EXHIBIT 10.1
INCENTIVE STOCK OPTION AGREEMENT
AMENDED AND RESTATED AS OF ______________, 2002
THIS AGREEMENT, originally effective as of June 16, 2000 (the "Grant
Date"), and amended and restated effective as of ______________, 2002 (the
"First Amendment Date") is made by and among Dayton Superior Corporation, an
Ohio corporation (the "Company"), and __________________, an employee of the
Company (or one of its Subsidiaries, as defined herein), hereinafter referred to
as "Optionee."
WHEREAS, pursuant to Section 8.2 of the 2000 Stock Option Plan of
Dayton Superior Corporation, as amended, the terms of which are hereby
incorporated by reference and made a part of this Agreement, the Company has
reserved the right to amend this Agreement; and
WHEREAS, the Company and the Optionee have mutually agreed that it is
in their best interest to amend this Agreement as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree that, effective as of the First
Amendment Date, this Agreement is hereby amended and restated as follows:
ARTICLE I.
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. Capitalized terms used in this Agreement and not defined below shall
have the meaning given such terms in the Plan. The singular pronoun shall
include the plural, where the context so indicates.
Section 1.1 Affiliate
"Affiliate" shall mean, with respect to any Person, a Person directly
or indirectly, through one or more intermediaries, controlling, controlled by,
or under common control with, such Person, and with respect to the Company, also
any entity designated by the Board in which the Company or one of its Affiliates
has an interest, and with respect to Odyssey, also any Affiliate of any partner
of Odyssey.
Section 1.2 EBITDA Target; Base Cumulative EBITDA Target; High Cumulative
EBITDA Target
"EBITDA Target", "Base Cumulative EBITDA Target" and "High Cumulative
EBITDA Target" shall be as set forth in Appendix A to this Agreement, subject to
the provisions of Section 4.7.
Section 1.3 Basic Option
"Basic Option" shall have the meaning set forth in Section 2.1.
Section 1.4 Cause
"Cause" shall mean the Optionee's (i) willful or gross misconduct or
material failure in the performance of the Optionee's duties and
responsibilities to the Company, other than any such failure resulting from the
Optionee's Disability, which misconduct or failure continues beyond 14 days
after the Company notifies the Optionee, in writing, of the Company's finding of
such misconduct or failure; or (ii) conviction of, or plea of guilty or nolo
contendre to, a felony or a crime involving moral turpitude; or (iii) fraud or
personal dishonesty involving the Company's assets.
Section 1.5 Change in Control
"Change in Control" shall mean the occurrence of any of the following:
(i) a change in ownership or control of the Company effected through a
transaction or series of transactions whereby any "person" or related "group" of
"persons" (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange
Act) (other than the Company, any of its subsidiaries, an employee benefit plan
maintained by the Company or any of its subsidiaries, a Principal Stockholder or
a "person" that, prior to such transaction, directly or indirectly controls, is
controlled by, or is under common control with, the Company or a Principal
Stockholder) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than 50% of the total combined voting power of the Company's
securities outstanding immediately after such transaction or series of
transactions, (ii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company, or the
Company and its Subsidiaries taken as a whole, to any "person" (as defined
above), or (iii) any consolidation or merger of the Company with or into any
other corporation or entity or "person" (as defined above) in which the
stockholders of the Company prior to such consolidation or merger own less than
fifty percent (50%) of the Company's voting power immediately after such
consolidation or merger, excluding any consolidation or merger affected
exclusively to change the domicile of the Company.
Section 1.6 Chief Executive Officer
"Chief Executive Officer" shall mean the Chief Executive Officer of the
Company.
Section 1.7 Determination Date
"Determination Date" with respect to a given fiscal year, shall mean a
date, not later than 90 days following December 31st of such year, as of which
the Committee determines, pursuant to Section 3.1(d) herein, whether the EBITDA
Target, Base Cumulative EBITDA Target and High Cumulative EBITDA Target have
been met with respect to such fiscal year.
Section 1.8 Disability
"Disability" shall mean the inability of the Optionee to perform his or
her duties with the Company or a Subsidiary on a full time basis for more than
six months within any 12-month period due to reasonably documented physical or
mental illness.
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Section 1.9 EBITDA; Cumulative EBITDA
"EBITDA" with respect to any period of determination shall mean the sum
of the following (without duplication): (i) consolidated net income (or loss) of
the Company and, if applicable, its Subsidiaries, for such period (exclusive of
all extraordinary, unusual, or nonrecurring charges, gains and losses
(including, without limitation, all restructuring costs and any expense or
charge related to the repurchase of capital stock or warrants or options to
purchase capital stock) and the related tax effects according to generally
accepted accounting principles ("GAAP")), as determined in accordance with GAAP
consistently applied, as such principles are in effect on the First Amendment
Date, plus (ii) amounts deducted from net revenues in determining such net
income (or loss) on account of (w) depreciation and amortization, (x) interest
expense (net of interest income), (y) all taxes on income and (z) any management
or acquisition fee charged to the Company by the Principal Stockholder.
"Cumulative EBITDA" as of a given date shall mean the total of EBITDA from and
after January 1, 2000 through such date.
Section 1.10 High Performance Option
"High Performance Option" shall have the meaning set forth in Section
2.1.
Section 1.11 Investment
"Investment" shall mean any investment of funds by the Principal
Stockholder in debt and equity securities or instruments of the Company and its
Subsidiaries.
Section 1.12 Investor Return
"Investor Return" shall mean the annual compounded pre-tax internal
rate of return on a given Investment determined with respect to the period
beginning on the initial date of such Investment and ending on the effective
date of a Change in Control.
Section 1.13 Management Stockholders' Agreement
"Management Stockholders' Agreement" shall mean that certain Management
Stockholders' Agreement dated as of June 16, 2000 among the Company, Odyssey,
and the stockholder parties thereto, as amended from time to time.
Section 1.14 Odyssey
"Odyssey" shall mean Odyssey Investment Partners Fund, L.P.
Section 1.15 Option
"Option" shall mean the Incentive Stock Option to purchase Common Stock
granted under this Agreement and shall include, collectively, the Basic Option
and the High Performance Option.
Section 1.16 Person
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"Person" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
Section 1.17 Plan
"Plan" shall mean the 2000 Stock Option Plan of Dayton Superior
Corporation, as amended from time to time.
Section 1.18 Principal Stockholder
"Principal Stockholder" shall mean (a) Odyssey and Odyssey Coinvestors,
LLC (together, the "Odyssey Stockholders"), (b) any general or limited partner
or member of any Odyssey Stockholder (an "Odyssey Partner"), (c) any
corporation, partnership, limited liability company or other entity that is an
Affiliate of any Odyssey Stockholder or of any Odyssey Partner (collectively,
the "Odyssey Affiliates"), (d) any managing director, member, general partner,
director, limited partner, officer or employee of (i) any Odyssey Stockholder,
(ii) any Odyssey Partner or (iii) any Odyssey Affiliate, or the heirs,
executors, administrators, testamentary trustees, legatees or beneficiaries of
any of the foregoing Persons referred to in this clause (d) (collectively, the
"Odyssey Associates"), (e) any trust, the beneficiaries of which, or
corporation, limited liability company or partnership, the stockholders, members
or general or limited partners of which, include only Odyssey Stockholders,
Odyssey Partners, Odyssey Affiliates, Odyssey Associates, their spouses or their
lineal descendants; and (f) a voting trustee for one or more Odyssey
Stockholders, Odyssey Affiliates, Odyssey Partners or Odyssey Associates,
provided that in no event shall the Company or any Subsidiary be considered an
Odyssey Partner, Odyssey Affiliate, or Odyssey Associate and provided further
that an underwriter or other similar intermediary engaged by the Company in an
offering of the Company's debt or equity securities or other instruments shall
not be deemed a Principal Stockholder with respect to such engagement.
Section 1.19 Proceeds
"Proceeds" shall mean the aggregate fair market value of the
consideration received (excluding any management or similar fees) by the
Principal Stockholder in connection with a Change in Control, after taking into
account all post closing adjustments, and assuming exercise of all options and
warrants outstanding as of the effective date of such Change in Control (after
giving effect to different dates of investment, if any, and after giving effect
to any dilution of securities or instruments arising in connection with such
Change in Control), provided however, that if the Principal Stockholder retains
any Investment or portion thereof following such Change in Control, the fair
market value of such Investment (or portion) immediately following such Change
in Control shall be deemed "consideration received" for purposes of calculating
the Proceeds, and provided further that the fair market value of any non-cash
consideration (including stock) shall be determined as of the date of such
Change in Control.
Section 1.20 Subsidiary
"Subsidiary" of any entity shall mean any corporation in an unbroken
chain of corporations beginning with such entity if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
50% or more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
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Section 1.21 Target Amount
"Target Amount" shall mean, with respect to any Investment, a dollar
amount representing:
(a) For purposes of the Basic Option,
(i) If the Investment was made on or prior to June 16, 2003,
three times the amount of such Investment; and
(ii) If the Investment was made on or after June 17, 2003, a
30% Investor Return on such Investment.
(b) For purposes of the High Performance Option, four times the amount
of such Investment.
For purposes of calculating the Target Amount:
(x) the amount of an Investment shall be the amount paid by such
Principal Stockholder to any Person (including, without limitation, the Company,
any Subsidiary, or any underwriter) for the purchase of such debt or equity
securities or instruments, provided that if such Principal Stockholder shall
have acquired such debt or equity securities or instruments directly from
another Principal Stockholder or through an uninterrupted series of Principal
Stockholders, the amount of such Investment shall be the amount initially paid
to purchase such debt or equity securities or instruments from a Person other
than a Principal Stockholder; and
(y) the initial date of an Investment shall be the date such Principal
Stockholder purchased such debt or equity securities or instruments from any
Person (including, without limitation, the Company, any Subsidiary, or any
underwriter), provided that if such Principal Stockholder acquired such debt or
equity securities or instruments directly from another Principal Stockholder or
through an uninterrupted series of Principal Stockholders, the initial date of
such Investment shall be the date such debt or equity securities or instruments
were initially acquired from a Person other than a Principal Stockholder.
ARTICLE II.
GRANT OF OPTION
Section 2.1 Grant of Option
In consideration of the Optionee's agreement to remain in the employ
of the Company or one of its Subsidiaries and for other good and valuable
consideration, effective as of the Grant Date, the Company irrevocably granted
to the Optionee the Option to purchase any part or all of an aggregate of
___________ shares of Common Stock (the "Basic Option") and an additional
________ shares of Common Stock (the "High Performance Option"). Such Option
remains subject to the terms and conditions set forth in the Plan and this
Agreement, as amended.
Section 2.2 Option Subject to Plan
The Option granted hereunder is subject to the terms and provisions of
the Plan, including without limitation, Article VI and Sections 8.1, 8.2, 8.3
and 8.5 thereof.
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Section 2.3 Option Price
The purchase price of the shares of Common Stock covered by the Option
shall be $27.00 per share (without commission or other charge).
ARTICLE III.
EXERCISABILITY
Section 3.1 Commencement of Exercisability
(a) Subject to subsections (e) and (f) and Section 3.3, 21.25% of the
Basic Option shall become exercisable in two cumulative installments as follows:
(i) The first installment shall consist of 16.25% of the
shares covered by such Basic Option and shall be exercisable as of the
First Amendment Date;
(ii) The second installment shall consist of 5% of the shares
covered by such Basic Option and shall become exercisable on June 16,
2002;
(b) Subject to subsections (e) and (f) and Section 3.3, the remaining
78.75% of the Basic Option, as well as the entire High Performance Option shall
become exercisable in full on June 15, 2009 provided that the Optionee remains
continuously employed in active service by the Company from the Grant Date
through such date.
(c) Notwithstanding Section 3.1(b), but subject to subsections (e) and (f)
and Section 3.3, 78.75% of the shares subject to the Basic Option shall become
exercisable as follows:
(i) Annual Performance Test. If the EBITDA for any fiscal year
2002 through 2005 equals or exceeds the EBITDA Target for such fiscal
year, on the Determination Date for such fiscal year, a portion of the
Basic Option shall become exercisable as follows:
(A) An installment consisting of 11.25% of the shares
covered by the Basic Option shall become exercisable on the
Determination Date for fiscal year 2002 if EBITDA for such
fiscal year equals or exceeds the EBITDA Target for such year;
and
(B) An installment consisting of 16.25% of the shares
covered by the Basic Option shall become exercisable on the
Determination Date for each fiscal year 2003 through 2005 if
EBITDA for such fiscal year equals or exceeds the EBITDA
Target for such year.
(ii) Missed Years and Catch-Up Opportunities.
(A) If any installment subject to exercisability
pursuant to Section 3.1(c)(i) fails to become exercisable in
accordance therewith, such installment shall become
exercisable on the Determination Date for the first fiscal
year thereafter ending on or prior to December 31, 2005 (if
any) with respect to which fiscal year (x) the EBITDA for such
fiscal year equals or exceeds the EBITDA Target for such year
and (y) the Cumulative EBITDA through the last day of such
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fiscal year equals or exceeds the Base Cumulative EBITDA
Target through such date; and
(B) 18.75% of the Basic Option shall become
exercisable on the Determination Date for the first fiscal
year ending on or prior to December 31, 2005 (if any) with
respect to which fiscal year (x) the EBITDA for such fiscal
year equals or exceeds the EBITDA Target for such year and (y)
the Cumulative EBITDA through the last day of such fiscal year
equals or exceeds the High Cumulative EBITDA Target through
such date
provided that in no event shall the Basic Option become exercisable for
greater than 100% of the shares subject thereto.
(iii) Discretionary Catch-Up Opportunity. If any portion of
the Basic Option subject to accelerated vesting under this Section
3.1(c) remains unexercisable following the Determination Date for the
fiscal year ending December 31, 2005, the Board may, in its discretion,
provide that the vesting of such portion may accelerate subsequent to
such Determination Date subject to the attainment of such performance
targets or the satisfaction of such other terms and conditions as the
Board may determine in its discretion.
(d) As of the Determination Date for each fiscal year 2002 through
2005, the Committee shall make the determination, in accordance with this
Section 3.1, as to whether the EBITDA Target, Base Cumulative EBITDA Target and
High Cumulative EBITDA Target have been met, and shall determine, in accordance
with this Section 3.1, the extent, if any, to which the Basic Option has become
exercisable. As soon as practicable following the Determination Date, the
Committee shall notify the Optionee of its determinations and provide Optionee
with a copy of the calculations supporting the Committee's conclusions.
(e) Notwithstanding the foregoing provisions of this Section 3.1, but
subject to subsection (f) and Section 3.3,
(i) the Basic Option shall become fully vested and exercisable
immediately prior to the effective date of a Change in Control through
which the Principal Stockholder receives Proceeds greater than or equal
to the sum of the Target Amounts (as defined in Section 1.21(a)) with
respect to all Investments; and
(ii) the High Performance Option shall become fully vested and
exercisable immediately prior to the effective date of a Change in
Control through which the Principal Stockholder receives Proceeds
greater than or equal to the sum of the Target Amounts (as defined in
Section 1.21(b)) with respect to all Investments.
(f) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
Section 3.2 Duration of Exercisability
The installments provided for in Section 3.1 are cumulative. Each such
installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it is exercised or the Option expires pursuant to Section 3.3.
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Section 3.3 Expiration of Option
The Option may not be exercised to any extent by anyone after the first to
occur of the following events:
(a) The expiration of ten years from the Grant Date; or
(b) The 90th day following the date of the Optionee's Termination of
Employment for any reason other than for Cause (unless the Optionee dies within
said 90-day period, in which case the Option shall cease to be exercisable upon
the expiration of 90 days from the date of the Optionee's death); or
(c) Except as the Committee may otherwise approve, the date of the
Optionee's Termination of Employment by the Company for Cause.
Section 3.4 Partial Exercise
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable; provided,
however, that each partial exercise shall be for not less than one hundred (100)
shares (or the total amount then exercisable pursuant to Section 3.1, if a
smaller number of shares) and shall be for whole shares only.
Section 3.5 Exercise of Option
The exercise of the Option shall be governed by the terms of this
Agreement and the terms of the Plan, including, without limitation, the
provisions of Article VI of the Plan.
Section 3.6 Special Tax Consequences
The Option is intended to be an Incentive Stock Option, and the
amendment to the Option made hereunder as of the First Amendment Date is not
intended to affect such Incentive Stock Option status. The Optionee acknowledges
that, to the extent that the aggregate fair market value of stock with respect
to which "incentive stock options" (within the meaning of Section 422 of the
Code, but without regard to Section 422(d) of the Code), including the Option,
are exercisable for the first time by the Optionee during any fiscal year (under
the Plan and all other stock option plans of the Company, any Subsidiary and any
parent corporation) exceeds $100,000, such options shall be treated as not
qualifying under Section 422 of the Code but rather shall be treated and taxable
as non-qualified options. The Optionee further acknowledges that the rule set
forth in the preceding sentence shall be applied by taking options into account
in the order in which they were granted, and the stock certificate issued upon
exercise of the options shall designate whether such stock was acquired upon
exercise of an Incentive Stock Option. For purposes of these rules, the fair
market value of stock shall be determined as of date of grant of the applicable
option covering such stock.
ARTICLE IV.
OTHER PROVISIONS
Section 4.1 Not a Contract of Employment
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Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue in the employ of the Company or any of its Subsidiaries or
shall interfere with or restrict in any way the rights of the Company or its
Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at
any time for any reason whatsoever, with or without Cause.
Section 4.2 Shares Subject to Plan and Management Stockholders' Agreement
The Optionee acknowledges that any shares acquired upon exercise of the
Option are subject to the terms of the Plan and the Management Stockholders'
Agreement including without limitation, the restrictions set forth in Section
6.5 of the Plan. If the Optionee is not already a party to the Management
Stockholders' Agreement at the time he or she exercises all or part of the
Option, such exercise shall be conditioned upon the Optionee's delivery to the
Company of such Management Stockholders' Agreement, executed by the Optionee.
Section 4.3 Construction
This Agreement shall be administered, interpreted and enforced under
the laws of the State of Ohio.
Section 4.4 Conformity to Securities Laws
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated thereunder by the Securities
and Exchange Commission, including without limitation Rule 16b-3.
Notwithstanding anything herein to the contrary, the Plan shall be
administered, and the Option is granted and may be exercised, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and this Agreement shall be deemed amended
to the extent necessary to conform to such laws, rules and regulations.
Section 4.5 Options Not Transferable
The Option may not be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject to
the consent of the Committee, pursuant to a domestic relations order (as defined
by the Code or Title I of the Employee Retirement Income Security Act of 1974,
as amended, or the rules promulgated thereunder), unless and until such Option
has been exercised, or the shares underlying such Option have been issued, and
all restrictions applicable to such shares have lapsed. No Option or interest or
right therein shall be liable for the debts, contracts or engagements of the
Optionee or Optionee's successors in interest or shall be subject to disposition
by transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by operation
of law by judgment, levy, attachment, garnishment or any other legal or
equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.
Section 4.6 No Rights as Stockholder
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The Optionee shall not be, nor have any of the rights or privileges of,
a stockholder of the Company in respect of any shares purchasable upon the
exercise of any part of the Option unless and until certificates representing
such shares shall have been issued by the Company to the Optionee and the
Optionee's name has been entered as the shareholder of record with respect to
such shares on the books of the Company.
Section 4.7 Adjustments in Targets
The EBITDA Targets, Base Cumulative EBITDA Targets and High Cumulative
EBITDA Targets specified in Appendix A are based upon certain revenue and
expense assumptions about the future business of the Company as of the First
Amendment Date. Accordingly, in the event that, after the First Amendment Date,
the Committee determines, in its sole discretion, that any acquisition or any
divestiture of any business by the Company or any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or the financial statements of the Company, or change
in applicable laws, regulations, or accounting principles occurs such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to the Option, then the Committee
shall adjust the financial targets set forth on Appendix A to reflect the
projected effect of such transaction(s) or event(s) on such targets. Without
limiting the generality of the foregoing, in the event the Company acquires any
business: (a) with respect to such acquired business, EBITDA and Cumulative
EBITDA with respect to the fiscal year in which such acquisition occurs shall be
calculated pro-rata from the date of such acquisition, and (b) in the event the
Committee determines that an adjustment to the targets set forth on Appendix A
is appropriate, such adjustment shall be made from the date of such acquisition
and shall be made pro rata with respect to the fiscal year in which such
acquisition occurs.
[signature page follows]
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DAYTON SUPERIOR CORPORATION
By:____________________________________________
Title:_________________________________________
______________________________
Optionee
______________________________
______________________________
Address
Optionee's Taxpayer Identification Number:_________________________________
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