Philippe Chambadal tries to prove he had the right to exercise options worth $25 million.
Phillipe Chambadal, former CEO of SmartStream Technologies, has sought to prove that his claims about incentive plan awards due to him are well founded. Mr Chambadal has stated the arguments for his claims in a document filed at the New York Southern District Court on Tuesday.
The arguments form part of a legal dispute between SmartStream and Mr Chambadal over trade secrets, confidential information and compensation payments.
The case, brought by SmartStream, names Mr Chambadal as a defendant. The company seeks injunctive relief to enforce an agreement containing a return of information and confidentiality clause and to enjoin Mr Chambadal from further misappropriation or dissemination of SmartStream’s trade secrets and confidential information. In brief, SmartStream alleges that Mr Chambadal who was provided with a 90 days’ notice of termination of his contract with SmartStream on January 5, 2017, retained corporate property and access to confidential information after the notice was issued.
Mr Chambadal has issued a counterclaim, claiming that the company has prevented him from exercising options worth $25 million.
In May 2014, Chambadal was awarded an option to acquire 1,000,000 shares in D-CLEAR EUROPE, SmartStream’s parent company, which are governed by SmartStream’s Long Term Incentive Plan. At present, these awards account for one-third of SmartStream’s management options pool. On January 23, 2017, prior to the effective date of his employment termination, Chambadal notified SmartStream of his decision to exercise his Awards. According to him, SmartStream “made a bad-faith calculated decision” to lapse his awards.
SmartStream argues that an Exit event (i.e., an acquisition or IPO) is a condition that must occur before a plan participant, such as Mr Chambadal, can exercise his options. Mr Chambadal, however, refers to a part of the Plan stating that “Options may be exercised immediately prior to an Exit as set out in Rules 5.1 to 5.3. Options that have not been exercised on Exit will be lapsed.”
Another point of disagreement is whether Mr Chambadal was in “Relevant employment” when he tried to exercise the options. On January 5, 2017, Mr Chambadal received notice that he would be on “Garden Leave” until April 4, 2017, the effective date of his termination. Mr Chambadal argues that he “held employment” until his Garden Leave ended on April 4, 2017. According to him, it is untenable for him to be employed for the purposes of his Garden Leave, but “ceasing to be in Relevant Employment” for the purposes of SmartStream’s lapsing of his Awards under the Plan.
Chambadal alleges that he satisfied all conditions precedent to exercise his option to acquire his awards, and that upon information and belief, SmartStream is currently preparing for a sale to a strategic buyer for $500 million.
The case, captioned Smartstream Technologies, Inc. v. Chambadal (1:17-cv-02459), continues at the New York Southern District Court.