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Exhibit
10.19
FORM OF OPTION ROLLOVER
AGREEMENT
THIS OPTION ROLLOVER
AGREEMENT, dated as of February 13, 2008 (this “
Agreement ”), is made by and between Chill Holdings,
Inc., a Delaware corporation (“ Holdings ”), and
[ ],
an individual (the “ Management Participant
”).
WHEREAS, Holdings entered
into an Agreement and Plan of Merger, dated as of October 21,
2007 (as may be amended from time to time, the “ Merger
Agreement ”), with Chill Acquisition, Inc., a
Delaware corporation and a wholly owned indirect subsidiary of
Holdings (together with its successors and assigns, “
Merger Sub ”) and Goodman Global, Inc., a
Delaware corporation (the “ Company ”), pursuant
to which, upon the terms and subject to the conditions set forth
therein, Merger Sub will merge with and into the Company (the
“ Merger ”), whereby Merger Sub will cease to
exist and the Company will become a wholly owned indirect
subsidiary of Holdings;
WHEREAS, pursuant to
Section 2.1(f) of the Merger Agreement, each option to
purchase shares of common stock of the Company (the “
Company Stock Option ”) granted under the 2004 Stock
Option Plan and the 2006 Incentive Award Plan of the Company
(together, the “ Company Stock Plans ”), whether
vested or unvested, that is outstanding immediately prior to the
consummation of the Merger (the “ Closing ”),
other than any such option that is subject to an alternative
arrangement specifically agreed to between Holdings and the holder
thereof, shall, as of the Closing, become fully vested and be
converted into the right to receive at the Closing an amount in
cash in U.S. dollars equal to the product of (i) the total
number of shares of common stock of the Company subject to such
Company Stock Option and (ii) the excess, if any, of
(A) $25.60 over (B) the exercise price per share of
common stock of the Company subject to such Company Stock Option,
with the aggregate amount of such payment rounded to the nearest
cent less such amounts as are required to be withheld or deducted
under the United States Internal Revenue Code of 1986, as amended
(the “Code”) or any provision of U.S. federal, state,
local or foreign tax law with respect to the making of such payment
(the “ Option Consideration ”); and
WHEREAS, the Management
Participant was granted one or more Company Stock Options pursuant
to the Company Stock Plans;
WHEREAS, the parties hereto
desire to agree that, pursuant to the Merger Agreement, the Company
Stock Options held by the Management Participant (the “
Management Participant Options ”) shall become fully
vested as of the Closing, and, to the extent set forth on
Schedule I hereto, remain outstanding and be assumed by
Holdings as provided for herein;
NOW, THEREFORE, in
consideration of the mutual covenants and conditions as hereinafter
set forth, the parties hereto do hereby agree as
follows:
| I. |
Company Stock Options . |
Holdings and the Management
Participant hereby acknowledge and agree that as of the date of
this Agreement, the Management Participant Options shall, to the
extent then outstanding, become fully vested as of the
Closing.
| II. |
Rollover of the Unexercised Portion of the Management
Participant Option . |
Subject to terms and
conditions set forth herein, to the extent set forth on Schedule
I hereto, the Management Participant hereby permanently and
irrevocably elects not to exercise the Company Stock Options in
connection with the Merger, and therefore acknowledges that
following the Merger, the portion of the Management Participant
Options described on Schedule I shall remain
outstanding and be converted automatically into options to acquire
the common stock, par value $0.01 per share of Holdings (the
“ Holdings Common Stock ”) (as so converted, the
“ Rollover Options ”). It is hereby expressly
agreed and acknowledged that the Management Participant shall not
be entitled to the Option Consideration with respect to shares of
Holdings Common Stock subject to the Rollover Options. Without
limiting the foregoing, the Rollover Options shall be subject to
the same general terms and conditions as are applicable to the
Management Participant Options as of the date hereof, except
that:
(i) such Rollover Options
shall be fully vested and immediately exercisable;
(ii) the exercise price per
share of such Rollover Options shall be $2.07, and the number of
shares of Holdings Common Stock subject to the Rollover Options
shall be the number set forth on Column F of Schedule
I hereto, which shall have been determined by dividing the
total option spread indicated on Column E of Schedule
I hereto by $7.93, whereby the total option spread before and
after such conversion shall, subject to the following proviso,
remain unchanged; provided , that in performing such
adjustment, the number of shares subject to the Rollover Options
after the conversion shall have been rounded down to the nearest
whole number of shares of Holdings Common Stock, to the extent
necessary;
(iii) in connection with any
extraordinary cash dividend declared and paid on the Holdings
Common Stock, the Rollover Option shall be adjusted by the Board of
Directors of Holdings (the “ Board ”), or
committee thereof, in a manner it deems equitable in its good
faith, which may include the reduction of the exercise price per
share of Holdings Common Stock subject to the Rollover Option by
the amount of such dividend, provided that if such reduction
exceeds the exercise price per share (or such percentage of the
exercise price per share that Holdings determines would result in
adverse tax consequences to the Management Participant) or would
cause the Rollover Option to cease to be exempt from
Section 409A of the Code, then such excess shall be paid in
cash; and
(iv) to the extent that the
Board (or any committee thereof) makes adjustments to the
Management Participant’s stock option granted under the
Chill Holdings, Inc. 2008 Stock Incentive Plan, pursuant to
Section 11 thereof, corresponding adjustments shall be made to
the Rollover Option.
| III. |
Execution of Management Stockholders Agreements
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Concurrently with the
execution and delivery of this Agreement, each of Holdings and the
Management Participant agrees to execute and deliver the Management
Stockholders Agreement, as may be amended from time to time, in the
form attached as Exhibit A hereto (the “ Management
Stockholders Agreement ”).
2
This Agreement shall
terminate automatically and the transactions contemplated hereby
shall be abandoned if at any time prior to the Closing, the Merger
Agreement shall have been terminated in accordance with its terms.
In the event of any termination of this Agreement as provided in
this Article IV, this Agreement shall forthwith become wholly void
and of no further force or effect (except Article VI) and there
shall be no liability on the part of any parties hereto or their
respective officers or directors, except as provided in such
Article VI. Notwithstanding the foregoing, no party hereto shall be
relieved from liability for any willful breach of this
Agreement.
| V. |
Representations and Warranties . |
1. Representations and
Warranties of the Management Participant . The Management
Participant represents and warrants to Holdings that:
a. He or she is competent to,
and has sufficient capacity to, execute and deliver this Agreement
and the agreements contemplated hereby and to perform his or her
obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by the Management Participant and, assuming
the due authorization, execution and delivery of this Agreement by
Holdings, this Agreement constitutes the valid and binding
obligation of the Management Participant, enforceable against the
Management Participant in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by the effect
of general principles of equity (re
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