for estate planning purposes to family members or estate planning vehicles, (ii) by will or the laws of descent, (iii) pursuant to a tag-along, drag-along or registered public offering, or (iv) to New Holdings or a designee of New Holdings. Any transferee pursuant to clause (i) or (ii) will be required to become a party to the Stockholders Agreement. The transfer restrictions will terminate upon an IPO.