Exhibit 10.8
OPTION ROLLOVER AGREEMENT
This OPTION ROLLOVER AGREEMENT dated
May 1, 2006 (this “ Agreement ”), is made
by and between Lone Star Holding Corp. (“ Lone Star
”), Activant Solutions Holdings Inc. (the “
Company ”) and Pervez Qureshi (the “
Investor ”). Unless expressly provided otherwise in
this Agreement, capitalized terms defined in the Merger Agreement
(as defined below) when used in this Agreement shall have the same
meanings provided to such terms in the Merger Agreement.
WHEREAS, the Company entered into an
Agreement and Plan of Merger dated as of March 12, 2006 (the
“ Merger Agreement ”) with Lone Star Merger
Corp. (“ Merger Sub ”) and Lone Star, pursuant
to which and subject to the terms and conditions thereof, Merger
Sub shall merge with and into the Company, with the Company as the
surviving entity (the “ Front-End Merger
”);
WHEREAS, immediately following the
Front-End Merger, the surviving entity of the Front-End Merger
shall be merged with and into Activant Solutions Inc. (“
Activant ”), with Activant as the surviving
corporation (the “ Back-End Merger ”; and,
together with the Front-End Merger, the “ Mergers
”), such that Activant shall thereafter be a wholly owned
subsidiary of Lone Star;
WHEREAS, in connection with the
consummation of the Mergers and the transactions contemplated by
this Agreement, the Investor shall become a party to a stockholders
agreement in the form attached hereto as Exhibit A (the
“ Stockholders Agreement ”); and
WHEREAS, the parties hereto desire to
make certain agreements, representations, warranties and covenants
in connection with the Mergers, the Merger Agreement and the
Stockholders Agreement and the transactions contemplated hereby and
thereby (collectively, the “ Transactions
”).
NOW, THEREFORE, in consideration of
the mutual covenants and conditions as hereinafter set forth, the
parties hereto do hereby agree as follows:
I. Assumption and Rollover
1.1 No Option Payment . On the
terms and subject to the conditions of this Agreement, the Investor
hereby agrees that effective at the Closing of the Front-End
Merger, Activant Solutions Holdings Inc. shall not cancel and
terminate those outstanding Options listed in Table 1 below
that were previously granted to Investor under the Company’s
stock option plans (the “ Company Options ”) and
shall not convert any part of the Company Options into a right to
receive the Option Payment with respect to the Company Options,
which Option Payment would be $1,000,000 (such amount, the “
Option Consideration ”) but for the terms of this
Agreement. The Investor understands and agrees that, pursuant to
the terms of this Agreement, he or she shall have no right to
receive the Option Payment with respect to the Company
Options.
Table 1
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Number of |
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shares subject |
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to Company |
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Options not |
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Company |
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being cashed |
|
Exercise price |
|
Spread value (at |
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Grant date |
|
option plan |
|
out |
|
per share |
|
$4 per share) |
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2/16/2000
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2000 |
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125,000 |
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$ |
1.00 |
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$ |
375,000 |
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1/1/2001
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2000 |
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25,000 |
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$ |
1.00 |
|
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$ |
75,000 |
|
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1/1/2002
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2000 |
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25,000 |
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$ |
1.00 |
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$ |
75,000 |
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6/30/2004
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2000 |
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50,000 |
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$ |
2.25 |
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$ |
87,500 |
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2/1/2005
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|
2000 |
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221,429 |
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$ |
2.25 |
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$ |
387,500 |
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Total number
rolled:
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446,429 |
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Total spread: |
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$ |
1,000,000 |
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1.2 Assumption and Granting of
Rollover Options . In consideration for the Investor’s
agreement to forego payment of the Option Consideration, Lone Star
hereby agrees to assume the Company Options as of the Closing and
automatically convert the Company Options into stock options to
acquire an aggregate of 333,334 shares of Lone Star common stock,
par value $0.01 per share (the “ Rollover Options
”), as set forth in Table 2 below. The Rollover
Options will be fully vested, non-statutory stock options, and
except as otherwise set forth in this Agreement, will be subject to
the terms and conditions of the Company stock option plans under
which they originally were granted. The per share exercise price of
each of the Rollover Options is equal to 25% of the
“Subscription Price” (as defined below). The number of
shares of Lone Star common stock subject to each of the Rollover
Options has been determined by dividing (A) the total option
spread for each respective Company Option (i.e., the product of
(i) the difference between $4.00 and the exercise price of
such Company Option and (ii) the total number of shares of
Common Stock subject to such Company Option) by (B) 75% of the
Subscription Price. In making this adjustment, the adjusted number
of shares of Lone Star common stock subject to the Rollover Options
has been rounded up to the nearest whole share, to the extent
necessary. For purposes of this Agreement, the term “
Subscription Price ” shall mean $4, which is the per
share price paid by Hellman & Friedman Capital Partners V,
L.P., a Delaware limited partnership, Hellman & Friedman
Capital Partners V (Parallel), L.P., a Delaware limited
partnership, and Hellman & Friedman Capital Associates V, LLC,
a Delaware limited liability company (collectively, the “
H&F Parties ”), Thoma Cressey Fund VII, L.P., a
Delaware limited partnership, Thoma Cressey Fund VIII, L.P., a
Delaware limited partnership, and Thoma Cressey Friends Fund VIII,
L.P., a Delaware limited partnership (collectively, the “
TCEP Parties ”), and JMI Equity Fund IV, L.P., a
Delaware limited partnership, and JMI Equity Fund IV (AI), L.P., a
Delaware limited partnership (collectively, the “ JMI
Parties ”) to subscribe for shares of Lone Star common
stock on the Closing Date. You will not be issued new option
agreements for your Rollover Options.
Table 2
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Company |
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Number of Lone
Star |
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Exercise price |
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Grant date |
|
option plan |
|
shares |
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per share |
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2/16/2000
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|
|
2000 |
|
|
|
125,000 |
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|
$ |
1.00 |
|
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1/1/2001
|
|
|
2000 |
|
|
|
25,000 |
|
|
$ |
1.00 |
|
|
1/1/2002
|
|
|
2000 |
|
|
|
25,000 |
|
|
$ |
1.00 |
|
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6/30/2004
|
|
|
2000 |
|
|
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29,167 |
|
|
$ |
1.00 |
|
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2/1/2005
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|
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2000 |
|
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129,167 |
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$ |
1.00 |
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Total shares: |
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333,334 |
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1.3 Compliance with Applicable
Laws . The parties contemplate that the assumption of the
Company Options and the conversion thereof into Rollover Options
will qualify as a transaction satisfying the requirements of
Section and 409A of the Internal Revenue Code of 1986, as amended,
and the regulatory guidance promulgated thereunder (the “
Code ”).
1.4 Condition to the Obligations
of the Investor . The obligations of the Investor to consummate
the transactions contemplated by this Agreement shall be subject to
the following conditions:
(a) the
Company shall determine that all conditions to the Company’s
obligation to close under the Merger Agreement shall have been
satisfied, or waived by the Company, on or before the Closing and
the Company shall confirm to the Investor that the Mergers shall
occur on the Closing Date; and
(b)&n
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