As filed with the Securities and Exchange Commission on October 30, 2020
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DATTO HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization) |
81-3345706
(I.R.S. Employer Identification No.) |
|
101 Merritt 7 Norwalk, CT |
06851 | |
(Address of Principal Executive Offices) | (Zip Code) |
Datto Holding Corp. Omnibus Incentive Plan
Amended and Restated 2017 Stock Option Plan
2020 Non-Employee Director RSU Agreements
2017 Autotask Option Rollover Agreements
(Full title of the plan)
Tim Weller
Chief Executive Officer
101 Merritt 7
Norwalk, CT 06851
Telephone: 888-995-1431
(Name, address and telephone number, including area code, of agent for service)
Copies to:
Robert M. Hayward, P.C.
Robert E. Goedert, P.C.
Kirkland & Ellis LLP
300 North LaSalle
Chicago, Illinois 60654
(312) 862-2000
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ |
Accelerated filer ☐ | |
Non-accelerated filer ☒ |
Smaller reporting company ☐ | |
Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
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Title of securities to be
registered |
Amount to be
registered (1) |
Proposed maximum
offering price per share (2) |
Proposed maximum
aggregate offering price (2) |
Amount of
registration fee |
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|
|
|
|
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Common stock, par value $0.001 per share, reserved for issuance pursuant to the Omnibus Plan |
25,042,648(3) | $28.66 | $717,597,078.44 | $78,289.84 | ||||
Common stock, par value $0.001 per share, reserved for issuance pursuant to the Option Plan |
9,290,688(4) | $17.87(7) | $165,978,141.12 | $18,108.22 | ||||
Common stock, par value $0.001 per share, reserved for issuance pursuant to 2020 Non-Employee Director RSU Agreements |
23,438(5) | $28.66 | $ 671,615.90 | $73.28 | ||||
Common stock, par value $0.001 per share, reserved for issuance pursuant to 2017 Autotask Option Rollover Agreements |
577,336(6) | $25.26(8) | $ 14,584,771.80 | $1,591.20 | ||||
TOTAL |
$898,831,607.25 | $98,062.53 | ||||||
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(1) |
Pursuant to Rule 416 under the Securities Act of 1933, as amended (the Securities Act), this Registration Statement shall also cover any additional shares of common stock, par value $0.001 per share, of Datto Holding Corp. (the Company), which become issuable under the above-named plans by reason of any stock dividend, stock split, recapitalization or any other similar transaction effected without the receipt of consideration which results in an increase in the number of shares of our outstanding common stock. |
(2) |
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(c) and Rule 457(h) of the Securities Act based on a per share price of $28.66, the average of the high and low price of the Companys common stock on October 26, 2020, as reported on the New York Stock Exchange. |
(3) |
Represents shares of the Companys common stock issuable pursuant to the Datto Holding Corp. Omnibus Incentive Plan (the Omnibus Plan) being registered herein, which shares consist of shares of common stock reserved and available for delivery with respect to awards under the Omnibus Plan, shares of common stock that may again become available for delivery with respect to awards under the Omnibus Plan pursuant to the share counting, share recycling and other terms and conditions of the Omnibus Plan, and shares of common stock that may become reserved and available for delivery with respect to awards under the Omnibus Plan pursuant to the Omnibus Plans evergreen provision. |
(4) |
Represents shares of the Companys common stock issuable upon exercise of options granted pursuant to the Amended and Restated 2017 Stock Option Plan (the Option Plan) being registered herein. |
(5) |
Represents shares of the Companys common stock issuable upon vesting of restricted stock units granted under restricted stock unit agreements being registered herein (the 2020 Non-Employee Director RSU Agreements) between the Company and two non-employee directors in 2020 prior to our initial public offering. |
(6) |
Represents shares of common stock issuable upon exercise of options granted pursuant to a series of option rollover agreements being registered herein entered into between the Company and 14 individuals in connection with the Companys acquisition of Autotask Superior Holding, Inc. in 2017 (the 2017 Autotask Option Rollover Agreements) |
(7) Estimated in accordance with Rule 457(h) of the Securities Act solely for the purpose of calculating the registration fee on the basis of the weighted average exercise price of $10.79 per share.
(8) Estimated in accordance with Rule 457(h) of the Securities Act solely for the purpose of calculating the registration fee on the basis of the weighted average exercise price of $3.39 per share.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. |
Plan Information. |
The documents containing the information specified in Part I will be delivered in accordance with Rule 428(b) under the Securities Act. Such documents are not required to be, and are not, filed with the Securities and Exchange Commission (the Commission), either as part of this Registration Statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act. These documents, and the documents incorporated by reference in this Registration Statement pursuant to Item 3 of Part II of the Form S-8, taken together, constitute a prospectus that meets the requirements of Section 10(a) of the Securities Act.
Item 2. |
Registrant Information and Employee Plan Annual Information. |
The written statement required by Item 2 of Part I is included in documents that will be delivered to participants in the plans covered by this Registration Statement pursuant to Rule 428(b) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. |
Incorporation of Documents by Reference. |
The following documents, which have been filed by Datto Holding Corp. (the Company) with the Commission, are incorporated in this Registration Statement by reference:
(a) The Companys prospectus filed pursuant to Rule 424(b) under the Securities Act on October 22, 2020, relating to the Companys Registration Statement on Form S-1 (Registration No. 333-249122), originally filed with the Commission on September 29, 2020 (as amended, including all exhibits);
(b) the Companys Current Report on Form 8-K, filed with the Commission on October 26, 2020; and
(c) The description of the Companys common stock contained in the Companys Registration Statement on Form 8-A filed with the Commission on October 20, 2020, pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the Exchange Act), including any amendments or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act (other than Current Reports on Form 8-K furnished pursuant to Item 2.02 or Item 7.01 of Form 8-K, including any exhibits included with such information that are related to such items) after the date of this Registration Statement, but prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents; provided, however, that documents or information deemed to have been furnished and not filed in accordance with the rules of the Commission shall not be deemed incorporated by reference into this Registration Statement.
Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement.
Item 4. |
Description of Securities. |
Not applicable.
Item 5. |
Interests of Named Experts and Counsel. |
The validity of the common stock offered hereby will be passed upon for the Company by Kirkland & Ellis LLP, Chicago, Illinois.
Item 6. |
Indemnification of Directors and Officers. |
Section 102(b)(7) of the Delaware General Corporation Law (the DGCL) allows a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except where the director breached the duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our certificate of incorporation will provide for this limitation of liability.
Section 145 of the DGCL (Section 145) provides that a Delaware corporation may indemnify any person who was, is or is threatened to be made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of such corporation),
by reason of the fact that such person is or was an officer, director, employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporations best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was illegal. A Delaware corporation may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporations best interests, provided that no indemnification is permitted without judicial approval if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director has actually and reasonably incurred.
Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.
The Companys bylaws provide that we will indemnify our directors and officers to the fullest extent authorized by the DGCL and must also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise.
The Company has entered into indemnification agreements with each of its executive officers and directors. The indemnification agreements provide the executive officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the DGCL.
The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of the Companys certificate of incorporation or bylaws, agreement, vote of shareholders or disinterested directors or otherwise.
The Company maintains standard policies of insurance that provide coverage (1) to the Companys directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (2) to the Company with respect to indemnification payments that the Company may make to such directors and officers. The form of Underwriting Agreement filed as Exhibit 1.1 to the Companys Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 333-249122) provides for indemnification of the Companys directors and officers by the underwriters party thereto against certain liabilities.
Item 7. |
Exemption from Registration Claimed. |
Not applicable.
Item 8. |
Exhibits. |
EXHIBIT INDEX
* Filed herewith.
Item 9. |
Undertakings. |
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to the Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price
set forth in the Calculation of Registration Fee table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Company hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Companys annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plans annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Company will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Norwalk, State of Connecticut, on October 30, 2020.
DATTO HOLDING CORP.
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By: |
/s/ Tim Weller |
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Name: | Tim Weller | |
Title: | Chief Executive Officer |
Each person whose signature appears below constitutes and appoints, jointly and severally, Tim Weller, John Abbot and Michael Fass, as his or her attorneys-in-fact, each with the power of substitution, for him in any and all capacities, to sign any amendments to this registration statement on Form S-8 (including post-effective amendments), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on October 30, 2020.
Signature |
Title |
|
/s/ Tim Weller |
Chief Executive Officer and Director | |
Tim Weller | (Principal Executive Officer) | |
/s/ John Abbot |
Chief Financial Officer | |
John Abbot | (Principal Financial Officer) | |
/s/ Bill Severance |
Chief Accounting Officer | |
Bill Severance | (Principal Accounting Officer) | |
/s/ David Breach |
Director | |
David Breach | ||
/s/ Marc Brown |
Director | |
Marc Brown | ||
/s/ Adrian Dillon |
Director | |
Adrian Dillon | ||
/s/ Christina Lema |
Director | |
Christina Lema | ||
/s/ Austin McChord |
Director | |
Austin McChord | ||
/s/ Maneet S. Saroya |
Director | |
Maneet S. Saroya | ||
/s/ John Stalder |
Director | |
John Stalder | ||
/s/ Nadeem Syed |
Director | |
Nadeem Syed |
October 30, 2020
Datto Holding Corp.
101 Merritt 7
Norwalk, CT 06851
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We are acting as special counsel to Datto Holding Corp., a Delaware corporation (the Company), in connection with the proposed registration by the Company of up to 34,963,060 shares of its common stock, par value $0.001 per share (the Shares), pursuant to the Registration Statement on Form S-8, filed with the Securities and Exchange Commission (the Commission), under the Securities Act of 1933, as amended (the Act) (such Registration Statement, as amended or supplemented, is hereinafter referred to as the Registration Statement).
In connection therewith, we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary for the purposes of this opinion, including (i) the organizational documents of the Company, including the Third Amended and Restated Certificate of Incorporation, (ii) minutes and records of the corporate proceedings of the Company, (iii) the Datto Holding Corp. Omnibus Incentive Plan (the 2020 Plan) and the forms of award agreement used thereunder, (iv) the Amended and Restated 2017 Stock Option Plan and the forms of award agreement used thereunder (the 2017 Plan and together with the 2020 Plan, the Plans), (v) the 2020 Non-Employee Director RSU Agreements (RSU Agreements), (vi) the 2017 Autotask Option Rollover Agreements (Rollover Agreements), and (vii) the Registration Statement and the exhibits thereto.
For purposes of this opinion, we have assumed the authenticity of all documents submitted to us as originals, the conformity to the originals of all documents submitted to us as copies and the authenticity of the originals of all documents submitted to us as copies. We have also assumed the legal capacity of all natural persons, the genuineness of the signatures of persons signing all documents in connection with which this opinion is rendered, the authority of such persons signing on behalf of the parties thereto other than the Company and the due authorization, execution and delivery of all documents by the parties thereto other than the Company. We have not independently established or verified any facts relevant to the opinion expressed herein, but have relied upon statements and representations of officers and other representatives of the Company and others.
Based upon and subject to the foregoing qualifications, assumptions and limitations and the further limitations set forth below, we are of the opinion that when (i) the Registration Statement related to the Shares becomes effective under the Act, (ii) when the Shares have been duly issued in accordance with the terms of the applicable Plan and the award agreements thereunder, the RSU Agreements or the Rollover Agreements, as applicable, (iii) when the Shares are duly countersigned by the Companys registrar, and (iv) upon receipt by the Company of the consideration to be paid therefor, the Shares will be validly issued, fully paid and nonassessable.
Our opinions expressed above are subject to the qualification that we express no opinion as to the applicability of, compliance with, or effect of any laws except the General Corporation Law of the State of Delaware (including the statutory provisions, all applicable provisions of the Delaware constitution and reported judicial decisions interpreting the foregoing).
Beijing Boston Dallas Hong Kong Houston London Los Angeles Munich New York Palo Alto Paris San Francisco Shanghai Washington, D.C.
Datto Holding Corp.
October 30, 2020
Page 2
We hereby consent to the filing of this opinion with the Commission as Exhibit 5.1 to the Registration Statement. We also consent to the reference to our firm under the heading Interests of Named Experts and Counsel in the Registration Statement. In giving this consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and accordingly we do not purport to cover herein, the application of the securities or Blue Sky laws of the various states to the issuance and sale of the Shares.
This opinion is limited to the specific issues addressed herein, and no opinion may be inferred or implied beyond that expressly stated herein. We assume no obligation to revise or supplement this opinion after the date of effectiveness should the General Corporation Law of the State of Delaware be changed by legislative action, judicial decision or otherwise after the date hereof. This opinion is furnished to you in connection with the filing of the Registration Statement in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Act.
Sincerely,
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/s/ KIRKLAND & ELLIS LLP |
KIRKLAND & ELLIS LLP |
Exhibit 10.1
DATTO HOLDING CORP.
OMNIBUS INCENTIVE PLAN
ARTICLE I
PURPOSE; EFFECTIVE DATE; TERM
1.1 |
Purpose. The purpose of this Datto Holding Corp. Omnibus Incentive Plan is to enhance the profitability and value of the Company for the benefit of its Stockholders by enabling the Company to offer Eligible Individuals stock- and cash-based incentives in order to attract, retain, and reward such individuals and strengthen the mutuality of interests between such individuals and the Stockholders. |
1.2 |
Effective Date. The Plan became effective on October 13, 2020 (the Effective Date), which is the date of its adoption by the Board, subject to the approval of the Plan by the Stockholders in accordance with Applicable Law. |
1.3 |
Term. No Award may be granted on or after the 10th anniversary of the earlier of the Effective Date or the date of Stockholder approval of the Plan, but Awards granted before such 10th anniversary may extend beyond that date. |
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms will have the following meanings:
2.1 |
Affiliate means each of the following: (a) any Subsidiary; (b) any Parent; (c) any corporation, trade, or business that is directly or indirectly controlled 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) by the Company or any Affiliate; (d) any trade or business that directly or indirectly controls 50% or more (whether by ownership of stock, assets, or an equivalent ownership interest or voting interest) of the Company; and (e) any other entity in which the Company or any Affiliate has a material equity interest and that is designated as an Affiliate by resolution of the Committee; provided, however, that Affiliate will not include other portfolio companies of any fund controlled by Vista Equity Partners or any of its affiliates that are not Parents or Subsidiaries. |
2.2 |
Applicable Law means the requirements related to or implicated by the administration or operation of the Plan under United States federal and applicable state laws (including corporate, securities, tax, and employment laws, and the Code), any stock exchange or quotation system on which the Shares are listed or quoted, and the applicable laws of any foreign country or jurisdiction where Awards are granted. |
2.3 |
Award means any award granted under the Plan of any Stock Option, Stock Appreciation Right, Restricted Shares, Performance Award, Other Share-Based Award, or Other Cash-Based Award. All Awards will be granted by, confirmed by, and subject to the terms and conditions of, a written Award Agreement executed by the Company and the Participant. |
2.4 |
Award Agreement means the written or electronic agreement setting forth the terms and conditions applicable to an Award. |
2.5 |
Board means the Board of Directors of the Company. |
2.6 |
Business Combination has the meaning set forth in Section 11.2(c). |
2.7 |
Cause means, as determined by the Company, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to an Eligible Employees or Consultants Separation from Service, the following: (a) in the case where there is no employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define cause (or words of like import)), a Participants insubordination, material dishonesty, fraud, moral turpitude, willful misconduct, refusal to perform the Participants duties or responsibilities (for any reason other than illness or incapacity), repeated or material violation of any employment policy, or violation or breach of any confidentiality agreement, work product agreement, or other agreement between the Participant and the Company; or (b) in the case where there is an employment agreement, consulting agreement, change in control agreement, or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines cause (or words of like import), cause as defined under such agreement. Notwithstanding any foregoing term or condition of this definition of Cause, with respect to a Non-Employee Director, Cause means an act or failure to act that constitutes cause for removal of a director under applicable Delaware law. |
2.8 |
Change in Control has the meaning set forth in Section 11.2. |
2.9 |
Change in Control Price has the meaning set forth in Section 11.1. |
2.10 |
Code means the Internal Revenue Code of 1986. |
2.11 |
Committee means any committee of the Board duly authorized by the Board to administer the Plan. If no committee is duly authorized by the Board to administer the Plan, Committee will be deemed to refer to the Board for all purposes under the Plan. |
2.12 |
Common Stock means the shares of common stock, $0.001 par value per share, of the Company. Unless otherwise determined by the Committee, the Common Stock subject to any Award must constitute service recipient stock under Section 409A (or otherwise not subject the Award to Section 409A). |
2.13 |
Company means Datto Holding Corp., a Delaware corporation, and its successors by operation of law. |
2
2.14 |
Consultant means an advisor or consultant to the Company or an Affiliate. |
2.15 |
Detrimental Conduct means, as reasonably determined by the Company, the Participants engaging in any of the following behaviors, provided that such behavior causes or would be reasonably expected to cause material harm to the Company or an Affiliate: (a) any violation by the Participant of a restrictive covenant agreement that the Participant has entered into with the Company or an Affiliate (covering, for example, confidentiality, non-competition, non-solicitation, non-disparagement, etc.); (b) the commission of a criminal act by the Participant while employed by or providing services to the Company or an Affiliate, whether or not performed in the workplace, that subjects, or if generally known would subject, the Company or an Affiliate to public ridicule or embarrassment, or other improper or intentional conduct by the Participant while employed by or providing services to the Company or an Affiliate causing reputational harm to the Company or an Affiliate; (c) the Participants breach of a fiduciary duty owed to the Company or an Affiliate or a client or former client of the Company or an Affiliate; (d) the Participants intentional violation, or grossly negligent disregard, of the Companys or an Affiliates policies, rules, or procedures; or (e) the Participant taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to the Company or an Affiliate. |
2.16 |
Disability means, unless otherwise determined by the Committee in the applicable Award Agreement, with respect to a Participants Separation from Service, a permanent and total disability as defined in Code Section 22(e)(3). A Disability will only be deemed to occur at the time of the determination by the Committee of the Disability; provided, however, that, for Awards that are subject to Section 409A, Disability means that a Participant is disabled under Section 409A. |
2.17 |
Effective Date has the meaning set forth in Section 1.2. |
2.18 |
Eligible Employee means each employee of the Company or an Affiliate. |
2.19 |
Eligible Individual means each Eligible Employee, Non-Employee Director, or Consultant who is designated by the Committee as eligible to receive an Award. |
2.20 |
Exchange Act means the Securities Exchange Act of 1934. |
2.21 |
Fair Market Value means, as of any date and except as provided below, the last sales price reported for the Common Stock on the applicable date as reported on the principal stock exchange in the United States on which the Common Stock is then listed, or if the Common Stock is not listed, or otherwise reported or quoted, the Committee will determine the Fair Market Value taking into account the requirements of Section 409A. For purposes of the grant of any Award, the applicable date will be the trading day immediately before the date on which the Award is granted. For purposes of any Award granted in connection with the Registration Date, the Fair Market Value will be the public offering price in the initial public offering as set forth on the cover of the final prospectus. For purposes of the purchase of any Award, the applicable date will be the date a notice of purchase is received by the Company or, if not a day on which the applicable market is open, the next day that |
3
it is open. Notwithstanding the foregoing, the Committee may use any alternative definition of Fair Market Value that it determines should be used in connection with the grant, exercise, vesting, settlement, or payment of any Award. Such alternative definition may include a price that is based on the opening, actual, high, low, or average selling prices of the Common Stock on the applicable stock exchange on the given date, the trading day preceding the given date, the trading day next succeeding the given date, or an average of trading days. |
2.22 |
Family Member of a Participant means the Participants child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Participants household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests. |
2.23 |
GAAP means generally accepted accounting principles. |
2.24 |
Incentive Stock Option or ISO means any Stock Option awarded to an Eligible Employee of the Company, its Subsidiaries, or any Parent intended to be, qualifying, and designated as an incentive stock option within the meaning of Code Section 422. |
2.25 |
Incumbent Directors has the meaning set forth in Section 11.2(b). |
2.26 |
Lead Underwriter has the meaning set forth in Section 13.21. |
2.27 |
Lock-Up Period has the meaning set forth in Section 13.21. |
2.28 |
Non-Employee Director means a member of the Board or the board of directors of an Affiliate who is not an active employee of the Company or an Affiliate. |
2.29 |
Nonstatutory Stock Option means any Stock Option that is not an ISO. |
2.30 |
Other Cash-Based Award means an award granted to an Eligible Individual under Section 10.3 that is payable in cash at the time or times and subject to the terms and conditions determined by the Committee. |
2.31 |
Other Share-Based Award means an award granted to an Eligible Individual under Article X that is valued in whole or in part by reference to, or is payable in or otherwise based on, Common Stock, including an award valued by reference to an Affiliate. Other Share-Based Awards may include restricted stock units. |
2.32 |
Parent means any parent corporation of the Company within the meaning of Code Section 424(e). |
2.33 |
Participant means an Eligible Individual who has been granted, and holds, an Award. |
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2.34 |
Performance Award means an award granted to an Eligible Individual under Article IX contingent upon achieving specified Performance Goals. |
2.35 |
Performance Goals means goals established by the Committee as contingencies for Awards to vest or become exercisable or distributable, which may be based on business objectives or other measures of performance as the Committee, in its discretion, deems appropriate. Performance Goals may differ among Awards granted to any one Participant or to different Participants. The Committee may also designate additional business objectives on which the Performance Goals may be based and adjust, modify, or amend the aforementioned business objectives. |
2.36 |
Performance Period means the designated period during which Performance Goals must be satisfied with respect to a Performance Award. |
2.37 |
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a government or any branch, department, agency, political subdivision, or official thereof. |
2.38 |
Plan means this Datto Holding Corp. Omnibus Incentive Plan. |
2.39 |
Proceeding has the meaning set forth in Section 13.10. |
2.40 |
Registration Date means the date on which the Company consummates the initial sale of its Common Stock in a bona fide, firm commitment underwriting pursuant to a registration statement under the Securities Act. |
2.41 |
Restricted Shares means restricted Shares granted to an Eligible Individual under Article VIII. |
2.42 |
Restriction Period has the meaning set forth in Section 8.3(a). |
2.43 |
Rule 16b-3 means Rule 16b-3 under Section 16(b) of the Exchange Act. |
2.44 |
Section 409A means Code Section 409A. |
2.45 |
Securities Act means the Securities Act of 1933. |
2.46 |
Separation from Service means, unless otherwise determined by the Committee or the Company, the termination of the applicable Participants employment with, and performance of services for, the Company and all Affiliates, including by reason of the fact that the Participants employer or other service recipient ceases to be an Affiliate of the Company. Unless otherwise determined by the Company, if a Participants employment or service with the Company or an Affiliate terminates but the Participant continues to provide services to the Company or an Affiliate in a Non-Employee Director capacity or as an Eligible Employee or Consultant, as applicable, such change in status will not be considered a Separation from Service. Approved temporary absences from employment because of illness, vacation, or leave of absence and transfers among the Company and its Affiliates will not be considered Separations from Service. Notwithstanding the foregoing definition of Separation from Service, with respect to any Award that constitutes nonqualified deferred compensation under Section 409A, Separation from Service means a separation from service as defined under Section 409A. |
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2.47 |
Share means a share of Common Stock. |
2.48 |
Share Reserve has the meaning set forth in Section 4.1. |
2.49 |
Stock Appreciation Right means a right granted to an Eligible Individual under Article VII to receive an amount in cash or Shares equal to the difference between (a) the Fair Market Value of a Share on the date such right is exercised and (b) the per Share exercise price of such right. |
2.50 |
Stock Option means an option to purchase Shares granted to an Eligible Individual under Article VI. |
2.51 |
Stockholder means a stockholder of the Company. |
2.52 |
Subsidiary means any subsidiary corporation of the Company within the meaning of Code Section 424(f). |
2.53 |
Substitute Award has the meaning set forth in Section 4.1. |
2.54 |
Ten Percent Stockholder means a Person owning stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, its Subsidiaries, or any Parent. |
2.55 |
Transfer means (a) when used as a noun, any direct or indirect transfer, sale, assignment, pledge, hypothecation, encumbrance, or other disposition, whether for value or no value and whether voluntary or involuntary, and (b) when used as a verb, to directly or indirectly transfer, sell, assign, pledge, encumber, charge, hypothecate, or otherwise dispose of, whether for value or for no value and whether voluntarily or involuntarily. Transferred and Transferable have a correlative meaning under the Plan. |
ARTICLE III
ADMINISTRATION
3.1 |
Committee. The Plan will be administered and interpreted by the Committee; provided that the Board will retain the right to exercise the authority of the Committee to the extent consistent with Applicable Law. To the extent required by Applicable Law, it is intended that each member of the Committee will qualify as (a) a non-employee director under Rule 16b-3 and (b) an independent director under the rules of the principal stock exchange in the United States on which the Common Stock is then listed, as applicable. If it is later determined that one or more members of the Committee do not so qualify, actions taken by the Committee before such determination will be valid despite such failure to qualify. |
6
3.2 |
Grants of Awards. The Committee will have full authority to grant, under the terms and conditions of the Plan, to Eligible Individuals: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted Shares, (iv) Performance Awards, (v) Other Share-Based Awards, and (vi) Other Cash-Based Awards. In particular, the Committee will have the authority: |
(a) |
to select the Eligible Individuals to whom Awards may be granted; |
(b) |
to determine whether and to what extent Awards, or any combination thereof, are to be granted to one or more Eligible Individuals; |
(c) |
to determine the number of Shares to be covered by each Award; |
(d) |
to determine the terms and conditions, not inconsistent with the terms and conditions of the Plan, of all Awards; |
(e) |
to determine the amount of cash to be covered by each Award; |
(f) |
to determine whether, to what extent, and under what circumstances grants of Stock Options and other Awards are to operate on a tandem basis or in conjunction with or apart from other awards made by the Company outside of the Plan; |
(g) |
to determine whether and under what circumstances a Stock Option may be settled in cash, Common Stock, or Restricted Shares under Section 6.4(d); |
(h) |
to determine whether a Stock Option is an ISO or Nonstatutory Stock Option; |
(i) |
to impose a blackout period during which Stock Options may not be exercised; |
(j) |
to determine whether to require a Participant, as a condition of the granting of any Award, to not sell or otherwise dispose of Shares acquired upon the exercise of an Award for a period of time as determined by the Committee after the date of the acquisition of such Award; |
(k) |
to modify, extend, or renew an Award, subject to Section 6.4(l) and Article XII; and |
(l) |
solely to the extent permitted by Applicable Law, to determine whether, to what extent, and under what circumstances to provide loans (which may be on a recourse basis and bear interest at the rate the Committee may determine) to Participants in order to exercise Stock Options. |
3.3 |
Guidelines. Subject to Article XII, the Committee will have the authority to adopt, alter, and repeal such administrative rules, guidelines, and practices governing the Plan and perform all acts, including the delegation of its responsibilities (to the extent permitted by Applicable Law and not inconsistent with the Plan), as it may deem advisable; to construe and interpret the Plan, all Awards, and all Award Agreements (and in each case any agreements relating thereto); and to otherwise supervise the administration of the Plan. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in |
7
the Plan or in any agreement relating thereto in the manner and to the extent it deems necessary to effectuate the purpose and intent of the Plan. The Committee may adopt special terms and conditions for Persons who are residing in, or employed in, or subject to the taxes of, any domestic or foreign jurisdictions to comply with Applicable Law. Notwithstanding the foregoing terms and conditions of this Section 3.3, no action of the Committee under this Section 3.3 may materially impair the rights of any Participant under the Plan or any Award without the Participants consent. To the extent applicable, the Plan is intended to comply with the applicable requirements of Rule 16b-3, and the Plan will be limited, construed, and interpreted in a manner so as to comply therewith. |
3.4 |
Sole Discretion; Decisions Final. Any decision, interpretation, or other action made or taken by or at the direction of the Company, the Board, or the Committee (or any of their members) arising out of or in connection with the Plan will be within the sole and absolute discretion of all and each of them, as the case may be, and will be final, binding, and conclusive on the Company and all employees and Participants and their respective heirs, executors, administrators, successors, and assigns and all other Persons having an interest in the Plan. |
3.5 |
Designation of Consultants/Liability; Delegation of Authority. |
(a) |
The Committee may designate employees of the Company and professional advisors to assist the Committee in the administration of the Plan and may grant authority to officers to grant Awards and execute agreements and other documents on behalf of the Committee, in each case to the extent permitted by Applicable Law. In the event of any designation of authority hereunder, subject to Applicable Law and any terms and conditions imposed by the Committee in connection with such designation, such designee or designees will have the power and authority to take such actions, exercise such powers, and make such determinations that are otherwise specifically designated to the Committee hereunder. |
(b) |
The Committee may employ such legal counsel, consultants, and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant and any computation received from any such consultant or agent. Expenses incurred by the Committee or the Board in the engagement of any such counsel, consultant, or agent will be paid by the Company. The Committee, its members, and any Person designated under Section 3.5(a) will not be liable for any action or determination made in good faith with respect to the Plan. To the maximum extent permitted by Applicable Law, no officer of the Company or member or former member of the Committee or of the Board will be liable for any action or determination made in good faith with respect to the Plan or any Award. |
(c) |
The Committee may delegate any or all of its powers and duties under the Plan to a subcommittee of directors or to any officer of the Company, including the power to perform administrative functions and grant Awards, provided that such delegation does not (i) violate Applicable Law, or (ii) result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to |
8
Section 16 of the Exchange Act in respect of the Company. Upon any such delegation, all references in the Plan to the Committee, shall be deemed to include any subcommittee or officer of the Company to whom such powers have been delegated by the Committee. Any such delegation shall not limit the right of such subcommittee members or such an officer to receive Awards. The Committee may also appoint agents who are not executive officers of the Company or members of the Board to assist in administering the Plan, provided, however, that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Shares. |
3.6 |
Indemnification. To the maximum extent permitted by Applicable Law and the Certificate of Incorporation and By-Laws of the Company and to the extent not covered by insurance directly insuring such Person, each officer and employee of the Company and each Affiliate and member or former member of the Committee and the Board will be indemnified and held harmless by the Company against all costs and expenses and liabilities, and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the Plan, except to the extent arising out of such officers, employees, members, or former members own fraud or bad faith. Such indemnification will be in addition to any right of indemnification the employees, officers, directors, or members or former officers, directors, or members may have under Applicable Law or under the Certificate of Incorporation or By-Laws of the Company or an Affiliate. Notwithstanding any other term or condition of the Plan, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to himself or herself. |
ARTICLE IV
SHARE LIMITATION
4.1 |
Shares. |
(a) |
Share Limits and Counting. The maximum number of Shares available for issuance under the Plan may not exceed 20,868,874 Shares (subject to any increase or decrease under this Section 4.1 or Section 4.2) (the Share Reserve). The Share Reserve may consist of authorized and unissued Shares and Shares held in or acquired for the treasury of the Company. The Share Reserve will automatically increase on each January 1 that occurs after the Effective Date, for 10 years, by an amount equal to 5% of the total number of Shares outstanding on December 31 of the preceding calendar year, or a lesser number as may be determined by the Board. The maximum number of Shares with respect to which ISOs may be granted is 33,993,196 Shares. With respect to Stock Appreciation Rights settled in Shares, upon settlement, only the number of Shares delivered to a Participant will count against the Share Reserve. If any Stock Option, Stock Appreciation Right, or Other Share-Based Award expires, terminates, or is canceled for any reason without having been exercised in full, the number of Shares underlying such Award will be added back to the Share Reserve. If any Restricted Shares, Performance Awards, or Other Share-Based Awards denominated in Shares are forfeited for any reason, |
9
the number of Shares underlying such Award will be added back to the Share Reserve. Any Award settled in cash will not count against the Share Reserve. If Shares issuable upon exercise, vesting, or settlement of an Award, or Shares owned by a Participant (that are not subject to any pledge or other security interest), are surrendered or tendered to the Company in payment of the purchase or exercise price of an Award or any taxes required to be withheld in respect of an Award, in each case, in accordance with the terms of the Plan, such surrendered or tendered Shares will be added back to the Share Reserve. Awards may be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (Substitute Awards). Substitute Awards will not count against the Share Reserve; provided that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding Stock Options intended to qualify as ISOs will count against the ISO limit above. Subject to applicable stock exchange requirements, available shares under a shareholder-approved plan of an entity acquired by the Company or with which the Company combines (as appropriately adjusted to reflect such acquisition or transaction) may be used for Awards and will not count against the Share Reserve. |
(b) |
Annual Non-Employee Director Award Limitation. The maximum value of Awards granted during any calendar year to any Non-Employee Director, taken together with any cash fees paid to that Non-Employee Director during the calendar year and the value of awards granted to the Non-Employee Director under any other compensation plan of the Company or any Affiliate during the calendar year, may not exceed $750,000 in total value (based on the Fair Market Value of the Shares underlying the Award as of the grant date for Restricted Shares and Other Share-Based Awards, and based on the grant date fair value for accounting purposes for Stock Options and Stock Appreciation Rights). |
4.2 |
Changes. |
(a) |
The existence of the Plan and any Awards will not affect in any way the right or power of the Board, the Committee, or the Stockholders to make or authorize (i) any adjustment, recapitalization, reorganization, or other change in the Companys capital structure or its business, (ii) any merger or consolidation of the Company or any Affiliate, (iii) any issuance of bonds, debentures, or preferred or prior preference stock ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of the Company or any Affiliate, (v) any sale or transfer of all or part of the assets or business of the Company or any Affiliate, or (vi) any other corporate act or proceeding. |
(b) |
Subject to Section 11.1: |
(i) |
In the event of any change in the outstanding Common Stock or in the capital structure of the Company by reason of any stock split, reverse stock split, recapitalization, reorganization, merger, consolidation, combination, division, exchange, spin off, extraordinary cash or stock dividend, or other relevant change in capitalization, Awards will be equitably adjusted or substituted to the extent necessary to preserve the economic intent of such Awards. |
10
(ii) |
Fractional Shares resulting from any adjustment in Awards under this Section 4.2(b) will be aggregated until, and eliminated at, the time of exercise or payment by rounding down to the nearest whole number. No cash settlements will be required with respect to fractional Shares eliminated by rounding. Notice of any adjustment will be given by the Committee to each Participant whose Award has been adjusted and such adjustment (whether or not such notice is given) will be effective and binding for all purposes of the Plan. |
4.3 |
Minimum Purchase Price. Notwithstanding any other term or condition of the Plan, if authorized but previously unissued Shares are issued under the Plan, such Shares may not be issued for a consideration that is less than as permitted under Applicable Law. |
ARTICLE V
ELIGIBILITY
5.1 |
General Eligibility. All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the Plan will be determined by the Committee. |
5.2 |
ISOs. Notwithstanding Section 5.1, only Eligible Employees of the Company, its Subsidiaries, and any Parent are eligible to be granted ISOs. |
5.3 |
General Requirement. The vesting and exercise of Awards granted to a prospective Eligible Individual must be conditioned upon such individual actually becoming an Eligible Employee, Consultant, or Non-Employee Director, respectively. |
ARTICLE VI
STOCK OPTIONS
6.1 |
Stock Options. Stock Options may be granted alone or in addition to other Awards. Each Stock Option will be either (a) an ISO or (b) a Nonstatutory Stock Option. |
6.2 |
Grants. The Committee will have the authority to grant to any Eligible Employee one or more ISOs, Nonstatutory Stock Options, or both types of Stock Options. The Committee will have the authority to grant any Consultant or Non-Employee Director one or more Nonstatutory Stock Options. To the extent that any Stock Option does not qualify as an ISO, such Stock Option or the portion thereof that does not so qualify will constitute a separate Nonstatutory Stock Option. |
6.3 |
ISOs. Notwithstanding any other term or condition of the Plan, no term or condition of the Plan relating to ISOs will be interpreted, amended, or altered, nor will any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Code Section 422, or, without the consent of the Participants affected, to disqualify any ISO under Code Section 422. |
11
6.4 |
Terms and Conditions of Stock Options. Stock Options will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following: |
(a) |
Exercise Price. The exercise price per Share subject to a Stock Option will be determined by the Committee at the time of grant; provided that the per Share exercise price of a Stock Option may not be less than 100% (or, in the case of an ISO granted to a Ten Percent Stockholder, 110%) of the Fair Market Value of the Common Stock at the grant date. |
(b) |
Stock Option Term. The term of each Stock Option will be fixed by the Committee; provided that no Stock Option may be exercisable more than 10 years after the date the Stock Option is granted; and provided, further, that the term of an ISO granted to a Ten Percent Stockholder may not exceed 5 years. |
(c) |
Exercisability. Unless otherwise determined by the Committee in accordance with this Section 6.4, Stock Options will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any Stock Option is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after the time of grant in whole or in part. |
(d) |
Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions that may apply under Section 6.4(c), to the extent vested, Stock Options may be exercised in whole or in part at any time during the Stock Option term by giving written notice of exercise to the Company specifying the number of Shares to be purchased. Such notice must be accompanied by payment in full of the exercise price as follows: (i) in cash or by check, bank draft, or money order payable to the Company; (ii) solely to the extent permitted by Applicable Law, if the Common Stock is listed on a national stock exchange, and the Committee authorizes, through a procedure whereby the Participant delivers irrevocable instructions to a broker reasonably acceptable to the Committee to deliver promptly to the Company an amount equal to the exercise price; (iii) to the extent the Committee authorizes, having the Company withhold Shares issuable upon exercise of the Stock Option, or by payment in full or in part in the form of Shares owned by the Participant, based on the Fair Market Value of the Shares on the payment date; or (iv) on such other terms and conditions that may be acceptable to the Committee. No Shares will be issued under the Plan until payment for those Shares has been made or provided for in accordance with the Plan. |
(e) |
Non-Transferability of Stock Options. No Stock Option will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all Stock Options will be exercisable, during the Participants lifetime, only by the Participant, except that the Committee may determine at the time of grant or thereafter that a Nonstatutory Stock Option that is otherwise not Transferable under this Section 6.4(e) is Transferable to a Family Member in whole or in part on terms and conditions that are specified by the Committee. A Nonstatutory Stock Option that is Transferred to a Family Member under the preceding sentence (i) may not be subsequently Transferred other than by will or by the laws of descent and distribution and (ii) remains subject to the Plan and the applicable Award Agreement. Any Shares acquired upon the exercise of a Nonstatutory Stock Option by a permissible transferee of a Nonstatutory Stock Option or a permissible transferee under a Transfer after the exercise of the Nonstatutory Stock Option will be subject to the Plan and the applicable Award Agreement. |
12
(f) |
Separation from Service by Death or Disability. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participants Separation from Service is by reason of death or Disability, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Separation from Service may be exercised by the Participant (or in the case of the Participants death, by the legal representative of the Participants estate) at any time within a period of 1 year from the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options; provided, however, that, in the event of a Participants Separation from Service by reason of Disability, if the Participant dies within such exercise period, all unexercised Stock Options held by such Participant will thereafter be exercisable, to the extent to which they were exercisable at the time of death, for a period of 1 year from the date of such death, but in no event beyond the expiration of the stated term of such Stock Options. |
(g) |
Involuntary Separation from Service without Cause. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participants Separation from Service is initiated by the Company without Cause, all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Separation from Service may be exercised by the Participant at any time within a period of 90 days after the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options. |
(h) |
Voluntary Resignation. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participants Separation from Service is voluntary (other than a voluntary Separation from Service described in Section 6.4(i)(y)), all Stock Options that are held by such Participant that are vested and exercisable at the time of the Participants Separation from Service may be exercised by the Participant at any time within a period of 90 days after the date of such Separation from Service, but in no event beyond the expiration of the stated term of such Stock Options. |
(i) |
Separation from Service for Cause. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, if a Participants Separation from Service (x) is for Cause or (y) is a voluntary Separation from Service (as provided in Section 6.4(h)) after the occurrence of an event that would be grounds for a Separation from Service for Cause, all Stock Options, whether vested or not vested, that are held by such Participant will terminate and expire as of the date of such Separation from Service. |
13
(j) |
Unvested Stock Options. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, Stock Options that are not vested as of the date of a Participants Separation from Service for any reason will terminate and expire as of the date of such Separation from Service. |
(k) |
ISO Terms and Conditions. To the extent that the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which ISOs are exercisable for the first time by an Eligible Employee during any calendar year under the Plan or any other stock option plan of the Company, any Subsidiary, or any Parent exceeds $100,000, such Stock Options will be treated as Nonstatutory Stock Options. In addition, if an Eligible Employee does not remain employed by the Company, any Subsidiary, or any Parent at all times from the time an ISO is granted until 3 months before the date of exercise thereof (or such other period as required by Applicable Law), such Stock Option will be treated as a Nonstatutory Stock Option. Should any term or condition of the Plan not be necessary in order for the Stock Options to qualify as ISOs, or should any additional terms and conditions be required, the Committee may amend the Plan accordingly. |
(l) |
Form, Modification, Extension and Renewal of Stock Options. Subject to the terms and conditions of the Plan, Stock Options will be evidenced by such form of agreement or grant as is approved by the Committee, and the Committee may (i) modify, extend, or renew outstanding Stock Options (provided that the rights of a Participant are not reduced without such Participants consent; and provided, further, that such action does not subject the Stock Options to Section 409A without the consent of the Participant), and (ii) accept the surrender of outstanding Stock Options (to the extent not theretofore exercised) and authorize the granting of new Stock Options in substitution therefor (to the extent not theretofore exercised). Notwithstanding any other term or condition of the Plan, except in connection with a corporate transaction involving the Company in accordance with Section 4.2, the repricing of Options (and Stock Appreciation Rights) is prohibited without prior approval of the Stockholders. |
For this purpose, a repricing means any of the following (or any other action that has the same effect as any of the following): (y) any action that is treated as a repricing under GAAP and (z) repurchasing for cash or canceling an Option or a Stock Appreciation Right at a time when its exercise price is greater than the Fair Market Value of the underlying Shares in exchange for another Award. A cancellation and exchange under clause (z) would be considered a repricing regardless of whether it is treated as a repricing under GAAP and regardless of whether it is voluntary on the part of the Participant.
14
(m) |
Early Exercise. The Committee may provide that a Stock Option include a term or condition whereby the Participant may elect at any time before the Participants Separation from Service to exercise the Stock Option as to any part or all of the Shares subject to the Stock Option before the full vesting of the Stock Option and such Shares will be subject to the terms and conditions of Article VIII and be treated as Restricted Shares. Unvested Shares so exercised may be subject to a repurchase option in favor of the Company or to any other restriction the Committee may determine. |
(n) |
Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Nonstatutory Stock Option on a cashless basis on the last day of the term of such Stock Option if the Participant has failed to exercise the Nonstatutory Stock Option as of such date, with respect to which the Fair Market Value of the Shares underlying the Nonstatutory Stock Option exceeds the exercise price of such Nonstatutory Stock Option on the date of expiration of such Stock Option, subject to Section 13.5. |
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 |
Terms and Conditions of Stock Appreciation Rights. Stock Appreciation Rights may be issued either alone or in tandem with Stock Options. Stock Appreciation Rights will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following: |
(a) |
Exercise Price. The exercise price per Share subject to a Stock Appreciation Right will be determined by the Committee at the time of grant; provided that the per Share exercise price of a Stock Appreciation Right will not be less than 100% of the Fair Market Value of the Common Stock at the time of grant. |
(b) |
Term. The term of each Stock Appreciation Right will be fixed by the Committee, but may not be greater than 10 years after the date the right is granted. |
(c) |
Exercisability. Unless otherwise determined by the Committee in accordance with this Section 7.1, Stock Appreciation Rights will be exercisable at the time or times and subject to the terms and conditions determined by the Committee at the time of grant. If the Committee provides that any such right is exercisable subject to certain terms and conditions, the Committee may waive those terms and conditions on the exercisability at any time at or after grant in whole or in part. |
(d) |
Method of Exercise. Subject to whatever installment exercise and waiting period terms and conditions apply under Section 7.1(c), Stock Appreciation Rights may be exercised in whole or in part at any time in accordance with the applicable Award Agreement, by giving written notice of exercise to the Company specifying the number of Stock Appreciation Rights to be exercised. |
(e) |
Payment. Upon the exercise of a Stock Appreciation Right, a Participant will be entitled to receive, for each right exercised, up to, but no more than, an amount in cash or Common Stock (as chosen by the Committee) equal in value to the excess of the Fair Market Value of 1 Share on the date that the right is exercised over the Fair Market Value of 1 Share on the date that the right was awarded to the Participant. |
15
(f) |
Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable Award Agreement and the Plan, upon a Participants Separation from Service for any reason, Stock Appreciation Rights will remain exercisable after a Participants Separation from Service on the same basis as Stock Options would be exercisable after a Participants Separation from Service in accordance with Sections 6.4(f) through 6.4(j). |
(g) |
Non-Transferability. No Stock Appreciation Rights will be Transferable by the Participant other than by will or by the laws of descent and distribution, and all such rights will be exercisable, during the Participants lifetime, only by the Participant. |
7.2 |
Automatic Exercise. The Committee may include a term or condition in an Award Agreement providing for the automatic exercise of a Stock Appreciation Right on a cashless basis on the last day of the term of the Stock Appreciation Right if the Participant has failed to exercise the Stock Appreciation Right as of such date, with respect to which the Fair Market Value of the Shares underlying the Stock Appreciation Right exceeds the exercise price of such Stock Appreciation Right on the date of expiration of such Stock Appreciation Right, subject to Section 13.5. |
ARTICLE VIII
RESTRICTED SHARES
8.1 |
Restricted Shares. The Committee will determine the Eligible Individuals to whom, and the time or times at which, grants of Restricted Shares will be made, the number of Restricted Shares to be awarded, the price (if any) to be paid by the Participant (subject to Section 8.2), the time or times within which such Awards will be subject to forfeiture, the vesting schedule and rights to acceleration thereof, and all other terms and conditions of the Awards. |
8.2 |
Awards and Certificates. Participants selected to receive Restricted Shares will not have any right with respect to the Award, unless and until the Participant has delivered a fully executed copy of the agreement evidencing the Award to the Company, to the extent required by the Committee, and has otherwise complied with the applicable terms and conditions of the Award. Further, such Award will be subject to the following: |
(a) |
Purchase Price. The purchase price of Restricted Shares will be fixed by the Committee. Subject to Section 4.3, the purchase price for Restricted Shares may be zero to the extent permitted by Applicable Law, and, to the extent required by Applicable Law, such purchase price may not be less than par value. |
(b) |
Legend. Each Participant receiving Restricted Shares will be issued a stock certificate in respect of the Restricted Shares, unless the Committee elects to use another system, such as book entries by the transfer agent, as evidencing ownership of Restricted Shares. Such certificate will be registered in the name of the Participant, and will, in addition to any legends required by Applicable Law, bear an appropriate legend referring to the terms and conditions applicable to the Award, substantially in the following form: |
16
The anticipation, alienation, attachment, sale, transfer, assignment, pledge, encumbrance, or charge of the restricted shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Datto Holding Corp. (the Company) Omnibus Incentive Plan (the Plan) and an award agreement entered into between the registered owner and the Company dated __________ (the Agreement). Copies of such Plan and Agreement are on file at the principal office of the Company.
(c) |
Custody. If stock certificates are issued in respect of Restricted Shares, the Committee may require that any stock certificates evidencing such Shares be held in custody by the Company until the restrictions thereon have lapsed, and that, as a condition of any grant of Restricted Shares, the Participant must deliver a duly signed stock power or other instruments of assignment, each endorsed in blank with a guarantee of signature if deemed necessary or appropriate by the Company, which would permit transfer to the Company of all or a portion of the Restricted Shares in the event that such Award is forfeited in whole or part. |
8.3 |
Terms and Conditions. Restricted Shares will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following: |
(a) |
Restriction Period. The Participant is not permitted to Transfer Restricted Shares during the period or periods set by the Committee (the Restriction Period) commencing on the date of such Award, as set forth in the applicable Award Agreement, and such agreement will set forth a vesting schedule and any event that would accelerate vesting of the Restricted Shares. Within these limits, based on service, attainment of Performance Goals, or such other factors or criteria as the Committee may determine, the Committee may condition the grant or provide for the lapse of such restrictions in installments in whole or in part, or may accelerate the vesting of all or any part of any Restricted Shares and waive the deferral terms and conditions for all or any part of any Restricted Shares. |
(b) |
Rights as a Stockholder. Except as provided in Section 8.3(a) and this Section 8.3(b) or as otherwise determined by the Committee, the Participant will have, with respect to Restricted Shares, all of the rights of a Stockholder, including the right to receive dividends, the right to vote such Restricted Shares, and, subject to and conditioned upon the full vesting of Restricted Shares, the right to tender those Shares. The Committee may determine at the time of grant that the payment of dividends will be deferred until, and conditioned upon, the expiration of the applicable Restriction Period. |
(c) |
Separation from Service. Unless otherwise determined by the Committee at the time of grant or, if no rights of the Participant are reduced, thereafter, subject to the applicable Award Agreement and the Plan, upon a Participants Separation from Service for any reason during the relevant Restriction Period, all Restricted Shares will be forfeited. |
17
(d) |
Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Shares, the certificates for such Shares will be delivered to the Participant. All legends will be removed from said certificates at the time of delivery to the Participant, except as otherwise required by Applicable Law or other terms and conditions imposed by the Committee. |
ARTICLE IX
PERFORMANCE AWARDS
9.1 |
Performance Awards. The Committee may grant a Performance Award to a Participant payable upon the attainment of specific Performance Goals. If the Performance Award is payable in Restricted Shares, such Shares will be transferable to the Participant only upon attainment of the relevant Performance Goal in accordance with Article VIII. If the Performance Award is payable in cash, it may be paid upon the attainment of the relevant Performance Goals either in cash or in Restricted Shares (based on the then current Fair Market Value of such Shares). Each Performance Award will be evidenced by an Award Agreement in such form that is not inconsistent with the Plan and that the Committee may approve. The Committee will condition the right to payment of any Performance Award upon the attainment of Performance Goals established under Section 9.2(c). |
9.2 |
Terms and Conditions. Performance Awards will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following: |
(a) |
Earning of Performance Award. At the expiration of the applicable Performance Period, the Committee will determine the extent to which the Performance Goals established under Section 9.2(c) are achieved and the percentage of each Performance Award that has been earned. |
(b) |
Non-Transferability. Subject to the applicable Award Agreement and the Plan, Performance Awards may not be Transferred. |
(c) |
Performance Goals, Formulae or Standards. The Committee will establish the Performance Goals for the earning of Performance Awards based on a Performance Period applicable to each Participant or class of Participants. Such Performance Goals may incorporate terms and conditions for disregarding (or adjusting for) changes in accounting methods, corporate transactions, and other similar type events or circumstances. |
(d) |
Dividends. Unless otherwise determined by the Committee at the time of grant, amounts equal to dividends declared during the Performance Period with respect to the number of Shares covered by a Performance Award will not be paid to the Participant. |
18
(e) |
Payment. After the Committees determination in accordance with Section 9.2(a), the Company will settle Performance Awards, in such form as determined by the Committee, in an amount equal to such Participants earned Performance Awards. Notwithstanding the foregoing sentence, the Committee may award an amount less than the earned Performance Awards and subject the payment of all or part of any Performance Award to additional vesting, forfeiture, and deferral terms and conditions. |
(f) |
Separation from Service. Subject to the applicable Award Agreement and the Plan, upon a Participants Separation from Service for any reason during the Performance Period for a Performance Award, the Performance Award will vest or be forfeited in accordance with the terms and conditions established by the Committee at grant. |
(g) |
Accelerated Vesting. Based on service, performance, and any other factors or criteria the Committee may determine, the Committee may, at or after grant, accelerate the vesting of all or any part of any Performance Award. |
ARTICLE X
OTHER SHARE-BASED AND CASH-BASED AWARDS
10.1 |
Other Share-Based Awards. The Committee is authorized to grant to Eligible Individuals Other Share-Based Awards that are payable in, valued in whole or in part by reference to, or otherwise based on or related to Shares, including Shares awarded purely as a bonus and not subject to terms or conditions, Shares in payment of the amounts due under an incentive or performance plan sponsored or maintained by the Company or an Affiliate, stock equivalent units, restricted stock units (RSUs), and Awards valued by reference to book value of Shares. Other Share-Based Awards may be granted either alone or in addition to or in tandem with other Awards. Subject to the terms and conditions of the Plan, the Committee has the authority to determine the Eligible Individuals to whom, and the time or times at which, Other Share-Based Awards will be granted, the number of Shares to be granted under such Awards, and all other terms and conditions of the Awards. |
10.2 |
Terms and Conditions. Other Share-Based Awards will be subject to terms and conditions, not inconsistent with the Plan, determined by the Committee, and the following: |
(a) |
Non-Transferability. Subject to the applicable Award Agreement and the Plan, Shares subject to Other Share-Based Awards may not be Transferred before the date on which the Shares are issued, or, if later, the date on which any applicable restriction, performance, or deferral period lapses. |
(b) |
Dividends. Unless otherwise determined by the Committee at the time of grant, subject to the applicable Award Agreement and the Plan, the recipient of an Other Share-Based Award will not be entitled to receive, currently or on a deferred basis, dividends or dividend equivalents in respect of the number of Shares covered by the Award. |
(c) |
Vesting. All Other Share-Based Awards and any Shares covered by those awards will vest or be forfeited to the extent so provided in the Award Agreement. |
19
(d) |
Price. Common Stock issued on a bonus basis under this Article X may be issued for no cash consideration. Common Stock purchased under a purchase right awarded under this Article X will be priced as determined by the Committee. |
10.3 |
Other Cash-Based Awards. The Committee may grant Other Cash-Based Awards to Eligible Individuals in amounts, on terms and conditions, and for consideration, including no consideration or such minimum consideration as may be required by Applicable Law. Other Cash-Based Awards may be granted subject to the satisfaction of vesting terms and conditions or may be awarded purely as a bonus and not subject to terms and conditions, and if subject to vesting, the Committee may accelerate such vesting at any time. |
ARTICLE XI
CHANGE IN CONTROL
11.1 |
Benefits. In the event of a Change in Control (as defined below), and except as otherwise determined by the Committee in an Award Agreement, a Participants unvested Awards will not vest automatically and will be treated in accordance with one or more of the following methods as determined by the Committee: |
(a) |
Awards, whether or not then vested, will be continued, assumed, or have new rights substituted therefor, and restrictions to which Restricted Shares or any other Award granted before the Change in Control are subject will not lapse upon the Change in Control and the Restricted Shares or other Awards will receive the same distribution as other Common Stock on terms and conditions determined by the Committee; provided that the Committee may decide to award additional Restricted Shares or other Awards in lieu of any cash distribution. |
(b) |
The Committee may provide for the purchase of any Awards by the Company or an Affiliate for an amount of cash equal to the excess (if any) of the Change in Control Price (as defined below) of the Shares covered by such Awards, over the aggregate purchase or exercise price of such Awards. For purposes of the Plan, Change in Control Price means the highest price per Share paid in any transaction related to a Change in Control. |
(c) |
The Committee may terminate all outstanding and unexercised Stock Options, Stock Appreciation Rights, and other Other Share-Based Awards that provide for a Participant-elected exercise, effective as of the Change in Control, by delivering notice of termination to each Participant at least 20 days before the date of consummation of the Change in Control, in which case during the period from the date on which such notice of termination is delivered to the consummation of the Change in Control, each affected Participant will have the right to exercise in full all of the Participants Awards that are then outstanding (without regard to any terms and conditions on exercisability otherwise contained in the Award Agreements), but any such exercise will be contingent on the occurrence of the Change in Control; provided that if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the notice and exercise pursuant thereto will be null and void. |
20
(d) |
The Committee may make any other determination as to the treatment of Awards in connection with a Change in Control. The treatment of Awards need not be the same for all Participants. Any escrow, holdback, earnout, or similar terms and conditions in the definitive agreements relating to the Change in Control may apply to any payment to the holders of Awards to the same extent and in the same manner as such terms and conditions apply to the holders of Shares. |
11.2 |
Change in Control. Unless otherwise determined by the Committee in the applicable Award Agreement or other written agreement with a Participant approved by the Committee, a Change in Control means: |
(a) |
any person, as that term is used in Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other fiduciary holding securities under any employee benefit plan of the Company, or any company owned, directly or indirectly, by the Stockholders in substantially the same proportions as their ownership of Common Stock), becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Companys then outstanding securities; |
(b) |
during any period of 24 consecutive calendar months, individuals who were directors serving on the Board on the first day of such period (the Incumbent Directors) cease for any reason to constitute a majority of the Board; provided, however, that any individual becoming a director after the first day of such period whose election, or nomination for election, by the Stockholders was approved by a vote of at least 2/3 of the Incumbent Directors will be considered as though such individual were an Incumbent Director, but excluding, for purposes of this proviso, any such individual whose initial assumption of office occurs as a result of an actual or threatened proxy contest with respect to election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person (as used in Section 13(d) of the Exchange Act), in each case other than the Board; |
(c) |
consummation of a reorganization, merger, consolidation, or other business combination (any of the foregoing, a Business Combination) of the Company or any direct or indirect subsidiary of the Company with any other corporation, in any case with respect to which the Company voting securities outstanding immediately before such Business Combination do not, immediately after such Business Combination, continue to represent (either by remaining outstanding or being converted into voting securities of the Company or any ultimate parent thereof) more than 50% of the then outstanding voting securities entitled to vote generally in the election of directors of the Company (or its successor) or any ultimate parent thereof after the Business Combination; or |
(d) |
a complete liquidation or dissolution of the Company or the consummation of a sale or disposition by the Company of all or substantially all of the Companys assets other than the sale or disposition of all or substantially all of the assets of the Company to a Person or Persons who beneficially own, directly or indirectly, 50% or more of the combined voting power of the outstanding voting securities of the Company at the time of the sale. |
21
Notwithstanding the foregoing terms and conditions of this definition, with respect to any Award that is characterized as nonqualified deferred compensation within the meaning of Section 409A, an event will not be considered to be a Change in Control under the Plan for purposes of payment of such Award unless such event is also a change in control event within the meaning of Section 409A.
11.3 |
Initial Public Offering not a Change in Control. Notwithstanding the foregoing terms and conditions of the definition of Change in Control, the occurrence of the Registration Date will not be considered a Change in Control. |
ARTICLE XII
AMENDMENT AND TERMINATION
12.1 |
Amendment and Termination of Plan. Subject to Section 12.3, the Board may amend or terminate the Plan at any time; provided, however, that no amendment will be effective unless approved by the Stockholders to the extent Stockholder approval is necessary to satisfy any Applicable Laws. |
12.2 |
Amendment of Awards. Subject to Section 12.3, the Committee may amend any Award at any time; provided, however, that no amendment will be effective unless approved by the Stockholders to the extent Stockholder approval is necessary to satisfy any Applicable Laws. |
12.3 |
No Material Impairment of Rights. Rights under any Award granted before amendment or termination of the Plan or amendment of an Award may not be materially impaired by any such amendment or termination unless the Participant consents thereto. |
ARTICLE XIII
GENERAL TERMS AND CONDITIONS
13.1 |
Legend. The Committee may require each person receiving Shares under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. In addition to any legend required by the Plan, the certificates for Shares issued under the Plan may include any legend that the Committee deems appropriate to reflect any restrictions on Transfer. All certificates for Shares delivered under the Plan will be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under Applicable Law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. |
13.2 |
Book Entry. Notwithstanding any other term or condition of the Plan, the Company may elect to satisfy any requirement under the Plan for the delivery of Share certificates through the use of another system, such as book entry or electronically. |
22
13.3 |
Other Plans. Nothing contained in the Plan prevents the Board from adopting other or additional compensation arrangements, subject to Stockholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases. |
13.4 |
No Right to Employment/Consultancy/Directorship. Neither the Plan nor the grant of any Award gives any Person any right with respect to continuance of employment, consultancy, or directorship by the Company or any Affiliate, nor does the Plan or the grant of any Award cause any limitation in any way on the right of the Company or any Affiliate by which an employee is employed or a Consultant or Non-Employee Director is retained to terminate such employment, consultancy, or directorship at any time. |
13.5 |
Withholding for Taxes. The Company or an Affiliate, as the case may be, has the right to deduct from payments of any kind otherwise due to a Participant any federal, state, or local taxes of any kind required by Applicable Law to be withheld (a) with respect to the vesting of or other lapse of restrictions applicable to an Award, (b) upon the issuance of any Shares upon the exercise of an Option or Stock Appreciation Right, or (c) otherwise due in connection with an Award. At the time the tax obligation becomes due, the Participant must pay to the Company or the Affiliate, as the case may be, any amount that the Company or Affiliate determines to be necessary to satisfy the tax obligation. The Company or the Affiliate, as the case may be, may require or permit the Participant to satisfy the tax obligation, in whole or in part, (i) by causing the Company or Affiliate to withhold up to the maximum required number of Shares otherwise issuable to the Participant as may be necessary to satisfy such tax obligation or (ii) by delivering to the Company or Affiliate Shares already owned by the Participant. The Shares so delivered or withheld must have an aggregate Fair Market Value equal to the tax obligation. The Fair Market Value of the Shares used to satisfy the tax obligation will be determined by the Company or the Affiliate as of the date that the amount of tax to be withheld is to be determined. To the extent applicable, a Participant may satisfy his or her tax obligation only with Shares that are not subject to any repurchase, forfeiture, unfulfilled vesting, or other similar requirements. Any fraction of a Share required to satisfy tax obligations will be disregarded and the amount due must be paid instead in cash by the Participant. |
13.6 |
No Assignment of Benefits. No Award or other benefit payable under the Plan may, except as otherwise specifically provided by Applicable Law or permitted by the Committee, be Transferable in any manner, and any attempt to Transfer any such benefit will be void, and any such benefit will not in any manner be liable for or subject to the debts, contracts, liabilities, engagements, or torts of any Person who will be entitled to such benefit, nor will it be subject to attachment or legal process for or against such Person. |
13.7 |
Listing and Other Terms and Conditions. |
(a) |
Unless otherwise determined by the Committee, as long as the Common Stock is listed on a national stock exchange or system sponsored by a national securities association, the issuance of Shares under an Award will be conditioned upon such Shares being listed on such exchange or system. The Company will have no obligation to issue such Shares unless and until such Shares are so listed, and the right to exercise any Stock Option or other Award with respect to such Shares will be suspended until such listing has been effected. |
23
(b) |
If at any time counsel to the Company is of the opinion that any sale or delivery of Shares under an Award is or may be unlawful or result in the imposition of excise taxes on the Company, the Company will have no obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act or otherwise, with respect to Shares or Awards, and the right to exercise any Stock Option or other Award will be suspended until, in the opinion of said counsel, such sale or delivery would be lawful or would not result in the imposition of excise taxes on the Company. |
(c) |
Upon termination of any period of suspension under this Section 13.7, any Award affected by such suspension that has not expired or terminated will be reinstated as to all Shares available before such suspension and as to Shares that would otherwise have become available during the period of such suspension, but no such suspension will extend the term of any Award. |
(d) |
A Participant will be required to supply the Company with certificates, representations, and information that the Company requests and otherwise cooperate with the Company in obtaining any listing, registration, qualification, exemption, consent, and approval the Company determines necessary or appropriate. |
13.8 |
Stockholders Agreement and Other Requirements. Notwithstanding any other term or condition of the Plan, as a condition to the receipt of Shares under an Award, to the extent required by the Committee, the Participant must execute and deliver a Stockholders agreement and such other documentation that sets forth certain restrictions on transferability of the Shares acquired upon exercise or purchase, and such other terms and conditions as the Committee may establish. The Company may require, as a condition of exercise, the Participant to become a party to an existing Stockholders agreement (or other agreement). Any payment of cash or issuance or transfer of Shares or other property to the Participant or the Participants legal representative under the Plan will, to the extent thereof, be in full satisfaction of all claims of such Persons under the plan, and the Company may require the Participant or the Participants legal representative, as a condition to such payment or issuance or transfer, to execute a general release of all claims in favor of the Company and each Affiliate in such form as the Company may determine. |
13.9 |
Governing Law. The Plan and actions taken in connection with the Plan will be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws). |
13.10 |
Jurisdiction; Waiver of Jury Trial. Any suit, action, or proceeding with respect to the Plan or any Award or Award Agreement, or any judgment entered by any court of competent jurisdiction in respect of the Plan or any Award or Award Agreement, will be resolved only in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such |
24
courts. In that context, and without limiting the generality of the foregoing, each of the Company and each Participant irrevocably and unconditionally (a) submits in any proceeding relating to the Plan or any Award or Award Agreement, or for the recognition and enforcement of any judgment in respect of the Plan or any Award or Award Agreement (a Proceeding), to the exclusive jurisdiction of the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts, and agrees that all claims in respect of any Proceeding will be heard and determined in such state court or, to the extent permitted by Applicable Law, in such federal court, (b) consents that any Proceeding may and will be brought in such courts and waives any objection that the Company or the Participant may have at any time after the Effective Date to the venue or jurisdiction of any Proceeding in any such court or that the Proceeding was brought in an inconvenient court and agrees not to plead or claim the same, (c) waives all right to trial by jury in any Proceeding (whether based on contract, tort, or otherwise) arising out of or relating to the Plan or any Award or Award Agreement, (d) agrees that service of process in any Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party, in the case of a Participant, at the Participants address shown in the books and records of the Company or, in the case of the Company, at the Companys principal offices, attention General Counsel, and (e) agrees that nothing in the Plan will affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware. |
13.11 |
Other Benefits. No Award will be considered compensation for purposes of computing benefits under any retirement plan of the Company or any Affiliate or affect any benefit under any other benefit plan now or subsequently in effect under which the availability or amount of benefits is related to the level of compensation. |
13.12 |
Costs. The Company will bear all expenses associated with administering the Plan, including expenses of issuing Common Stock under Awards. |
13.13 |
No Right to Same Benefits. The terms and conditions of Awards need not be the same with respect to each Participant, and Awards to individual Participants need not be the same in subsequent years (if granted at all). |
13.14 |
Death/Disability. The Committee may require the transferee of a Participant to supply it with written notice of the Participants death or Disability and to supply it with a copy of the will (in the case of the Participants death) or such other evidence as the Committee deems necessary to establish the validity of the transfer of an Award. The Committee may also require the agreement of the transferee to be bound by the Plan. |
13.15 |
Section 16(b) of the Exchange Act. All elections and transactions under the Plan by Persons subject to Section 16 of the Exchange Act involving Shares are intended to comply with any applicable exemptive condition under Rule 16b-3. The Committee may establish and adopt written administrative guidelines, designed to facilitate compliance with Section 16(b) of the Exchange Act, as it may deem necessary or proper for the administration and operation of the Plan and the transaction of business thereunder. |
25
13.16 |
Section 409A. The Plan is intended to comply with Section 409A and will be limited, construed, and interpreted in accordance with such intent. To the extent that any Award is subject to Section 409A, it will be paid in a manner that complies with Section 409A. Notwithstanding any other provision of the Plan, any Plan provision that is inconsistent with Section 409A will be deemed to be amended to comply with Section 409A and to the extent such provision cannot be amended to comply, such provision will be null and void. The Company will have no liability to a Participant, or any other party, if an Award that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant, or for any action taken by the Committee or the Company and, in the event that any amount or benefit under the Plan becomes subject to penalties under Section 409A, responsibility for payment of such penalties will rest solely with the affected Participants and not with the Company. Notwithstanding any other provision in the Plan or any Award Agreement, any payment(s) of nonqualified deferred compensation (within the meaning of Section 409A) that are otherwise required to be made under the Plan to a specified employee (as defined under Section 409A) as a result of such employees separation from service (other than a payment that is not subject to Section 409A) will be delayed for the first 6 months after such separation from service and will instead be paid (in a manner set forth in the Award Agreement) upon expiration of such delay period (or, if earlier, the date of death of the specified employee). All installment payments under the Plan will be deemed separate payments for purposes of Section 409A. |
13.17 |
California Participants. The Plan is intended to comply with Section 25102(o) of the California Corporations Code, to the extent applicable. In that regard, to the extent required by Section 25102(o), (a) the terms and conditions of any Options and Stock Appreciation Rights, to the extent vested and exercisable upon a Participants Separation from Service, will include any minimum exercise periods after Separation from Service required by Section 25102(o) and (b) any repurchase right of the Company or any Affiliate will include a minimum 90-day notice requirement. Any Plan term that is inconsistent with Section 25102(o) will, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o). |
13.18 |
Successor and Assigns. The Plan will be binding on all successors and permitted assigns of a Participant, including the estate of such Participant and the executor, administrator, or trustee of such estate. |
13.19 |
Severability of Terms and Conditions. If any term or condition of the Plan is held invalid or unenforceable, such invalidity or unenforceability will not affect any other term or condition of the Plan, and the Plan will be construed and enforced as if such term or condition had not been included. |
13.20 |
Payments to Minors, Etc. Any benefit payable to or for the benefit of a minor, an incompetent Person, or other Person incapable of receipt thereof will be considered paid when paid to such Persons guardian or to the party providing or reasonably appearing to provide for the care of such Person, and such payment will fully discharge the obligations of the Committee, the Board, the Company, all Affiliates, and their employees, agents, and representatives with respect thereto. |
26
13.21 |
Lock-Up Agreement. As a condition to the grant of an Award, if requested by the Company and the lead underwriter of any public offering of Common Stock (the Lead Underwriter), a Participant must irrevocably agree not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of, any interest in any Common Stock or any securities convertible into, derivative of, or exchangeable or exercisable for, or any other rights to purchase or acquire Common Stock (except Common Stock included in such public offering or acquired on the public market after such offering) during such period of time after the effective date of a registration statement of the Company filed under the Securities Act that the Lead Underwriter may specify (the Lock-Up Period). Each Participant must sign such documents as may be requested by the Lead Underwriter to effect the foregoing. The Company may impose stop-transfer instructions with respect to Common Stock acquired under an Award until the end of such Lock-Up Period. |
13.22 |
Separation from Service for Cause; Clawbacks; Detrimental Conduct. |
(a) |
Separation from Service for Cause. The Company may cancel any unvested Awards if the Participant incurs a Separation from Service for Cause. |
(b) |
Clawbacks. All awards, amounts, or benefits received or outstanding under the Plan will be subject to clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with any Company clawback or similar policy or any Applicable Law related to such actions. A Participants acceptance of an Award will constitute the Participants acknowledgement of and consent to the Companys application, implementation, and enforcement of any applicable Company clawback or similar policy that may apply to the Participant, whether adopted before or after the Effective Date, and any Applicable Law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and the Participants agreement that the Company may take any actions that may be necessary to effectuate any such policy or Applicable Law, without further consideration or action. |
(c) |
Detrimental Conduct. Except as otherwise determined by the Committee, notwithstanding any other term or condition of the Plan, if a Participant engages in Detrimental Conduct, whether during the Participants service or after the Participants Separation from Service, in addition to any other penalties or restrictions that may apply under the Plan, Applicable Law, or otherwise, the Participant must forfeit or pay to the Company the following: |
(i) |
any and all outstanding Awards granted to the Participant, including Awards that have become vested or exercisable; |
(ii) |
any cash or Shares received by the Participant in connection with the Plan within the 36-month period immediately before the date the Participant engaged in Detrimental Conduct; and |
27
(iii) |
the profit realized by the Participant from the sale, or other disposition for consideration, of any Shares received by the Participant under the Plan within the 36-month period immediately before the date the Participant engaged in Detrimental Conduct. |
13.23 |
Data Protection. A Participants acceptance of an Award will be deemed to constitute the Participants acknowledgement of and consent to the collection and processing of personal data relating to the Participant so that the Company and the Affiliates can fulfill their obligations and exercise their rights under the Plan and generally administer and manage the Plan. This data will include data about participation in the Plan and Shares offered or received, purchased, or sold under the Plan and other appropriate financial and other data (such as the date on which the Awards were granted) about the Participant and the Participants participation in the Plan. |
13.24 |
Unfunded Plan. The Plan is intended to constitute an unfunded plan for incentive and deferred compensation. With respect to any payment as to which a Participant has a fixed and vested interest but that is not yet made to a Participant by the Company, nothing in the Plan gives any Participant any right that is greater than the rights of a general unsecured creditor of the Company. The grant of an Award will not require a segregation of any of the Companys assets for satisfaction of the Companys payment obligation under any Award. |
13.25 |
Plan Construction. In the Plan, unless otherwise stated, the following uses apply: |
(a) |
references to an Applicable Law refer to such Applicable Law and any amendments and supplements thereto and any successor Applicable Law, and to all valid and binding rules and regulations promulgated thereunder, court decisions, and other regulatory and judicial authority issued or rendered thereunder, as amended or supplemented, or their successors, as in effect at the relevant time; |
(b) |
in computing periods from a specified date to a later specified date, the words from and commencing on (and the like) mean from and including, and the words to, until, and ending on (and the like) mean to and including; |
(c) |
indications of time of day will be based upon the time applicable to the location of the principal headquarters of the Company; |
(d) |
the words include, includes, and including (and the like) mean include, without limitation, includes, without limitation, and including, without limitation (and the like), respectively; |
(e) |
all references to articles, sections, and exhibits are to articles, sections, and exhibits in or to the Plan; |
(f) |
all words used will be construed to be of such gender or number as the circumstances and context require; |
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(g) |
the captions and headings of articles, sections, and exhibits have been inserted solely for convenience of reference and will not be considered a part of the Plan, nor will any of them affect the meaning or interpretation of the Plan; |
(h) |
any reference to an agreement, plan, policy, form, document, or set of documents, and the rights and obligations of the parties under any such agreement, plan, policy, form, document, or set of documents, will mean the agreement, plan, policy, form, document, or set of documents as amended from time to time, and any and all modifications, extensions, renewals, substitutions, or replacements thereof; and |
(i) |
all accounting terms not specifically defined will be construed in accordance with GAAP. |
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Exhibit 10.3
NON-EMPLOYEE OUTSIDE DIRECTOR
RESTRICTED STOCK UNIT AGREEMENT
* * * * *
Participant:
Grant Date:
Number of RSUs Granted:
* * * * *
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this Agreement), dated as of the Grant Date specified above, is entered into by and between Datto Holding Corp. (formerly known as Merritt Topco, Inc.), a corporation organized in the State of Delaware (the Company), and the Participant specified above; and
WHEREAS, it has been determined by the Committee (as defined in the Companys 2017 Stock Option Plan (as amended, the Plan)) that it would be in the best interests of the Company to grant the restricted stock units (RSUs) provided for herein to the Participant; and
WHEREAS, this Agreement and the RSUs granted hereunder shall be applied as if they were issued under the Plan and will be subject to the following terms and conditions of the Plan, which are incorporated herein and made a part hereof (with such changes as the Board determines appropriate or necessary to give effect to the intent of this provision): (i) capitalized terms in this Agreement that are not otherwise defined herein shall have the meaning set forth in the Plan, (ii) Sections 4 (Administration of this Plan), 7 (Listing, Registration and Compliance with Laws and Regulations), 8 (Adjustment for Change in Common Stock), 12 (Repurchase Option), 13 (Restrictions on Transfer), 14 (Additional Restrictions on Transfer), 16 (Sale of the Company), 17 (Public Offering), 18 (Transfers in Violation of Plan), and 21 (Business Days) are incorporated herein as appropriate. For the sake of clarity, the use of award or Options under the Plan shall be deemed to include this award of RSUs (this Award), as appropriate, and the term Option Share shall be interpreted to mean shares of Common Stock subject to, or delivered pursuant to, this Award.
NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, the parties hereto hereby mutually covenant and agree as follows:
1. Grant of RSUs. The Company hereby grants to the Participant the RSUs specified above, each of which represents the right to receive a share of Common Stock upon satisfaction of the vesting, settlement and other conditions set forth in this Agreement. The RSUs granted under this Agreement are subject to the terms and conditions of this Agreement and Sections 4, 7, 8, 12, 13, 14, 16, 17, 18, and 21 of the Plan, which are incorporated herein as appropriate.
2. Vesting and Settlement.
(a) Vesting. Subject to the other provisions of this Section 2, ______ of the RSUs shall vest on ________ (the Vesting Date), provided that the Participants Termination Date does not occur on or prior to such Vesting Date. There shall be no proportionate or partial vesting in the periods prior to the Vesting Date and all vesting shall occur only on the Vesting Date, subject to the Participants continued service with the Company or any of its Subsidiaries through the Vesting Date.
(b) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the RSUs at any time and for any reason.
(c) Termination Event. Upon the consummation of a Termination Event, any RSUs that were unvested immediately prior to such Termination Event shall be deemed vested RSUs (such RSUs that are subject to accelerated vesting being referred to as the Accelerated RSUs). The Participant hereby agrees that upon a Termination Event, the Accelerated RSUs shall be deemed to be automatically converted into a right solely to receive payment of the consideration (less any applicable taxes and withholdings), if any, otherwise payable (whether in the form of cash or stock) in respect of the shares of Common Stock underlying such Accelerated RSUs in connection with the Termination Event.
(d) Forfeiture. Subject to the Committees discretion to accelerate vesting hereunder, all unvested RSUs shall be immediately forfeited upon the Participants Termination Date, if it precedes the Vesting Date.
3. Delivery of Shares.
(a) General. Subject to the provisions of Sections 3(b) and 10(c) hereof, within thirty (30) days following the vesting of the RSUs, the Participant shall receive the number of shares of Common Stock that correspond to the number of RSUs granted hereunder.
(b) Blackout Periods. If the Participant is subject to any Company blackout policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 3(a) hereof, such distribution shall be instead made on the date that the Participant is not subject to any such policy or restriction.
4. Dividends; Rights as Stockholder. Cash dividends on shares of Common Stock issuable hereunder shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such cash dividends shall not be deemed to be reinvested in shares of Common Stock and shall be held uninvested and without interest and paid in cash at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. Stock dividends on shares of Common Stock shall be credited to a dividend book entry account on behalf of the Participant with respect to each RSU granted to the Participant, provided that such stock dividends
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shall be paid in shares of Common Stock at the same time that the shares of Common Stock underlying the RSUs are delivered to the Participant in accordance with the provisions hereof. In the event the RSUs are forfeited, any underlying cash or stock dividends will also be forfeited. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any RSU unless and until the Participant has become the holder of record of such shares.
5. Non-Transferability. No portion of the RSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company or as a result of forfeiture of the RSUs as provided herein, unless and until payment is made in respect of vested RSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder (which vested shares of Common Stock shall be subject to the limitations, including limitations on transferability, set forth in, inter alia, the organizational documents of the Company, the Stockholders Agreement, dated as of December 7, 2017, by and among the Company and each of the persons listed on the schedules thereto (as amended, restated and amended and restated from time to time, the Stockholders Agreement), and applicable securities laws).
6. Governing Law. All issues concerning this Agreement will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision of rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Each of the Company and the Participant submits to the co-exclusive jurisdiction of the United States District Court and any Delaware state court sitting in Wilmington, Delaware over any lawsuit under this Agreement and waives any objection based on venue or forum non conveniens with respect to any action instituted therein. Each of the Company and the Participant waives the necessity for personal service of any and all process upon it and consents that all such service of process may be made by registered or certified mail (return receipt requested), in each case directed to such party in accordance with the notice requirements set forth in this Agreement, and service so made will be deemed to be completed on the date of actual receipt. Each of the Company and the Participant consents to service of process as aforesaid. Nothing in this Agreement will prohibit personal service in lieu of the service by mail contemplated herein.
7. Taxes. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax due with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer any such payment or issuance unless and until indemnified to its satisfaction. The Participant will be solely liable for all federal, state, local, foreign and other tax obligations related to the RSUs (collectively, Tax Obligations), and the Company (a) makes no representation or undertakings regarding the treatment of any Tax Obligations in connection with the grant, vesting, or settlement of the RSUs or the subsequent sale of any Shares and (b) does not commit to structure the RSUs to reduce or eliminate the Participants liability for Tax Obligations. The Participant acknowledges that the Company has encouraged the Participant to consult the Participants own adviser regarding the tax consequences of this Award, and that the Participant is not relying on the Company or its affiliates or agents for tax advice.
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8. Legend. The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates representing shares of Common Stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section 8. Any issuance of shares of Common Stock under this Award may be effected on a non-certificated basis, to the extent not prohibited by applicable law.
9. Securities Representations. This Agreement is being entered into by the Company in reliance upon the following express representations and warranties of the Participant. The Participant hereby acknowledges, represents and warrants that:
(a) The Participant has been advised that the Participant may be an affiliate within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participants representations set forth in this Section 9.
(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Common Stock issuable hereunder must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a re-offer prospectus) with regard to such shares of Common Stock and the Company is under no obligation to register such shares of Common Stock (or to file a re-offer prospectus).
(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issuable hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.
10. Participant Acknowledgments. In connection with the grant of any RSU and/or the issuance of any Common Stock pursuant to this Agreement, the Participant acknowledges and agrees, that as a condition to any such grant or issuance:
(a) Neither the grant of any RSU, the issuance of any Common Stock nor any provision contained in this Agreement shall entitle the Participant to remain in the service of the Company or its Subsidiaries or affect the right of the Company to terminate any Participants service at any time for any reason.
(b) The Participant will have consulted, or will have had an opportunity to consult with, independent legal counsel regarding his or her rights and obligations under this Agreement evidencing any grant of RSUs and he or she fully understands the terms and conditions contained herein and therein.
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(c) Prior to the issuance of any shares of Common Stock hereunder, the Participant will deliver to the Company an executed consent from the Participants spouse (if any) in the form of Exhibit A attached hereto. If, at any time subsequent to the date the Participant is issued any shares of Common Stock and prior to the occurrence of a Termination Event, the Participant becomes legally married (whether in the first instance or to a different spouse), the Participant shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit A attached hereto. The Participants failure to deliver the Company an executed consent in the form of Exhibit A at any time when the Participant would otherwise be required to deliver such consent shall constitute the Participants continuing representation and warranty that the Participant is not legally married as of such date. Prior to the issuance of any shares of Common Stock hereunder, Participant will deliver to the Company an executed joinder to the Stockholders Agreement.
11. Entire Agreement; Termination and Amendment. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter.
12. Rights of Participant. Any questions as to whether and when there has been a Termination Event or a Termination Date shall be determined in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or its Affiliates to terminate the Participants provision of services at any time (for any reason and with or without Cause), nor confer upon the Participant any right to continue to provide services to the Company or any of its Subsidiaries for any period of time or to continue to receive the Participants present (or any other) compensation.
13. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the RSUs awarded under this Agreement for legitimate business purposes. This authorization and consent is freely given by the Participant.
14. Compliance with Laws. The grant of RSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue the RSUs or any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the RSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.
15. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 5 hereof) any part of this Agreement without the prior express written consent of the Company.
16. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.
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17. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
18. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated thereunder.
19. Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
20. Remedies. Each of the Company, the Participant and the Investors will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including reasonable attorneys fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The Participant and the Company acknowledge and agree that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.
21. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Agreement at any time; (b) the award of RSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the RSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participants ordinary compensation (if any), and shall not be considered as part of such compensation in the event of termination or resignation.
22. Notices. Any notice required or permitted under this Agreement shall be in writing and shall be either delivered by electronic transmission (i.e., electronic mail or facsimile) (which shall be effective upon receipt of confirmation of successful transmission), personally delivered, or mailed by first class mail, return receipt requested, to the Participant at the address indicated in the Companys records for such Person, and to the Company at the facsimile number and address below indicated:
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Notices to the Company:
Datto Holding Corp.
or such other facsimile number or address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed to have been given when so delivered or mailed.
Remainder of Page Intentionally Left Blank
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
DATTO HOLDING CORP. |
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EXHIBIT A
Form of Spousal Consent
SPOUSAL CONSENT
The undersigned spouse hereby acknowledges that I have read the following agreements to which my spouse is a party:
Merritt Topco, Inc. Amended and Restated 2017 Stock Option Plan
Stockholders Agreement
Non-Employee Outside Director Restricted Stock Unit Agreement
and that I understand their contents. I am aware that such agreements provide for the repurchase of certain of my spouses capital stock of Datto Holding Corp. (formerly known as Merritt Topco, Inc.) (the Company), under certain circumstances and impose other restrictions on such capital stock. I agree that my spouses interest in such capital stock is subject to the agreements referred to above and the other agreements referred to therein and any interest I may have in such capital stock shall be irrevocably bound by these agreements and the other agreements referred to therein and further that my community property interest (if any) shall be similarly bound by these agreements.
The undersigned spouse irrevocably constitutes and appoints ____________ (the Stockholder) as the undersigneds true and lawful attorney and proxy in the undersigneds name, place and stead to sign, make, execute, acknowledge, deliver, file and record all documents which may be required, and to manage, vote, act and make all decisions with respect to (whether necessary, incidental, convenient or otherwise), any and all capital stock of the Company in which the undersigned now has or hereafter acquires any interest and in any and all capital stock of the Company now or hereafter held of record by the Stockholder (including but not limited to, the right, without further signature, consent or knowledge of the undersigned spouse, to exercise or not to exercise any and all options under any appropriate agreements and to exercise amendments and modifications of and to terminate the foregoing agreements and to dispose of any and all such capital stock and options), with all powers the undersigned spouse would possess if personally present, it being expressly understood and intended by the undersigned that the foregoing power of attorney and proxy is coupled with an interest; and this power of attorney is a durable power of attorney and will not be affected by disability, incapacity or death of the Stockholder, or dissolution of marriage and this proxy will not terminate without consent of the Stockholder and the Company.
Stockholder:
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Notary Public |
Exhibit 10.4
OPTION ROLLOVER AGREEMENT
This OPTION ROLLOVER AGREEMENT (this Agreement) is entered into as of _________ by and between Merritt Topco, Inc., a Delaware corporation (Topco), and ____________ (the Rollover Holder).
WHEREAS, Datto, Inc. a Delaware corporation (Parent). Asteroid Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Parent (Merger Sub), Autotask Superior Holding, Inc., a Delaware corporation (the Company), and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the Securityholders Representative (as defined therein), entered into that certain Agreement and Plan of Merger, dated as of October 24, 2017 (as the same may be amended, supplemented or otherwise modified from time to time, the Merger Agreement), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the merger (the Merger) on the terms and conditions set forth therein (all capitalized terms used in this Agreement but not defined herein shall have the meanings ascribed to such terms in the Merger Agreement);
WHEREAS, the Rollover Holder currently is the holder of the type and number of Company Rollover Options as set forth on Schedule A attached hereto; and WHEREAS, subject to the terms and conditions of this Agreement, Topco and the Rollover Holder desire, immediately prior to Closing, to enter into this Agreement to provide the terms and conditions on which the Rollover Holder will exchange the Company Rollover Options for new options to purchase shares of common stock of Topco (Topco Common Stock) (each, a New Option. and collectively, the New Options) in accordance with the terms and conditions set forth herein and in the Merger Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which the parties hereby acknowledge, Topco and the Rollover Holder hereby agree as follows:
1. Authorization of New Options. Subject to the terms and conditions of this Agreement, promptly following the Closing, Topco will grant the New Options to the Rollover Holder.
2. Exchange; Closing.
(i) On the Closing Date, and subject to the terms and conditions contained herein, the Rollover Holder hereby irrevocably and unconditionally agrees to exchange all Company Rollover Options for the New Options in accordance with the terms and conditions set forth herein, including Schedule A, and in the Merger Agreement.
(ii) Immediately upon the consummation of the transactions contemplated by the Merger Agreement, the Company Rollover Options will be of no further force and effect, and neither Topco nor any of its affiliates (including the Company) will have any further liability or obligation to the Rollover Holder or any other Person with respect thereto (except the obligation to grant New Options).
3. Representations and Warranties of the Rollover Holder.
(a) In connection with the issuance of the New Options under this Agreement, as a material inducement for Topco to enter into this Agreement, the Rollover Holder represents and warrants to Topco that the following statements are true and correct as of the date hereof and the Closing Date:
(i) The Rollover Holder is the record and beneficial owner of the Company Rollover Options free and clear of any restrictions on transfer (other than any restrictions under applicable securities Laws), security interests or liens as of the date hereof and as of the Closing Date is the legal and beneficial owner of the Company Rollover Options set forth on Schedule A, and irrevocably and unconditionally covenants and agrees that he or she shall not transfer any actual or beneficial interest in any of the Company Rollover Options and shall not exercise any of the Company Rollover Options prior to the Closing Date.
(ii) This Agreement constitutes the legal, valid and binding obligation of the Rollover Holder, enforceable in accordance with its terms, and the execution, delivery and performance of this Agreement by the Rollover Holder does not conflict with, violate or cause a breach of, or otherwise require the consent of any third party pursuant to, any Contract or instrument to which the Rollover Holder is a party, or any judgment, order or decree to which the Rollover Holder is subject.
(iii) The Rollover Holder is acquiring the New Options issued to him or her for the Rollover Holders own account (and not on behalf of any other persons) with the present intention of holding such New Options for the purposes of investment and not with a view to, or intention of, distribution thereof in violation of any applicable securities laws and the New Options shall not be disposed of in contravention of any applicable securities laws.
(iv) The Rollover Holder is either (A) an Accredited Investor as that term is defined in Regulation D under the Securities Act of 1933 (the Securities Act), as amended or (B) on his or her own or with the assistance of a purchaser representative (as defined in Regulation D under the Securities Act), has such knowledge and experience in financial and business matters that he or she is capable of evaluating the merits and risks of the prospective investment. The Rollover Holder considers himself or herself to be an experienced and sophisticated investor and to have such knowledge and experience in financial and business matters as are necessary to evaluate the merits and risks of an investment in the New Options.
(v) The Rollover Holder is able to bear the economic risk of the investment in the New Options for an indefinite period of time. The Rollover Holder understands that the New Options acquired hereunder are a speculative investment which involves a high degree of risk of loss of the entire investment therein, that there are substantial restrictions on the transferability of the New Options (including under applicable Laws and the any applicable documentation of Topco or the Company), and that for an indefinite period following the date hereof there will be no public market for the New Options and that, accordingly, it may not be possible for such Rollover Holder to sell or otherwise transfer the New Options in case of emergency or otherwise.
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(vi) The Rollover Holder has not employed any investment banker, broker or finder or incurred any actual or potential liability or obligation, whether direct or indirect, for any brokers fees or finders fees in connection with the transactions contemplated by this Agreement, for which Topco or any of its subsidiaries may have any liability.
(vii) The Rollover Holder has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the New Options and has had access to such other information regarding the exchange of the Company Rollover Options and issuance of the New Options contemplated hereby as such Rollover Holder has requested.
(viii) The Rollover Holder acknowledges that Topco will rely upon the accuracy and truth of the foregoing representations in this Section 3 and hereby consents to such reliance.
(b) In connection with the cancellation of the Company Rollover Options and the grant of the New Options under this Agreement, as a material inducement for the Rollover Holder to enter into this Agreement, Topco represents and warrants to the Rollover Holder that the following statements are true and correct as of the date hereof and the Closing Date:
(i) Organization. Corporate Power. Topco is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business and in good standing in every jurisdiction in which the failure to do so would, or would reasonably be expected to, have a material adverse effect on the assets, operations, business or financial condition of Topco. Topco possesses all requisite corporate power and authority necessary to carry out the transactions contemplated by this Agreement.
(ii) Authorization; Enforceability. The execution, delivery and performance by Topco or its officers of this Agreement with respect to the New Options have been, or will be at their execution, duly authorized by Topco. This Agreement constitutes a legal, valid and binding obligation of Topco, enforceable against Topco in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors rights generally and limitations on the availability of equitable remedies.
(iii) Non-Contravention. The execution, delivery and performance by Topco of this Agreement does not (A) conflict with or result in a breach of the terms, conditions or provisions or violation of, (B) constitute a default under, (C) result in the creation of any lien upon the Rollover Holders equity interests or assets pursuant to, (D) give any third party the right to modify, terminate or accelerate any obligation under, (E) result in a violation of, or (F) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with any third party or any governmental entity pursuant to any law to which the Rollover Holder is subject, or any order, judgment or decree or any material contract, agreement, instrument or document to which the Rollover Holder is a party or is otherwise subject.
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(iv) Brokerage. There are no claims for and no one is entitled to brokerage commissions, finders fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement to which the Rollover Holder is a party or is otherwise subject.
4. Other Agreements.
(a) The Rollover Holder agrees that he, she or it shall, upon request, execute and deliver any additional documents reasonably deemed by Topco to be necessary to complete the proper exchange of the Company Rollover Options for the New Options in accordance with the terms and conditions of this Agreement.
(b) The Rollover Holder hereby acknowledges and agrees that, other than the right to receive New Options in accordance with the Merger Agreement, the Rollover Holder shall have no rights as the holder of Common Stock.
5. Notices. All notices or other communications given or made hereunder shall be in writing and shall be delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, to (a) Topco, and (b) the Rollover Holder at the address set forth on the signature page hereto.
6. General Provisions.
(a) Amendments. Waivers and Consents. No modification, amendment or waiver of any provision of this Agreement will be effective against Topco or the Rollover Holder unless such modification, amendment or waiver is approved in writing by Topco or the Rollover Holder (as the case may be). The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
(b) Counterparts. This Agreement may be executed simultaneously in two or more separate counterparts, any one of which need not contain the signatures of more than one party, but each of which shall be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.
(c) Parties in Interest: Successors and Assigns. Except as otherwise provided herein, this Agreement will bind and inure to the benefit of and be enforceable by the Rollover Holder, Topco and their respective successors and assigns (including subsequent holders of the New Options issued hereunder).
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(d) Choice of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Any dispute relating hereto shall be heard in the state or federal courts of the State of Delaware, and the parties agree to jurisdiction and venue therein.
(e) Survival: Entire Agreement. All representations and warranties contained herein, or made in writing by or on behalf of a party hereto in connection herewith, will survive the execution and delivery of this Agreement, the consummation of the Transaction, and the transfer by the Rollover Holder of any of New Options, and may be relied upon by each party hereto and any of its successors and assigns, regardless of any investigation made at any time by or on behalf of such party or any of its successors and assigns. This Agreement and the agreements and documents referred to herein contain the complete agreement among the parties hereto and supersede any prior understandings, agreements or representations by or among the parties hereto, written or oral, that may have related to the subject matter hereof in any way.
(f) Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
(g) No Strict Construction. The parties to this Agreement have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement will be construed as if drafted jointly by the parties to this Agreement, and no presumption or burden of proof will arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.
(h) Acknowledgement. The Rollover Holder acknowledges that he or she has not relied on any statement made by Topco or its Affiliates or _____ in connection with such investment. The Rollover Holder acknowledges and agrees that he or she has been advised in writing to obtain legal counsel to represent such party in connection with its evaluation of the investment in Topco, the risks associated with such investment and all other matters relating to such investment, and that the Rollover Holder has not been represented or advised by Topco or its Affiliates or _____ on any matter concerning his or her investment in Topco, including but not limited to, the structure of the investment, the tax consequences of such investment or any other risks associated with such investment.
(i) Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (I) ARISING UNDER THIS AGREEMENT OR (II) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY TO THIS AGREEMENT HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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(j) Submission to Jurisdiction. ANY AND ALL SUITS, LEGAL ACTIONS OR PROCEEDINGS ARISING OUT OF THIS AGREEMENT WILL BE BROUGHT IN ANY STATE OR FEDERAL COURT IN THE STATE OF DELAWARE AND EACH OF TOPCO AND THE ROLLOVER HOLDER HEREBY SUBMITS TO AND ACCEPTS THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR THE PURPOSE OF SUCH SUITS, LEGAL ACTIONS OR PROCEEDINGS. IN ANY SUCH SUIT, LEGAL ACTION OR PROCEEDING, EACH OF TOPCO AND THE ROLLOVER HOLDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO HIM OR HER AT THE ADDRESS SET FORTH IN THE BOOKS AND RECORDS OF TOPCO TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OR ANY SUCH SUIT, LEGAL ACTION OR PROCEEDING IN ANY SUCH COURT AND HEREBY FURTHER WAIVES ANY CLAIM THAT ANY SUIT, LEGAL ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(k) Section 409A. The intent of the parties is that the exchange of Company Rollover Options for New Options as contemplated herein will comply with the applicable requirements of Section 409A of the Internal Revenue Code.
(l) Taxes. Topco shall be entitled, if necessary or desirable, to withhold from the Rollover Holder any amount due and payable by Topco to the Rollover Holder (or secure payment from the Rollover Holder in lieu of withholding) the amount of any withholding or other tax due from Topco with respect to the transaction contemplated hereunder or with respect to the vesting, exercise, or any other disposition of the New Options, and Topco may defer such issuance or such vesting exercise or other disposition unless indemnified by the Rollover Holder to its satisfaction.
(m) Termination. This Agreement shall terminate, and be of no further force and effect, upon the valid termination of the Merger Agreement in accordance with the terms and conditions thereof and, to the extent applicable, all transactions contemplated by this Agreement will be deemed to be rescinded and, for the avoidance of doubt, all Company Rollover Options shall be returned to the Rollover Holder, if applicable.
(n) Expenses. Except as otherwise specified in this Agreement, whether or not the transactions contemplated hereby are consummated, each party shall pay its own costs and expenses, including, but not limited to, legal fees, incurred in connection with the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby, whether or not such transactions are consummated.
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(o) Further Assurances. Topco and the Rollover Holder shall cooperate with each other at all times to do, or procure the doing of, all acts and things, and execute, or procure the execution of, all documents and instruments, as may reasonably be required to give full effect to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Option Rollover Agreement as of the date first above written.
MERRITT TOPCO, INC. | ||
By: | ||
Name: | ||
Title: |
IN WITNESS WHEREOF, the parties hereto have executed this Option Rollover Agreement as of the date first above written.
ROLLOVER HOLDER: |
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Name: |
Address for Notices: |
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[Signature Page to Rollover Agreement]
SCHEDULE A
OPTION ROLLOVER INFORMATION
The number of Company Rollover Options shall equal the quotient (rounded out to four decimal points) of (i) _______, divided by (ii) the fair market value of a share of Common Stock immediately prior to the Closing. The number of New Options that will be issued in exchange for the Company Rollover Options shall be determined in accordance with this Schedule A.
At the Closing, each Company Rollover Option shall be converted into a number of New Options equal to the product (rounded out to four decimal points) of (i) the number of shares of Common Stock subject to the Company Rollover Option immediately prior to the Closing and (ii) the Option Exchange Ratio (as defined below), at an exercise price per share of Topco Common Stock (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Company Rollover Option immediately prior to the Closing, divided by (B) the Option Exchange Ratio. Notwithstanding the foregoing, the number of New Options determined by the previous sentence may be further reduced, with a corresponding reduction in the exercise price per share of Topco Common Stock, so long as the aggregate spread between the fair market value of the shares of Topco Common Stock subject to the New Options, and the exercise price of such New Options, is equal to the aggregate spread value that would have existed had the Company Rollover Options been converted in the manner provided in the previous sentence. Furthermore, the number of shares of Topco Common Stock subject to the New Options and the applicable exercise price shall be subject to such adjustments as may be necessary for the foregoing conversion to satisfy the requirements of Sections 409A, 422 and 424 of the Code and Treasury Regulation Section 1.424- 1.
For purposes of this Schedule A, the Option Exchange Ratio shall be equal to a fraction (i) having a numerator equal to the fair market value of a share of Common Stock immediately prior to the Closing and (ii) having a denominator equal to the fair market value of a share of Topco Common Stock immediately after the Closing (determined in good faith using standard valuation methods consistent with the requirements of Section 409A of the Code).
Except as specifically provided above, following the Closing, each New Option shall continue to be governed by the same terms and conditions as were applicable immediately prior to the Closing, including those set forth in the applicable award agreement and the Option Plan governing the Company Rollover Options.
The intention of this Schedule A is to provide for the tax-free rollover of the Company Rollover Options into an option to acquire Topco Common Stock while preserving the aggregate spread value of the Company Rollover Options immediately prior to such conversion. The parties mutually agree to determine, in good faith, any addition adjustments to the number of shares of Topco Common Stock subject to the New Options, and the applicable exercise price, as may be required to satisfy this intent. For the avoidance of doubt, Topco and the Company make no representations or warranties with respect to the application of Section 409A of the Code and other tax consequences with respect to the conversion of the Company Rollover Options contemplated hereunder.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this Agreement) is made and entered as of ________, between Autotask Superior Holding, Inc., a Delaware corporation (the Company), and _________ (Optionholder).
The Company and Optionholder desire to enter into this Agreement whereby the Company will grant Optionholder the options specified herein to acquire certain shares of the Companys Common Stock. Defined terms used in this Agreement without definition will have the meanings ascribed thereto in the Companys 2014 Stock Option Plan (the Plan), a copy of which is attached hereto as Exhibit A. In the event a provision of this Agreement is inconsistent or conflicts with the provisions of the Plan, the provisions of this Agreement will govern and prevail.
The parties hereto agree as follows:
7. Plan Acknowledgment. Each of the undersigned agrees that this Agreement has been executed and delivered, and the stock options have been granted hereunder, in connection with and as a part of the compensation and incentive arrangements between the Company and Optionholder and, except as otherwise specified herein, pursuant to each of the terms and conditions of the Plan.
8. Options.
(a) Time Based Option Grant. The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to _____ shares of Common Stock (the Time Based Option), at an exercise price per share of _____ (the Option Price). As set forth in Section 8 of the Plan, the Option Price and the number of Time Based Option Shares issuable upon exercise of any Time Based Option will be equitably adjusted for any share split, share dividend or reclassification of Common Stock which occurs subsequent to the date of this Agreement. The Time Based Option will expire on the close of business on the tenth anniversary of the date of this Agreement, subject to earlier expiration as provided in Section 2(d) and Section 2(f) below. The Time Based Option is not intended to be an incentive stock option within the meaning of Section 422 of the Code. The Vesting Commencement Date for purposes of this Agreement is _________.
(b) Value Creation Based Option Grant. The Company hereby grants to Optionholder, pursuant to the Plan, an option to purchase up to _____ shares of Common Stock (the Value Creation Based Option), at an exercise price per share equal to the Option Price. As set forth in Section 8 of the Plan, the Option Price and the number of Value Creation Based Option Shares issuable upon exercise of any Value Creation Based Option will be equitably adjusted for any share split, share dividend or reclassification of the Common Stock which occurs subsequent to the date of this Agreement. The Value Creation Based Option will expire on the close of business on the tenth anniversary of the date of this Agreement, subject to earlier expiration in connection with the termination of Optionholders employment or service, as provided in Section 2(d) below. The Value Creation Based Options are not intended to be incentive stock options within the meaning of Section 422 of the Code.
(c) Exercisability. Options may be exercised only to the extent they have become vested and the vested portion of such Options shall be exercisable only upon the earlier of the following events: (i) a Change of Control and (ii) Optionholders Termination Date. Options shall become vested and exercisable in accordance with the provisions of this Section 2(c) and Section 2(f) below. Options which have become vested as of the date of determination are referred to herein as Vested Options, and all other Options are referred to herein as Unvested Options. Participant may only exercise Options that are Vested Options.
(i) Time Based Options. The Time Based Options described in Section 2(a) above will have vested with respect to: _____.
(ii) Value Creation Based Option. The Value Creation Based Options will have vested upon the consummation of a Change of Control if Optionholder is, and has been, continuously employed by Vista Consulting Group or has acted as a director, officer or employee of the Company or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries from the Grant Date through the date of such Change of Control.
(d) Early Expiration of Options. Notwithstanding any provision herein to the contrary, any portion of the Options granted hereunder that have not vested and become exercisable on or prior to the Termination Date will expire on the Termination Date and may not be exercised under any circumstance. Options shall be exercisable only upon one or more of the events described in Section 2(c) above and to the extent not exercised in accordance with Section 2(c) upon the occurrence of such event(s), the Options shall immediately terminate and cease to be exercisable. Options granted hereunder that have vested on or prior to the Termination Date will expire on the earliest of (i) 30 days after the Termination Date, (ii) 30 days after the date of a Change of Control, provided that the Optionholder received written notice of the Change of Control not less than ten (10) days before the occurrence of the Change of Control, (iii) 30 days after receipt by the Optionholder of notice of a Change of Control that has already occurred for which no advance written notice was provided as specified in clause (ii) above, and (iv) the close of business on the tenth anniversary of the date of this Agreement. Notwithstanding any provision in this Agreement to the contrary, any portion of the Options granted hereunder which have not been exercised prior to or in connection with a Change of Control shall expire upon the consummation of any such transaction.
(e) Procedure for Exercise. At any time after all or any portion of the Options granted hereunder have become exercisable with respect to any Option Shares and prior to the close of business on the tenth anniversary of the date of this Agreement (except as provided for in Section 2(d) above), Optionholder may exercise all or any portion of the Options granted hereunder with respect to Option Shares vested pursuant to Section 2(c) above by delivering written notice of exercise to the Company, together with (i) a written acknowledgment that Optionholder has read and has been afforded an opportunity to ask questions of management of the Company regarding all financial and other information provided to Optionholder regarding the Company and its Subsidiaries, (ii) payment in full by delivery of a cashiers, personal or certified check or wire transfer of immediately available funds to the Company in the amount equal to the number of Option Shares to be acquired multiplied by the applicable option exercise price (the Aggregate Exercise Price), provided that, Optionholder may, in lieu of paying the
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Aggregate Exercise Price in cash, indicate in Optionholders exercise notice that such Optionholder intends to effect a cashless exercise thereof and, in such case, the Company shall cancel such number of Option Shares otherwise issuable to the Optionholder having a Fair Market Value equal to the Aggregate Exercise Price of the Options being exercised, in which event the Company shall only issue Option Shares for the remainder of the Options being exercised after satisfying the Aggregate Exercise Price, (iii) an executed joinder to that certain Stockholders Agreement, dated as of June 25, 2014, by and among the Company and its stockholders signatory thereto (as amended from time to time, the Stockholders Agreement), in form and substance reasonably satisfactory to the Company, pursuant to which such Optionholder shall agree to become a party to the Stockholders Agreement and entitled to the rights and benefits and subject to the duties and obligations of a Management Stockholder thereunder, and (iv) an executed consent from Optionholders spouse (if any) in the form of Exhibit 1 attached to the Plan. As a condition to any exercise of the Options, Optionholder will permit the Company to deliver to him or her all financial and other information regarding the Company and its Subsidiaries which it believes is necessary to enable Optionholder to make an informed investment decision. If, at any time subsequent to the date Optionholder exercises any portion of the Options granted hereunder and prior to the occurrence of a Change of Control, Optionholder becomes legally married (whether in the first instance or to a different spouse), Optionholder shall cause Optionholders spouse to execute and deliver to the Company a consent in the form of Exhibit 1 attached to the Plan. Optionholders failure to deliver to the Company an executed consent in the form of Exhibit 1 to the Plan at any time when Optionholder would otherwise be required to deliver such consent shall constitute Optionholders continuing representation and warranty that Optionholder is not legally married as of such date.
(f) Change of Control. Upon the consummation of a Change of Control, any Time Based Options which were Unvested Options immediately prior to such Change of Control shall be deemed Vested Options (such Options which are subject to accelerated vesting being referred to as the Accelerated Options). The Optionholder hereby agrees that upon a Change of Control, the Accelerated Options shall be deemed to be automatically exercised through a cashless exercise and Optionholder shall have no further rights under the Accelerated Options other than payment of the consideration, if any, to be paid to the Optionholder (whether in the form of cash or stock) in respect of such deemed exercise of Accelerated Options as of the Change of Control.
(g) Securities Laws Restrictions. Optionholder represents that when Optionholder exercises any portion of the Options he or she will be purchasing the Option Shares represented thereby for Optionholders own account and not on behalf of others. Optionholder understands and acknowledges that federal, state and foreign securities laws govern and restrict Optionholders right to offer, sell or otherwise dispose of any Option Shares unless Optionholders offer, sale or other disposition thereof is registered under the Securities Act and federal, state and foreign securities laws or, in the opinion of the Companys counsel, such offer, sale or other disposition is exempt from registration thereunder. Optionholder agrees that he or she will not offer, sell or otherwise dispose of any Option Shares in any manner which would: (i) require the Company to file any registration statement (or similar filing under applicable securities law) with the Securities and Exchange Commission or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other applicable securities law. Optionholder further understands that the certificates for any Option Shares which Optionholder purchases will bear the legend set forth in the Plan or such other legends as the Company deems necessary or desirable in connection with the Securities Act or other rules, regulations or laws.
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(h) Withholding of Taxes. The Company shall be entitled, if necessary or desirable, to withhold from Optionholder from any amounts due and payable by the Company to Optionholder (or secure payment from Optionholder in lieu of withholding) the amount of any withholding or other tax due from the Company with respect to any Options or Common Stock issuable under this Agreement.
(i) Limited Transferability of the Options. The Options granted hereunder are personal to Optionholder and are not transferable by Optionholder except pursuant to the laws of descent or distribution. Only Optionholder or his legal guardian or representative may exercise the Options granted hereunder.
9. Optionholders Representations. Optionholder hereby represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by Optionholder does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which Optionholder is a party or by which he or she is bound, (ii) Optionholder is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity (other than the Company or one of its Subsidiaries) and (iii) upon the execution and delivery of this Agreement by the Company and Optionholder, this Agreement shall be the valid and binding obligation of Optionholder, enforceable against Optionholder in accordance with its terms. Optionholder hereby acknowledges and represents that he or she has consulted with (or has had an opportunity to consult with) independent legal counsel regarding his or her rights and obligations under this Agreement (including, without limitation, the Plan) and that he or she fully understands the terms and conditions contained herein and therein.
10. Notices. Any notices required or permitted under this Agreement or the Plan will be delivered in accordance with the requirements of the Plan.
11. Third Party Beneficiaries; Successors and Assigns. The parties hereto acknowledge and agree that the VEP Stockholders are third party beneficiaries of this Agreement and the Plan. Except as otherwise provided herein, this Agreement and the Plan shall bind and inure to the benefit of and be enforceable by Optionholder, the Company and the VEP Stockholders and their respective heirs, successors and assigns (including subsequent holders of Option Shares); provided that the rights and obligations of Optionholder under this Agreement and the Plan shall not be assignable except in connection with a permitted transfer of Option Shares in accordance with the Plan.
12. Complete Agreement. This Agreement and the Plan and the other documents referred to herein and therein embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
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13. No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.
14. Counterparts. This Agreement may be executed in separate counterparts, each of which is deemed to be an original and all of which taken together constitute one and the same agreement.
15. Governing Law. This Agreement will be subject to the Governing Law provisions of the Plan as if fully set forth in this Agreement.
16. Remedies. Each of the parties to this Agreement will be entitled to any of the remedies specified in the Plan.
17. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Board and Optionholder, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.
18. Defined Terms. Notwithstanding anything to the contrary in the Plan, Cause, Competitive Activity, Competitive Business, Good Reason and Termination Date, as used in the Plan and/or this Agreement, shall have the following definitions (as such definitions apply to Optionholder):
Cause shall have the meaning ascribed to such term in any written employment or severance agreement (or legally binding offer letter) between Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries, and Optionholder, or in the absence of any such written agreement, shall mean any of the following: (i) a material failure to perform responsibilities or duties to Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries under any written employment or severance agreement (or legally binding offer letter) between Vista Consulting Group, the Company, or portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries and Optionholder or those other responsibilities or duties as requested from time to time by the Chief Executive Officer and/or the Board, after demand for performance has been given by the Chief Executive Officer and/or the Board that identifies how such responsibilities or duties have not been performed; (ii) engagement in illegal or improper conduct or in gross misconduct; (iii) commission or conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude or any other act or omission that Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries in good faith believes may harm the standing and reputation of Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries; (iv) a material breach of the duty of loyalty to Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries material breach of any such Persons written code of conduct and business ethics or any agreement between Optionholder and any of such Persons; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of duties as an employee; (vi) personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from duties for any reason (other than authorized vacation or sick leave) or as a result of disability.
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Competitive Activity shall have the meaning ascribed to such term in any written employment or severance agreement between Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries and Optionholder, or in the absence of any such written agreement, shall mean, with respect to Optionholder, during the term of Optionholders employment with Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries and during the two year period immediately following Optionholders Termination Date, (i) rendering advice or services to, or otherwise assisting, any other Person who is engaged, directly or indirectly, in any Competitive Business, or (ii) Participating or otherwise holding a voting or profit participation interest in any Person who is engaged, directly or indirectly, in any Competitive Business; provided that the passive ownership by Optionholder of not more than five percent (5%) of the outstanding shares of any class of capital stock of a corporation which is publicly traded on a national securities exchange will not be deemed to be a Competitive Activity, so long as Optionholder has no active Participation in the business of such corporation.
Competitive Business shall have the meaning ascribed to such term in any written employment or severance agreement between Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries and Optionholder, or in the absence of any such written agreement, shall mean any business which is similar or related to or competitive with the business or planned business of the Company and/or any Subsidiary of the Company.
Good Reason shall have the meaning ascribed to such term in any written employment or severance agreement (or legally binding offer letter) between Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries and Optionholder, or in the absence of any such written agreement, shall mean Optionholders resignation from employment or consultancy with Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries as a result of one or more of the following reasons: (i) a material, adverse change in Optionholders duties or responsibilities with Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries, provided that a change in title or a change in the person or office to which Optionholder reports, shall not, by itself, constitute such a material, adverse change; (ii) a reduction in Optionholders then current base salary by more than 10% or a reduction in Optionholders base salary by less than 10% which is not applied to similarly ranked employees; and/or (iii) the material breach by Vista Consulting Group, the Company, or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries of any legally binding offer letter or employment agreement between Optionholder any such Person; provided, however, that in each of the foregoing cases, Optionholder must first give the counterparty to such legally binding offer letter or employment agreement an opportunity to cure any of the foregoing within thirty (30) business days following Optionholders delivery to the counterparty to such legally binding offer letter or employment agreement of a written explanation specifying the basis for Optionholders belief that he or she is entitled to terminate his or her employment for Good Reason.
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Termination Date shall mean (i) with respect to Time Based Options, the first date on which the Optionholder is no longer employed by Vista Consulting Group and (ii) with respect to Value Creation Based Options, the first date on which (x) the Optionholder is no longer employed by Vista Consulting Group and (y) the Optionholder is no longer acting as a director, officer or employee of the Company or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries, in each case for any reason.
19. Any other reference in the Plan or the Agreement to a Participants employment by the Company or any of its Subsidiaries shall mean a Participants employment by Vista Consulting Group, the Company or any portfolio company or other affiliate of Vista Equity Partners or any of their respective Subsidiaries (but only to the extent such references apply to Optionholder).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
AUTOTASK SUPERIOR HOLDING, INC. | ||
By: | ||
Name: | ||
Title: | ||
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(Autotask Superior Holding, Inc.
Stock Option Agreement)
Exhibit A
2014 Stock Option Plan
AUTOTASK SUPERIOR HOLDING, INC.
2014 STOCK OPTION PLAN
1. Purpose of Plan. This 2014 Stock Option Plan (the Plan) of Autotask Superior Holding, Inc., a Delaware corporation (the Company), is designed to provide incentives to such present and future employees, directors, officers, consultants or advisors of the Company or its subsidiaries (Participants), as may be selected in the sole discretion of the Committee, through the grant of Options by the Company to Participants. Only those Participants who are employees of the Company or its Subsidiaries shall be eligible to receive incentive stock options within the meaning of Section 422 of the Code. This Plan is a compensatory benefit plan within the meaning of Rule 701 of the Securities Act of 1933, as amended, and, unless and until the Companys Common Stock is publicly traded, the issuance of options to purchase shares of the Companys Common Stock pursuant to the Plan and the issuance of shares of Common Stock pursuant to such options are, to the extent permitted by applicable federal securities laws, intended to qualify for the exemption from registration under Rule 701 of the Securities Act.
2. Definitions. Certain terms used in this Plan have the meanings set forth below:
Affiliate of a Person means any other Person, entity or investment fund controlling, controlled by or under common control with the Person and, in the case of a Person which is a partnership or a limited liability company, any partner or member, respectively, of such Person and, in the case of a Person which is corporation, any stockholder of such Person.
Board means the Companys board of directors.
Cause shall have the meaning ascribed to such term in any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant, or in the absence of any such written agreement, shall mean (i) a material failure by Participant to perform Participants responsibilities or duties to the Company under any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant or those other responsibilities or duties as requested from time to time by the Board, after demand for performance has been given by the Board that identifies how Participant has not performed Participants responsibilities or duties; (ii) Participants engagement in illegal conduct or in gross misconduct; (iii) Participants conviction of, or plea of guilty or nolo contendere to, a felony, a crime involving moral turpitude, or other act or omission causing material harm to the standing and reputation of the Company if the act or omission was wrongful or deliberate; (iv) a material breach of Participants duty of loyalty to the Company or Participants material breach of the Companys written code of conduct and business ethics or any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant; (v) dishonesty, fraud, gross negligence or repetitive negligence committed without regard to corrective direction in the course of discharge of Participants duties as an employee; (vi) Participants personal bankruptcy or insolvency; or (vii) excessive and unreasonable absences from Participants duties for any reason (other than authorized vacation or sick leave) or as a result of Participants inability to perform the essential duties, responsibilities and functions of Participants position with the Company as a result of any mental or physical disability or incapacity (Disability), provided, that for clauses (i) and (vii), the Company first gives Participant written notice and gives Participant an opportunity to cure the breach within thirty business days of the date of the written notice.
Change of Control means the first to occur of any (i) Sale of the Company, or (ii) sale or transfer to any third party of shares of the Companys capital stock by the holders thereof as a result of which any person or group other than the VEP Stockholders obtains possession of voting power (under ordinary circumstances) to elect a majority of the Companys board of directors.
Code means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, as the same may be amended from time to time.
Committee shall mean the committee of the Board which may be designated by the Board to administer the Plan. The Committee shall be composed of two or more directors as appointed from time to time to serve by the Board. In the absence of the appointment of any such Committee, any action permitted or required to be taken hereunder shall be deemed to refer to the Board.
Common Stock means the Companys Common Stock, par value $0,001 per share.
Company Group means the Company and its Subsidiaries.
Company Stock means, collectively, the Common Stock and any other class or series of shares of capital stock hereafter created by the Company.
Competitive Activity means, with respect to a Participant, during the term of such Participants employment with the Company or any of its Subsidiaries and during the two (2) year period immediately following such Participants Termination Date, directly or indirectly, for himself or for any other Person, Participating in any Competitive Business or any business in which the Company is engaged or is planning to engage as of such Participants Termination Date; provided that the passive ownership by such Participant of not more than two percent (2%) of the outstanding shares of any class of capital stock of a corporation which is publicly traded on a national securities exchange will not be deemed to be a Competitive Activity, so long as such Participant has no active Participation in the business of such corporation.
Competitive Business shall have the meaning ascribed to such term in any written employment or severance agreement (or legally binding offer letter) between the Company or any Subsidiary of the Company and the applicable Participant, or in the absence of any such written agreement (or legally binding offer letter), shall mean the business of the Company as of the Closing Date, including the business of providing front, mid and back office business management software to automate the core workflows of managed service providers, information technology solution providers, information technology service management organizations, professional services automation organizations or similar businesses (including, but not limited to, software to help customers manage service ticketing, time and expense management, service level agreement management, utilization tracking, customer relationship management, service desk, dispatch, billing, project management and contracts management, customer ticketing management, mobile management, analytics and business intelligence) and related services in the United States of America, Canada, Netherlands, South Africa, Belgium, New Zealand, the United Kingdom, Germany, Australia, and China and the remainder of the world.
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Effective Date means July 14, 2014.
Fair Market Value of an Option Share means the fair market value thereof as determined in good faith by the Committee or, in the absence of the Committee, by the Board.
Good Reason shall have the meaning ascribed to such term in any written employment or severance agreement between the Company or any Subsidiary of the Company and such Participant, or in the absence of any such written agreement, shall mean Participant resigns from employment with the Company or any Subsidiary of the Company as a result of one or more of the following reasons: (i) a material, adverse change in Participants duties or responsibilities with the Company; provided that a change in title or a change in the person or office to which Participant reports, shall not, by itself, constitute such a material, adverse change, or (ii) the material breach by the Company of any offer letter, employment agreement, consulting agreement, or option agreement between Participant and the Company, provided, however, that in each case above, Participant must first give the Company written notice of an alleged violation within thirty (30) business days of the occurrence thereof and an opportunity to cure such violation within thirty (30) business days of the date of the written notice.
Independent Third Party means any Person who (together with its Affiliates), immediately prior to the contemplated transaction, does not own, directly or indirectly, in excess of 5% of the Company Stock on a Fully-Diluted Basis (a 5% Owner), who is not controlling, controlled by or under common control with any such 5% Owner and who is not the spouse or descendant (by birth or adoption), parent or dependent of any such 5% Owner or a trust for the benefit of such 20% Owner and/or such other Persons IPO means an initial public offering and sale of the Companys Common Stock pursuant to an effective registration statement under the Securities Act.
Option means any option enabling the holder thereof to purchase any shares of the Companys Common Stock granted by the Committee pursuant to the provisions of this Plan. Options to be granted under this Plan may be incentive stock options within the meaning of Section 422 of the Code (Incentive Stock Options) or in such other form, consistent with this Plan, as the Committee may determine.
Option Shares means the shares of the Companys Common Stock acquired (or to be acquired) pursuant to the exercise of any Option.
Original Cost of each Option Share will be equal to the price paid therefor (in each case, as proportionally adjusted for all stock splits, stock dividends and other recapitalizations affecting such share of Common Stock subsequent to any such purchase), if any.
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Participate (and the correlative terms Participating and Participation) includes any direct or indirect ownership interest in any enterprise or participation in the 3 management of such enterprise, whether as an officer, director, employee, partner, sole proprietor, agent, representative, independent contractor, consultant, executive, franchisor, franchisee, creditor, owner or otherwise.
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint share company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Sale of the Company means a sale of all or a majority of the Companys assets determined on a consolidated basis or a sale of all or a majority of the Companys outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) to any Independent Third Party or group of Independent Third Parties.
Securities Act means the Securities Act of 1933, as amended.
Solvent Reorganization means any solvent reorganization of the Company or any Subsidiary of the Company, including by merger, consolidation, recapitalization, transfer or sale of shares or assets, or contribution of assets and/or liabilities, or any liquidation, exchange of securities, conversion of entity, migration of entity, formation of new entity, or any other transaction or group of related transactions (in each case other than to or with a third party that is not a member of the Company Group or its Affiliates (which Affiliates may include an entity formed for the purpose of such Solvent Reorganization)), in which:
(i) all holders of Option Shares are offered the same consideration in respect of such Option Shares;
(ii) the pro rata indirect economic interests of the holders of Option Shares in the business of Autotask Superior Holding, Inc., relative to each other and all other holders, directly or indirectly, of equity securities in the Company Group (other than those held by entities within the Company Group), are preserved; and
(iii) the rights of the holders of Option Shares are preserved in all material respects (it being understood by way of illustration and not limitation that the relocation of a covenant or restriction from one instrument to another shall be deemed a preservation if the relocation is necessitated, by virtue of any law or regulations applicable to the Company Group following such Solvent Reorganization, as a result of any change in jurisdiction or form of entity in connection with the Solvent Reorganization; provided that such covenants and restrictions are retained in instruments that are, as nearly as practicable and to the extent consistent with business and transactional objectives, equivalent to the instruments in which such restrictions or covenants were contained prior to the Solvent Reorganization).
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Subsidiary means any corporation or other entity of which the securities or other ownership interests having the voting power to elect a majority of the board of directors or other governing body are, at the time of determination, owned by the Company, directly or through one or more Subsidiaries.
Termination Date means the first date on which a Participant is no longer employed (or in the case of a Participant who was not an employee, the first date on which such Participant is no longer acting as a director or officer of, or consultant or advisor to, the Company or its Subsidiaries) by the Company or its Subsidiaries for any reason.
VEP Stockholders means Vista Equity Partners Management, LLC and/or any transferee of Vista Equity Partners, LLC and any Affiliate of any of the foregoing Persons that holds any shares of the Companys capital stock, including Vista Foundation Fund II, L.P.
3. Grant of Options. The Committee shall have the right and power to grant to any Participant such Options at any time prior to the termination of this Plan in such quantity, at such exercise price, which may be Fair Market Value or such other value as determined by the Committee and set forth in a written award agreement with respect to an Option, and on such other terms and subject to such conditions that are consistent with this Plan and established by the Committee. Options granted under this Plan shall be subject to such terms and conditions and evidenced by agreements as shall be determined from time to time by the Committee. Any Participant acquiring Common Stock pursuant to an Option shall be required to pay in full the exercise price related thereto.
4. Administration of the Plan. The Committee shall have the power and authority to prescribe, amend and rescind rules and procedures governing the administration of this Plan, including, but not limited to the full power and authority (i) to interpret the terms of this Plan, the terms of any Options granted under this Plan and the rules and procedures established by the Committee governing any such Options, (ii) to determine the rights of any person under this Plan or the meaning of requirements imposed by the terms of this Plan or any rule or procedure established by the Committee, (iii) to correct any defect or omission or reconcile any inconsistency in the Plan or in any Option granted hereunder, (iv) to determine whether any Options are subject to and/or comply with the requirements of Code Section 409A or the regulations thereunder and (v) to make all other determinations and take all other actions necessary or advisable for the implementation and administration of the Plan. Each action of the Committee shall be binding on all persons. Notwithstanding any provision to the contrary contained in this Plan or any separate written agreement between the Company and any Participant with respect to any Option pursuant to this Plan, any unvested Options that do not become vested immediately prior to, or in connection with, any Sale of the Company shall be forfeited and cancelled with concurrent effect upon the consummation of any such transaction, and no Participant nor any other Person shall have any further rights or obligations with respect to such forfeited Options.
It is the Companys intent that, except as otherwise specifically provided in a written award agreement with respect to an Option, the Options not be treated as a nonqualified deferred compensation plan that fails to meet the requirements of Section 409A(a)(2), (3) or (4) of the Code and that any ambiguities in construction be interpreted in order to effectuate such intent. However, the Company may, in its discretion, issue options that are subject to or compliant with Code §409A. Options under the Plan shall contain such terms as the Committee
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determines are appropriate to be exempt from, or comply with, the requirements of Section 409A of the Code. However, neither the Company nor any of its Affiliates makes any representations with respect to the application of Code Section 409A to the Options and, by the acceptance of the Options, the Participant agrees to accept the potential application of Code §409A to the Options and the tax consequences of the issuance, vesting, ownership, modification, adjustment, exercise and disposition of the Options. In the event that, after the issuance of an Option under the Plan, Section 409A of the Code or the regulations thereunder are amended, or the Internal Revenue Service or Treasury Department issues additional guidance interpreting Section 409A of the Code, the Committee may modify the terms of any such previously issued Option to the extent the Committee determines that such modification is necessary to comply with the requirements of Section 409A of the Code. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on any Participant by Section 409A of the Code or damages for failing to comply with Section 409A of the Code.
5. Limitation on the Aggregate Number of Shares of Common Stock. The number of shares of Common Stock with respect to which Options may be granted under this Plan (and which may be issued upon the exercise or payment thereof) shall not exceed, in the aggregate, 25,652.5253 shares of Common Stock (as such number is equitably adjusted pursuant to Section 8 hereof). If any Options expire unexercised or unpaid or are canceled, terminated or forfeited in any manner without the issuance of shares of Common Stock or payment thereunder, the shares with respect to which such Options were granted shall again be available under this Plan. Similarly, if any shares of Common Stock issued hereunder upon exercise of Options are repurchased hereunder, such shares shall again be available under this Plan for reissuance as Options.
6. Incentive Stock Options. Any of the Options to be granted hereunder may constitute Incentive Stock Options to the extent expressly designated as such by the Committee or the Board. All Incentive Stock Options (i) shall have an exercise price per share of Common Stock of not less than 100% of the Fair Market Value of such share on the date of grant, (ii) shall not be exercisable more than ten years after the date of grant, (iii) shall not be transferable other than by will or under the laws of descent and distribution and, during the lifetime of the Participant to whom such Incentive Stock Options were granted, may be exercised only by such Participant (or his guardian or legal representative) and (iv) shall be exercisable only during the Participants employment by the Company or a Subsidiary, provided, however, that the Committee may, in its discretion, provide at the time that an Incentive Stock Option is granted that such Incentive Stock Option may be exercised for a period ending no later than either (x) the termination of this Plan in the event of the Participants death while an employee of the Company or a Subsidiary or (y) the date which is three months after the Termination Date for any other reason. The Committees discretion to extend the period during which an Incentive Stock Option is exercisable shall only apply if and to the extent that (i) the Participant was entitled to exercise such option on the date of termination and (ii) such option would not have expired had the Participant continued to be employed by the Company or a Subsidiary. To the extent that the aggregate Fair Market Value of shares with respect to which Incentive Stock Options are exercisable for the first time by any individual during any calendar year exceeds $100,000, such options shall be treated as options which are not Incentive Stock Options.
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7. Listing, Registration and Compliance with Laws and Regulations. Each Option shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares subject to the Option upon any securities exchange or under any federal, state or foreign securities or other law or regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of such Option or the issue or purchase of shares thereunder, no such Option may be exercised or paid in shares of Common Stock in whole or in part unless such listing, registration, qualification, consent or approval (a Required Listing) shall have been effected or obtained, and the holder of each such Option will supply the Company with such certificates, representations and information as the Company shall request which are reasonably necessary or desirable in order for the Company to obtain such Required Listing, and shall otherwise cooperate with the Company in obtaining such Required Listing. In the case of officers and other persons subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may at any time impose any limitations upon the exercise of an Option which, in the Committees discretion, are necessary or desirable in order to comply with Section 16(b) and the rules and regulations thereunder. If the Company, as part of an offering of securities or otherwise, finds it desirable because of federal, state or foreign regulatory requirements to reduce the period during which any Option may be exercised, the Committee may, in its discretion and without the consent of the holders of any such Option, so reduce such period on not less than 15 days written notice to the holders thereof.
8. Adjustment for Change in Common Stock. In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation or other change in Common Stock, the Committee shall make appropriate changes in the number and type of shares authorized by this Plan, the number and type of shares covered by outstanding Options and the prices specified therein.
9. Taxes. The Company shall be entitled, if necessary or desirable, to withhold (or secure payment from the Participant in lieu of withholding) the amount of any withholding or other tax due with respect to any amount payable and/or shares issuable under this Plan, and the Company may defer any such payment or issuance unless and until indemnified to its satisfaction.
10. Termination and Amendment. The Committee at any time may suspend or terminate this Plan and make such additions or amendments as it deems advisable under this Plan, except that it may not, without further approval by the Companys stockholders, (a) increase the maximum number of shares as to which Options may be granted under this Plan, except pursuant to Section 8 above or (b) extend the term of this Plan; provided that, subject to the other provisions hereof, the Committee may not change any of the terms of a written agreement with respect to an Option between the Company and the holder of such Option in a manner which would have a material adverse effect on the holder of such Option without the approval of the holder of such Option. No Options shall be granted or shares of Common Stock issued hereunder after the tenth anniversary of the Effective Date; provided that, if the term of this Plan is otherwise extended, no Incentive Stock Options shall be granted hereunder after the tenth anniversary of the original Effective Date.
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11. Participant Acknowledgments. In connection with the grant of any Option and/or the issuance of any Common Stock pursuant to this Plan, each Participant acknowledges and agrees, that as a condition to any such grant or issuance:
(a) The Company will have no duty or obligation to disclose to any Participant, and no Participant will have any right to be advised of, any material information regarding the Company or its Subsidiaries at any time prior to, upon or in connection with the repurchase of any Option Shares upon the termination of such Participants employment with the Company or its Subsidiaries or as otherwise provided under this Plan or any written agreement evidencing the grant of any Option or the issuance of any shares of Common Stock.
(b) Neither the grant of any Option, the issuance of any Common Stock nor any provision contained in this Plan or in any written agreement evidencing the grant of any Option or the issuance of any Common Stock shall entitle such Participant to remain in the employment of the Company or its Subsidiaries or affect the right of the Company to terminate any Participants employment at any time for any reason.
(c) Such Participant will have consulted, or will have had an opportunity to consult with, independent legal counsel regarding his or her rights and obligations under this Plan and any written agreement evidencing any grant of any Option and he or she fully understands the terms and conditions contained herein and therein.
(d) Prior to the purchase of any shares of Common Stock pursuant to this Plan or any written agreement evidencing the purchase of any shares of Common Stock, such Participant will deliver to the Company an executed consent from such Participants spouse (if any) in the form of Exhibit 1 attached hereto. If, at any time subsequent to the date such Participant purchases any shares of Common Stock and prior to the occurrence of a Change of Control, such Participant becomes legally married (whether in the first instance or to a different spouse), such Participant shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit 1 attached hereto. Such Participants failure to deliver the Company an executed consent in the form of Exhibit 1 at any time when such Participant would otherwise be required to deliver such consent shall constitute such Participants continuing representation and warranty that such Participant is not legally married as of such date. At the request of the Company, all Participants shall execute a joinder to any stockholders agreement among the equityholders of the Company then in effect.
12. Repurchase Option.
(a) Repurchase Option. If a Participant is no longer employed (or in the case of a Participant who was not an employee, the date on which such Participant is no longer acting as a director or officer of, or consultant or advisor to, the Company or any of its Subsidiaries) by the Company or its Subsidiaries for any reason, the Option Shares (whether held by such Participant or one or more transferees of such Participant, other than the Company or any VEP Stockholder) will be subject to repurchase by the VEP Stockholders and the Company (each of the aforementioned solely at their option) pursuant to the terms and conditions set forth in this Section 12 (the Repurchase Option).
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(b) Repurchase Price. Following the Termination Date, the VEP Stockholders and the Company may elect to repurchase all or any portion of the Option Shares at a price per share equal to (i) Original Cost, in the event of Participants termination for Cause, or in the event Participant resigns without Good Reason (except under the circumstances described in clause (ii)(C) below), or in the event Participant engages in a Competitive Activity prior to the repurchase date, or (ii) Fair Market Value (as of the repurchase date), in the event (A) of the Participants termination without Cause, (B) Participant resigns for Good Reason or (C) Participant resigns without Good Reason after (i) providing the Company with 90 days written notice of Participants election to resign without Good Reason, and (ii) agreeing to an appropriate transition plan (both during such 90 day period and following such resignation without Good Reason), with the appropriateness of such transition plan being determined in good faith by the Companys Chief Executive Officer (or, if the Participant is the Companys Chief Executive Officer, then such determination shall be made by the Board), provided that if Participant engages in a Competitive Activity following the Termination Date, Participant shall pay to the Company the difference between the Fair Market Value (as of the repurchase date) and the Original Cost, if any. In the event any rights pursuant to the Repurchase Option may arise, the Company will promptly notify the VEP Stockholders thereof.
(c) Repurchase Procedures. Subject to Section 12(b), each VEP Stockholder may elect to exercise the Repurchase Option to purchase up to its pro rata share (determined based upon the number of shares of Common Stock then held by each such VEP Stockholder on an as converted basis) by delivering written notice (the Initial Repurchase Notice) to the holder or holders of the Option Shares, the Company and the other VEP Stockholders no later than 60 days after the later of (i) the Termination Date and (ii) the 181st day following the acquisition of the Option Shares subject to such repurchase. To the extent that any of the VEP Stockholders do not elect to repurchase their full allotment of Option Shares no later than the fifth business day following delivery of the first Initial Repurchase Notice delivered by any VEP Stockholder (and, immediately following the completion of such fifth business day, the Company will notify in writing each of the VEP Stockholders if any of the VEP Stockholders have not elected to purchase their full allotment of Option Shares), the other VEP Stockholders shall be entitled to purchase all or any portion of the remaining Option Shares by providing notice (the Supplemental Repurchase Notice) to each of the parties receiving the Initial Repurchase Notice within 10 business days following the delivery of the first Initial Repurchase Notice delivered by any VEP Stockholder; provided that if in the aggregate such VEP Stockholders elect to purchase more than the remaining available Option Shares, such remaining available Option Shares purchased by each VEP Stockholder will be reduced on a pro rata basis based upon the number of shares of Common Stock then held by each electing VEP Stockholder on an as converted basis. To the extent that, after giving effect to the reoffer pursuant to the immediately preceding sentence, any portion of the Option Shares are not being repurchased by the VEP Stockholders, the Company may exercise the Repurchase Option for the remaining Option Shares by delivering written notice (a Company Repurchase Notice and
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together with the Initial Repurchase Notice and Supplemental Repurchase Notice, a Repurchase Notice) to the holder or holders of the applicable Option Shares within 10 business days of the expiration of the latest period during which the VEP Stockholders were entitled to deliver Repurchase Notices. Each Repurchase Notice will set forth the number of Option Shares to be acquired from such holder(s), the aggregate consideration to be paid for such Option Shares and the time and place for the closing of the transaction. If any Option Shares are held by any transferees of a Participant, the VEP Stockholders and the Company, as the case may be, will purchase the shares elected to be purchased from all such holder(s) of Option Shares, pro rata according to the number of Option Shares held by each such holder(s) at the time of delivery of such Repurchase Notice (determined as nearly as practicable to the nearest share). If Option Shares of different classes are to be purchased pursuant to the Repurchase Option and such Option Shares are held by any transferees of a Participant, the number of shares of each class of Option Shares to be purchased will be allocated among all such holders, pro rata according to the total number of Option Shares to be purchased from such Persons.
(d) Closing. The closing of the transactions contemplated by this Section 12 will take place on the date designated in the applicable Repurchase Notice, which date will not be more than 60 days after the delivery of such notice. Each VEP Stockholder will pay for the Option Shares to be purchased by it by delivery of a check payable to the holder of such Option Shares. The Company will pay for the Option Shares to be purchased by it by first offsetting amounts outstanding under any bona fide debts owing by such Participant to the Company or any of its Subsidiaries, now existing or hereinafter arising (irrespective as to whether such amounts are owing by the holder of such Option Shares), and will pay the remainder of the purchase price by, at its option, delivery of (i) a check payable to the holder of such Option Shares, (ii) a subordinated promissory note payable in three equal annual installments commencing on the first anniversary of the closing of such purchase and bearing interest at a rate per annum equal to 5% or (iii) both (i) and (ii), in the aggregate amount of the purchase price for such shares. Notwithstanding anything to the contrary contained herein, all repurchases of Option Shares by the Company will be subject to applicable restrictions contained in the corporation law of the Companys jurisdiction of incorporation and in the Companys and its Subsidiaries debt and equity financing agreements. If any such restrictions prohibit the repurchase of Option Shares hereunder which the Company is otherwise entitled to make, the Company may make such repurchases as soon as it is permitted to do so under such restrictions. The VEP Stockholders and/or the Company, as the case may be, will receive customary representations and warranties from each seller regarding the sale of the Option Shares, including, but not limited to, representations that such seller has good and marketable title to the Option Shares to be transferred free and clear of all liens, claims and other encumbrances.
13. Restrictions on Transfer.
(a) Transfer of Option Shares. No Participant may sell, transfer, assign, pledge, encumber or otherwise dispose of (whether directly or indirectly, whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest (legal or beneficial) in any Option Shares (a Transfer) except Transfers pursuant to Sections 12, 13(b), 16 or 17 hereof (or as otherwise set forth in any written agreement with respect to the issuance of Options between the Company and such Participant), in each case pursuant to the terms and limitations set forth therein.
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(b) Certain Permitted Transfers. The restrictions contained in Section 13(a) will not apply with respect to Transfers of Option Shares by a Participant (i) to its Affiliates, (ii) pursuant to Section 16, (iii) pursuant to Section 17, or (iv) pursuant to applicable laws of descent or distribution or among a Participants Family Group; provided that the restrictions contained in this Plan will continue to apply to the Option Shares after any Transfer pursuant to clause (i) or (iv) above and each transferee of such Option Shares shall agree in writing, prior to and as a condition precedent to the effectiveness of such Transfer, to be bound by the provisions of this Plan, without modification or condition, subject only to the consummation of the Transfer. Upon the Transfer of Option Shares pursuant to clause (i) or (iv) of this Section 13(b), the transferring Participant will deliver a written notice to the Company and the VEP Stockholders, which notice will disclose in reasonable detail the identity of such transferee(s) and shall include an original counterpart of the agreement of such transferee(s) to be bound by this Plan. Notwithstanding the foregoing, no Participant shall avoid the provisions of this Plan by making one or more transfers to one or more transferees permitted under clause (i) above and then disposing of all or any portion of such Participants interest in such transferee. Family Group means a Participants spouse and descendants (whether by birth or adoption) and any trust solely for the benefit of such Participant and/or such Participants spouse and/or such Participants descendants (by birth or adoption), parents or dependents, or any charitable trust the grantor of which is such Participant and/or a member of the Participants Family Group. Any transferee of Option Shares pursuant to a transfer in accordance with the provisions of this Section 13(b) is herein referred to as a Permitted Transferee.
(c) Termination of Restrictions. The rights and restrictions on the transfer of Option Shares set forth in this Section 13 will continue with respect to each Option Share until the earlier of (i) the consummation of an Approved Sale (as defined below) and (ii) the consummation of an IPO.
14. Additional Restrictions on Transfer.
(a) The certificates representing the Option Shares will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE ACT), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN THE ISSUERS 2014 STOCK OPTION PLAN AND A WRITTEN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF SUCH SECURITIES, COPIES OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUERS PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.
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(b) No holder of Option Shares may sell, transfer or dispose of any Option Shares (except pursuant to an effective registration statement under the Securities Act) without first, if requested by the Company, delivering to the Company an opinion of counsel reasonably acceptable in form and substance to the Company (which counsel shall be reasonably acceptable to the Company) that registration under the Securities Act is not required in connection with such transfer.
(c) No holder of Option Shares will effect any public sale or distribution (including sales pursuant to Rule 144 of the Securities Act) of any Option Shares or of any other equity securities of the Company, or any securities, options or rights convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of any underwritten public offering of the Companys securities, except as part of such underwritten public offering. The restrictions on transfer set forth in this Section 14(c) shall continue with respect to each Option Share and each other security, option or right described in the preceding sentence until the date on which such security has been transferred pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market maker pursuant to the provisions of Rule 144 (other than Rule 144(k)) adopted under the Securities Act.
15. Definition of Option Shares. For all purposes of this Plan, Option Shares will continue to be Option Shares in the hands of any holder other than such Participant (except for the Company, the VEP Stockholders or purchasers pursuant to an offering registered under the Securities Act or purchasers pursuant to a Rule 144 transaction (other than a Rule 144(k) transaction occurring prior to the time of a closing of an IPO)), and each such other holder of Option Shares will succeed to all rights and obligations attributable to such Participant as a holder of Option Shares hereunder and under any separate written agreement between the Company and such Participant. Option Shares will also include shares of the Companys capital stock issued with respect to Option Shares by way of a share split, share dividend or other recapitalization.
16. Sale of the Company.
(a) If the holders of at least a majority of the Companys capital stock held by the VEP Stockholders (the Requisite Holders) approve (and in the case of any sale or fundamental change which requires the approval of the board of directors of a Delaware corporation pursuant to applicable Delaware law, the Board shall have approved such sale) a sale of all or substantially all of the Companys assets determined on a consolidated basis or a sale of a majority of the Companys outstanding capital stock (whether by merger, recapitalization, consolidation, reorganization, combination or otherwise) (collectively, an Approved Sale), each holder of Option Shares will be deemed to have consented to and agrees to raise no objections against such Approved
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Sale. If the Approved Sale is structured as (i) a merger or consolidation or asset sale or other transaction for which dissenters, appraisal or similar rights are available under applicable law, each holder of Option Shares will waive any dissenters rights, appraisal rights or similar rights in connection with such transaction, or (ii) a sale of stock (including by recapitalization, consolidation, combination or otherwise), each holder of Option Shares will agree to sell all of its Option Shares and rights to acquire Option Shares on the terms and conditions approved by the Board and the Requisite Holders. Each Participant shall be obligated to join in any indemnification or other obligations that the VEP Stockholders are required to provide in connection with the Approved Sale (other than any such obligations that relate solely to the VEP Stockholders, such as indemnification with respect to representations and warranties given by VEP Stockholders regarding the VEP Stockholders title to and ownership of the capital stock of the Company being sold by the VEP Stockholders, in respect of which only VEP Stockholders shall be liable); provided that no Participant shall be obligated in connection with such indemnification or other obligations with respect to any amount in excess of the consideration received by such Participant in connection with such transfer. Each holder of Option Shares will take all reasonably necessary or desirable actions in connection with the consummation of the Approved Sale as requested by the Requisite Holders and the Company.
(b) The obligations of the holders of Option Shares with respect to an Approved Sale are subject to the satisfaction of the following conditions: (i) upon the consummation of the Approved Sale and subject to the provisions of the Companys Certificate of Incorporation, each holder of Option Shares shall receive the same portion of the aggregate consideration from such transaction that such holder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Companys Certificate of Incorporation as in effect immediately prior to such transaction, (ii) if any holder of Option Shares is given an option as to the form and amount of consideration to be received, each holder of Option Shares will be given the same option and (iii) each holder of then currently exercisable rights to acquire Option Shares will be given an opportunity to exercise such rights prior to the consummation of the Approved Sale and participate in such sale as holders of Option Shares.
(c) If the Company or the holders of the Companys securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), the holders of Option Shares that are not Accredited Investors (as such term is defined under Rule 501 promulgated by the Securities and Exchange Commission) will, at the request of the Company, appoint a purchaser representative (as such term is defined in Rule 501 promulgated by the Securities and Exchange Commission) reasonably acceptable to the Company. If any such holder of Option Shares appoints a purchaser representative designated by the Company, the Company will pay the fees of such purchaser representative, but if any such holder of Option Shares declines to appoint the purchaser representative designated by the Company, such holder will appoint another purchaser representative, and such holder will be responsible for the fees of the purchaser representative so appointed.
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(d) Holders of Option Shares will bear their pro-rata share (based upon the number of shares sold by such holder Option Shares, in relation to the number of shares sold by all holders in such Approved Sale of Common Stock (with each class to bear expenses based upon the relative distribution priorities and preferences of each such class in relation to the other)) of the costs of any sale of Option Shares pursuant to an Approved Sale borne by the Company to the extent such costs are incurred for the benefit of all holders of Option Shares and are not otherwise paid by the Company or the acquiring party. Costs incurred by holders of Option Shares on their own behalf will not be considered costs of the transaction hereunder.
(e) The provisions of Sections 16(b), (c) and (d) hereof will terminate on the first to occur of (i) the consummation of an IPO and (ii) the consummation of an Approved Sale (except as such provisions relate to any such Approved Sale).
17. Public Offering. If the Board and the Requisite Holders approve an IPO, the holders of Option Shares will take all reasonably necessary or desirable actions in connection with the consummation of the IPO. If the IPO is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the capital stock structure will adversely affect the marketability of the offering, each holder of Option Shares will consent to and vote for a recapitalization, reorganization and/or exchange of the shares of Companys capital stock into securities that the managing underwriters, the Board and the holders of a majority of the Common Stock then held by the VEP Stockholders find acceptable and will take all necessary or desirable actions in connection with the consummation of the recapitalization, reorganization and/or exchange; provided that the resulting securities reflect and are consistent with the rights and preferences set forth in the Companys Certificate of Incorporation as in effect immediately prior to the IPO. The provisions of this Section 17 and all references to the defined term IPO in this Plan will apply, mutatis mutandis, to (i) any initial public offering and sale of any common stock of any Subsidiary of the Company and the liquidation of the Company into any such Subsidiary in connection therewith and (ii) any Solvent Reorganization approved by the Board. In connection with any such public offering and sale of any common stock of any Subsidiary of the Company, the Company shall liquidate into such Subsidiary or take other appropriate action to distribute the securities of such Subsidiary.
18. Transfers in Violation of Plan. Any transfer or attempted transfer of any Option Shares in violation of any provision of this Plan shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Option Shares as the owner of such shares for any purpose.
19. Severability. Whenever possible, each provision of this Plan will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Plan is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Plan will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.
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20. Remedies. Each of the Company, any Participant and the VEP Stockholders will be entitled to enforce its rights under this Plan specifically, to recover damages and costs (including reasonable attorneys fees) caused by any breach of any provision of this Plan and to exercise all other rights existing in its favor. Each Participant and the Company acknowledges and agrees that money damages may not be an adequate remedy for any breach of the provisions of this Plan and that any party may in its sole discretion apply to any court of law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Plan.
21. Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Companys chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.
22. Governing Law. All issues concerning this Plan will be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision of rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the law of any jurisdiction other than the State of Delaware. Each of the Company and each Participant submits to the co-exclusive jurisdiction of the United States District Court and any Delaware state court sitting in Wilmington, Delaware over any lawsuit under this Plan and waives any objection based on venue or forum non conveniens with respect to any action instituted therein. Each of the Company and each Participant waives the necessity for personal service of any and all process upon it and consents that all such service of process may be made by registered or certified mail (return receipt requested), in each case directed to such party in accordance with the notice requirements set forth in this Plan, and service so made will be deemed to be completed on the date of actual receipt. Each of the Company and each Participant consents to service of process as aforesaid. Nothing in this Plan will prohibit personal service in lieu of the service by mail contemplated herein.
23. Notices. Any notice required or permitted under this Plan or any agreement executed and delivered in connection with this Plan shall be in writing and shall be either personally delivered, or mailed by first class mail, return receipt requested, to any Participant at the address indicated in the Companys records for such Person, and to the Company at the address below indicated:
Notices to the Company:
Autotask Superior Holding, Inc.
or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Plan shall be deemed to have been given when so delivered or mailed.
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EXHIBIT 1
CONSENT
The undersigned spouse hereby acknowledges that I have read the following agreements to which my spouse is a party:
Autotask Superior Holding, Inc. 2014 Stock Option Plan,
Stock Option Agreement
and that I understand their contents. I am aware that such agreements provide for the repurchase of certain of my spouses capital stock of Autotask Superior Holding, Inc. (the Company) under certain circumstances and impose other restrictions on such capital stock. I agree that my spouses interest in such capital stock is subject to the agreements referred to above and the other agreements referred to therein and any interest I may have in such capital stock shall be irrevocably bound by these agreements and the other agreements referred to therein and further that my community property interest (if any) shall be similarly bound by these agreements.
The undersigned spouse irrevocably constitutes and appoints (the Stockholder) as the undersigneds true and lawful attorney and proxy in the undersigneds name, place and stead to sign, make, execute, acknowledge, deliver, file and record all documents which may be required, and to manage, vote, act and make all decisions with respect to (whether necessary, incidental, convenient or otherwise), any and all capital stock of the Company in which the undersigned now has or hereafter acquires any interest and in any and all capital stock of the Company now or hereafter held of record by the Stockholder (including but not limited to, the right, without further signature, consent or knowledge of the undersigned spouse, to exercise or not to exercise any and all options under any appropriate agreements and to exercise amendments and modifications of and to terminate the foregoing agreements and to dispose of any and all such capital stock and options), with all powers the undersigned spouse would possess if personally present, it being expressly understood and intended by the undersigned that the foregoing power of attorney and proxy is coupled with an interest; and this power of attorney is a durable power of attorney and will not be affected by disability, incapacity or death of the Stockholder, or dissolution of marriage and this proxy will not terminate without consent of the Stockholder and the Company.
Stockholder: | Spouse of Stockholder: | |||
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Signature | Signature | |||
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Printed Name | Printed Name | |||
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Dated | Dated |
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SUBSCRIBED AND SWORN to before me this ______ day of ____________, 20__ |
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My Commission Expires | ||||
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Notary Public |
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Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the Datto Holding Corp. Omnibus Incentive Plan, Amended and Restated 2017 Stock Option Plan of Merritt Topco, Inc., 2020 Non-Employee Director RSU Agreements and 2017 Autotask Option Rollover Agreements of our report dated March 23, 2020 with respect to the consolidated financial statements of Datto Holding Corp. included in Amendment No. 2 to the Registration Statement on Form S-1 (No. 333-249122) for the year end December 31, 2019, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP |
Stamford, Connecticut |
October 30, 2020 |