SOI HOLDINGS, INC. 2005 STOCK OPTION PLAN NONQUALIFIED COMMON STOCK OPTION AGREEMENT
EXHIBIT 10.3
THIS COMMON STOCK OPTION AGREEMENT (the “Agreement”), dated as of ___, 2005
(the “Date of Grant”), is made by and between SOI Holdings, Inc., a Delaware corporation
(the “Company”), and ___(the “Participant”).
WHEREAS, the Company has adopted the SOI Holdings, Inc. 2005 Stock Option Plan (the
“Plan”), pursuant to which options may be granted to purchase shares of the Company’s
common stock, par value, $0.01 per share (“Common Stock”); and
WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is
in the best interests of the Company and its stockholders to grant the stock option award provided
for herein to the Participant subject to the terms set forth herein;
NOW, THEREFORE, for and in consideration of the premises and the covenants of the parties
contained in this Agreement, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree
as follows:
1. Grant of Option.
Grant. The Company hereby grants to the Participant an option (the “Option”)
to purchase ___shares of Common Stock (such shares of Common Stock, the “Option
Shares”), on the terms and conditions set forth in this Agreement and as otherwise provided in
the Plan. This Option is not intended to be an Incentive Stock Option.
2. Incorporation by Reference, Etc.
The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise
expressly set forth herein, this Agreement shall be construed in accordance with the provisions of
the Plan and any capitalized terms not otherwise defined in this Agreement shall have the
definitions set forth in the Plan. The Committee shall have final authority to interpret and
construe the Plan and this Agreement and to make any and all determinations under them, and its
decision shall be binding and conclusive upon the Participant and his legal representative in
respect of any questions arising under the Plan or this Agreement.
3. Terms and Conditions.
(a) Option Price. The price at which the Participant shall be entitled to purchase
the Option Shares upon the exercise of all or any portion of this Option shall be $0.74 per share.
(b) Expiration Date. Subject to Section 3(d) hereof, the Option shall expire at the
end of the period commencing on the Date of Grant and ending at 11:59 p.m. Eastern Time
(“ET”) on the day immediately preceding the tenth anniversary of the Date of Grant (the
“Option Period”).
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(c) Exercisability of the Option.
(i) The exercise of the Option shall be subject to the Participant’s having
executed (if he or she is not already a party thereto) the Stockholders Agreement by
and among the Company, Trumpet Investors L.P., a Delaware limited partnership,
Trumpet SBIC Partners, L.P., a Delaware Limited partnership, Regions Bank, a bank
chartered under the laws of the State of Alabama and the stockholders who are party
thereto, dated as of August 3, 2005 (the “Stockholders Agreement”).
(ii) Except as may otherwise be provided herein, subject to the Participant’s
continued employment with the Company or an Affiliate on each applicable anniversary
of the Date of Grant, the Option shall become vested and exercisable
as to
(a) 162/3%
of the Option Shares on each of the first, second, and third anniversaries of the
Date of Grant, and (b) 162/3% of the Option Shares on each of the first, second, and
third anniversaries of the Date of Grant, if the Company’s subsidiary, Strategic
Outsourcing, Inc. and its subsidiaries on a consolidated basis, achieve the
applicable EBITDA targets set forth on Schedule A attached hereto for the calendar
year ending immediately prior to such anniversary; provided, that any Option
Shares that have not otherwise become vested and exercisable pursuant to this
subclause (b) prior to the third anniversary of the Date of Grant shall become
vested and exercisable on such date if both the applicable EBITDA target for the
calendar year ending immediately preceding such third anniversary and the cumulative
EBITDA target set forth on Schedule A attached hereto have been achieved. “EBITDA”
shall mean, in respect of any Fiscal Year, the operating income before depreciation
and amortization expense of the Company and its subsidiaries on a consolidated
basis, adjusted (I) by the Committee in good faith based on the anticipated effect
of any acquisition or disposition during such Fiscal Year on operating income before
depreciation and amortization expense of the Company and its subsidiaries on a
consolidated basis and (II) to add back to operating income any other item which the
Committee so determines in its sole discretion.
(iii) The Option may be exercised only by written notice, substantially in the
form attached hereto as Exhibit A (or a successor form provided by the Committee)
delivered in person or by mail in accordance with Section 6(a) hereof and
accompanied by payment therefor. The purchase price of the Option Shares shall be
paid by the Participant to the Company (A) by certified check, (B) by transferring
to the Company shares of Common Stock as described in Section 7(b) of the Plan, (C)
following an initial public offering by the Company of shares of Common Stock
registered under the Securities Act of 1933, as amended (an “Initial Offering”), by
a “cashless exercise” procedure if and in
the manner approved by the Committee or (D) by any other method approved by the
Committee in writing. If requested by the Committee, the Participant shall promptly
deliver his copy of this Agreement evidencing the Option to the Secretary of the
Company who shall endorse thereon a notation of such exercise
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and promptly return
such Agreement to the Participant. The Option may be exercised only
for whole shares.
(iv) Notwithstanding the above, if the Participant also holds an outstanding
option to purchase Preferred Stock of the Company (“Preferred Stock”), the
Option may only be exercised if the Participant simultaneously exercises the option
to purchase shares of Preferred Stock subject to such option in respect of that
number of shares of Preferred Stock equal to the number of shares of Preferred Stock
originally subject to such option multiplied by a fraction, the numerator of which
is the number of shares of Common Stock as to which the Participant is exercising
this Option, and the denominator of which is the number of shares of Common Stock
originally subject to this Option.
(d) Termination of Option. The unvested portion of the Option shall immediately
terminate upon the termination of the Participant’s employment with the Company and its Affiliates
for any reason; provided, however, that, if such termination of the Participant’s employment is by
the Company without “Cause” or by the Participant for “Good Reason” (as such terms are defined in
the employment agreement between the Participant and the Company, dated as of the date of this
Agreement), then, any portion of the Option that is not vested or exercisable as of the date of
such termination shall automatically become fully vested and exercisable as of the date of such
termination without further action by the Company or the Participant, and the Option shall remain
exercisable in accordance with the provisions of the following sentence. In the event of a
termination of the Participant’s employment with the Company, the Option shall remain exercisable
by the Participant to the extent of the portion thereof which was vested and exercisable at the
date of such termination (after giving effect to any acceleration of vesting and exercisability if
applicable under the preceding sentence), provided, that such portion shall expire
upon the earliest to occur of (i) the tenth anniversary of the Date of Grant, (ii) the date of the
termination of the Participant’s employment with the Company and its Affiliates either (x) by the
Company with Cause or (y) by the Participant other than for Good Reason, (iii) the date sixty (60)
days following the date of the termination of the Participant’s employment the Company and its
Affiliates by the Company without Cause or by the Participant for Good Reason; (iv) the first
anniversary of the termination of the Participant’s employment with the Company and its Affiliates
(A) by reason of the Participant’s death, or (B) by the Company on account of Disability; or (v) as
otherwise described in Section 12 of the Plan.
(e) Compliance with Legal Requirements. The granting and exercising of the Option,
and any other obligations of the Company under this Agreement shall be subject to all applicable
federal and state laws, rules and regulations and to such approvals by any regulatory or
governmental agency as may be required. The Committee, in its sole discretion, may postpone the
issuance or delivery of Option Shares as the Committee may consider appropriate and may require the
Participant to make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of
Option Shares in compliance with applicable laws, rules and regulations (in addition to those
representations required pursuant to Section 5).
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(f) Company Call Option. Any Common Stock purchased by the Participant through the
exercise of the Option (the “Option Shares”) shall be subject to the Company’s Call Option
as follows:
(i) Other than as set forth in the second sentence of Section 3(f)(vii), upon
and following the termination of the Participant’s employment with the Company for
any reason (or no reason), the Company shall have the right and option (the
“Call Option”), but not the obligation, to purchase from the Participant (or
his estate or permitted transferees) any or all of the Option Shares (whether
purchased pursuant to the exercise of the Option prior to, on or following such
termination of employment). The purchase price (the “Call Price”) of the
Option Shares subject to purchase under this provision (the “Called Shares”)
shall be (x) in the case of (A) a termination of the Participant’s employment by the
Company for Cause or (B) the termination of the Participant’s employment for any
reason (other than the Participant’s death) within one year following the Date of
Grant, the lower of the purchase price of such Called Shares or the Fair Market
Value of such Called Shares on the date of the applicable “Call Notice” (as defined
below) and (y) in the case of any other termination of employment, the Fair Market
Value of such Called Shares on the date of the applicable Call Notice.
(ii) The Company may exercise the Call Option by delivering or mailing to the
Participant (or to his estate, if applicable), in accordance with Section 6(a) of
this Agreement, written notice of exercise (a “Call Notice”). The Call
Notice shall specify the date thereof, the number of Called Shares and the Call
Price.
(iii) Within ten (10) days after his receipt of the Call Notice, the
Participant (or his estate) shall tender to the Company, at its principal office the
certificate or certificates representing the Called Shares, duly endorsed in blank
by the Participant (or his estate) or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such shares to the Company. Upon
its receipt of such shares, the Company shall pay to the Participant the aggregate
Call Price therefor, in cash.
(iv) The Company will be entitled to receive customary representations and
warranties from the Participant regarding the sale of the Called Shares pursuant to
the exercise of the Call Option as may reasonably requested by the Company,
including but not limited to the representation that the Participant has good and
marketable title to the Called Shares to be transferred free and clear of all liens,
claims and other encumbrances.
(v) If the Company delivers a Call Notice, then from and after the time of
delivery of the Call Notice, the Participant shall no longer have any
rights as a holder of the Called Shares subject thereto (other than the right
to receive payment of the Call Price as described above), and such Called Shares
shall be deemed purchased in accordance with the applicable provisions hereof
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and the Company shall be deemed to be the owner and holder of such Called Shares.
(vi) Any Option Shares as to which the Call Option is not exercised will remain
subject to all terms and conditions of this Agreement, including the continuation of
the Company’s right to exercise the Call Option.
(vii) This Section 3(f) is in addition to, and not in lieu of, any rights and
obligations of the Participant and the Company in respect of the Option Shares
contained in the Stockholders Agreement. Notwithstanding the above, this Section
3(f) shall be ineffective as to each Option Share on and following an Initial
Offering or any other event which causes the Common Stock, or other securities for
which all or substantially all of the Common Stock may have been exchanged, to be or
become listed for trading on or over an established securities market or established
trading system.
(viii) Notwithstanding anything in the Plan to the contrary, solely for
purposes of this Section 3(f), the term “Fair Market Value” shall have the meaning
that such term is given in the Stockholders Agreement.
(g) Drag-Along Right. The Option shall be subject to the drag along rights of the
“Drag-Along Rightholders” (as that term is defined in the Stockholders Agreement) to the same
extent as if the Option were “Common Stock Equivalents” (as that term is defined in the
Stockholders Agreement).
(h) Transferability. The Option shall not be transferable by the Participant other
than by will or the laws of descent and distribution.
(i) Rights as Stockholder. The Participant shall not be deemed for any purpose to be
the owner of any shares of Common Stock subject to this Option unless, until and to the extent that
(i) this Option shall have been exercised pursuant to its terms, (ii) the Participant shall have
executed the Stockholders Agreement, (iii) the Company shall have issued and delivered to the
Participant the Option Shares, and (iv) the Participant’s name shall have been entered as a
stockholder of record with respect to such Option Shares on the books of the Company.
(j) Tax Withholding. Prior to the delivery of a certificate or certificates
representing the Option Shares, the Participant must pay in the form of a certified check to the
Company any such additional amount as the Company determines that it is required to withhold under
applicable federal, state or local tax laws in respect of the exercise or the transfer of Option
Shares; provided that the Committee may, in its sole discretion, allow such withholding obligation
to be satisfied by any other method described in Section 11(d) of the Plan.
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4. Restrictive Legend. Unless otherwise determined by the Company, all certificates representing Stock shall have
affixed thereto a legend in substantially the following form, in addition to any other legends that
may be required under federal or state securities laws:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND AN OPTION TO PURCHASE SET FORTH IN THE SOI HOLDINGS, INC. 2005 STOCK
OPTION PLAN, A CERTAIN STOCK OPTION AGREEMENT BETWEEN SOI HOLDINGS, INC. AND THE
REGISTERED OWNER OF THIS CERTIFICATE (OR HIS PREDECESSOR IN INTEREST) AND A
STOCKHOLDERS AGREEMENT TO WHICH SOI HOLDINGS, INC. AND THE REGISTERED OWNER OF THIS
CERTIFICATE (OR HIS PREDECESSOR IN INTEREST) ARE PARTIES, WHICH AGREEMENTS ARE
BINDING UPON ANY AND ALL OWNERS OF ANY INTEREST IN SAID SHARES. SAID PLAN AND
AGREEMENTS ARE AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE PRINCIPAL OFFICE OF
SOI HOLDINGS, INC. AND COPIES THEREOF WILL BE FURNISHED WITHOUT CHARGE TO ANY OWNER
OF SAID SHARES UPON REQUEST.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR
RESALE, AND MAY NOT BE SOLD, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER
THE SECURITIES ACT OF 1933, AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS SOI
HOLDINGS, INC. HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY TO
IT, TO THE EFFECT THAT SUCH REGISTRATIONS ARE NOT REQUIRED.
5. Securities Laws. As a condition to the exercise of the Option, unless otherwise determined by the Company,
the Participant will be required to represent, warrant and covenant as follows:
(a) The Participant is acquiring the Option Shares for his own account and not
with a view to, or for sale in connection with, any distribution of the Option
Shares in violation of the Securities Act of 1933, as amended, or any rule or
regulation under the Securities Act or in violation of any applicable state
securities law.
(b) The Participant has had such opportunity as he has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit him to evaluate the merits and risks of his investment in the Company.
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(c) The Participant has sufficient experience in business, financial and
investment matters to be able to evaluate the risks involved in acquiring the Option
Shares and to make an informed investment decision with respect to such investment.
(d) The Participant can afford the complete loss of the value of the Option
Shares and is able to bear the economic risk of holding such Option Shares for an
indefinite period.
(e) The Participant understands that (i) the Option Shares have not been
registered under the Securities Act and constitute “restricted securities” within
the meaning of Rule 144 under the Securities Act; (ii) the Option Shares cannot be
sold, transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available; and
(iii) there is now no registration statement on file with the Securities and
Exchange Commission with respect to the Option Shares and there is no commitment on
the part of the Company to make any such filing.
(f) In addition, upon the exercise of any Option, and as a condition thereof,
Participant will make or enter into such other written representations, warranties
and agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement.
6. Miscellaneous.
(a) Notices. All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified first-class mail, return
receipt requested, telecopier, courier service or personal delivery:
if to the Company:
SOI Holdings, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
if to the Participant, to the last known address of the Participant on file with the Company.
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All such notices, demands and other communications shall be deemed to have been duly given
when delivered by hand, if personally delivered; when delivered by courier, if delivered by
commercial courier service; five (5) business days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged, if telecopied.
(b) Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to the extent
permitted by law.
(c) No Rights to Employment. Nothing contained in this Agreement shall be construed
as giving the Participant any right to be retained, in any position, as an employee, consultant or
director of the Company or its Affiliates or shall interfere with or restrict in any way the right
of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or
discharge the Participant at any time for any reason whatsoever.
(d) Bound by Plan. By signing this Agreement, the Participant acknowledges that he
has received a copy of the Plan and has had an opportunity to review the Plan and agrees to be
bound by all the terms and provisions of the Plan.
(e) Beneficiary. The Participant may file with the Committee a written designation of
a beneficiary on such form as may be prescribed by the Committee and may, from time to time, amend
or revoke such designation. If no designated beneficiary survives the Participant, the executor or
administrator of the Participant’s estate shall be deemed to be the Participant’s beneficiary.
(f) Successors. The terms of this Agreement shall be binding upon and inure to the
benefit of the Company and its successors and assigns, and of the Participant and the
beneficiaries, executors, administrators, heirs and successors of the Participant.
(g) Entire Agreement. This Agreement and the Plan contain the entire agreement and
understanding of the parties hereto with respect to the subject matter contained herein and
supersede all prior communications, representations and negotiations in respect thereto. No
change, modification or waiver of any provision of this Agreement shall be valid unless the same be
in writing and signed by the parties hereto.
(h) Governing Law. This Agreement shall be construed and interpreted in accordance
with the laws of the State of New York without regard to principles of conflicts of law thereof, or
principals of conflicts of laws of any other jurisdiction which could cause the application of the
laws of any jurisdiction other than the State of New York.
(i) Headings. The headings of the Sections hereof are provided for convenience only
and are not to serve as a basis for interpretation or construction, and shall not constitute a
part, of this Agreement.
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(j) Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
[Remainder of page intentionally left blank; signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first
written above.
| SOI HOLDINGS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
[Signature Page to Nonqualified Common Stock Option Agreement]
Exhibit A
NOTICE OF OPTION EXERCISE
PURSUANT TO THE SOI HOLDINGS, INC. 2005 STOCK OPTION PLAN
To exercise your option to purchase shares of SOI Holdings, Inc. (the “Company”) Common
Stock (“Shares”), please fill out this form and return it to the Corporate Secretary of the
Company, together with either a certified check in the amount of the exercise price due, which is
the product of the number of Shares with respect to which you are exercising the Option and the per
share exercise price of $[], or shares of Common Stock with a fair market value (as confirmed by
the Company) equal to the exercise price due. You are not required to exercise your option with
respect to all Shares thereunder. You also must include, as applicable, either a certified check
in the amount of any required payroll taxes and income tax withholding due in connection with your
exercise or shares of Common Stock with a fair market value (as confirmed by the Company) equal to
the amount of any required payroll taxes and income tax withholding due in connection with your
exercise, unless the Committee administering the SOI Holdings, Inc. 2005 Stock Option Plan
specifically provides for such obligation to be satisfied in a different manner.
I hereby exercise my right to purchase ___Shares under the option granted to me pursuant to the
Nonqualified Common Stock Option Agreement between myself and the Company, dated as of August 3,
2005. I am vested in my option as to the Shares being purchased hereunder. I have enclosed either
(a) one or more certified checks covering both the exercise price of $___and the required
payroll taxes and income tax withholding of $___(if applicable) or (b) shares of Common Stock
with a fair market value (as confirmed by the Company) equal to both the exercise price of $___
and the required payroll taxes and income tax withholding of $___(if applicable). (Please
contact the office of the Chief Executive Officer of the Company to determine the amount of any
required payroll taxes and income tax withholding.) I hereby represent that, to the best of my
knowledge and belief, I am legally entitled to exercise this option. I hereby represent and
warrant that I have signed and agreed to be bound by the Stockholders Agreement by and among the
Company, Trumpet Investors L.P., a Delaware limited partnership, Trumpet SBIC Partners, L.P., a
Delaware Limited partnership, Regions
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Bank, a bank chartered under the laws of the State of Alabama and the stockholders who are party
thereto, as described in the Nonqualified Common Stock Option Agreement.
Signature:
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Printed Name:
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Social Security Number:
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Date:
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Schedule A
EBITDA TARGETS
| Cumulative | ||||||||
| Calendar Year Ending | EBITDA Target | EBITDA Target | ||||||
December 31, 2005 |
$ | 14,597,000 | N/A | |||||
December 31, 2006 |
$ | 15,327,000 | N/A | |||||
December 31, 2007 |
$ | 16,093,000 | $ | 46,017,000 | ||||