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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-11781
DAYTON SUPERIOR CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-0676346
(State of incorporation) (I.R.S. Employer Identification No.)
7777 Washington Village Dr.
Suite 130
Dayton, Ohio 45459
(Address of principal executive office)
Registrant's telephone number, including area code: (937) 428-6360
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Class A Common Shares, without par value New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of the close of business on March 20, 2000, the aggregate market value of
voting shares held by non-affiliates of the registrant (determined by
multiplying the highest selling price of a Class A Common Share on the New York
Stock Exchange on such date by the total number of Class A Common Shares
outstanding not beneficially owned by directors or officers of the registrant)
was $135,453,297.
Number of Class A Common Shares, outstanding on March 20, 2000 5,946,233
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PART I
In this Annual Report on Form 10-K, unless otherwise noted, the terms "Dayton
Superior," "we," "us" and "our" refer to Dayton Superior Corporation and its
subsidiaries.
ITEM 1. BUSINESS.
GENERAL
We believe that Dayton Superior Corporation is the largest North
American manufacturer and distributor of metal accessories and forms used in
concrete construction and of metal accessories used in masonry construction. In
many of our product lines, we believe we are the market leader and lowest cost
manufacturer competing primarily with smaller, regional suppliers with more
limited product offerings. Our products are used primarily in two segments of
the construction industry: infrastructure construction, such as highways,
bridges, utilities, water and waste treatment facilities and airport runways,
and non-residential buildings, such as schools, stadiums, prisons, retail sites,
commercial offices and manufacturing facilities.
Our revenue is comprised of a profitable mix of sales of consumable
products and the sale and rental of engineered equipment. We believe that the
breadth of our product offering and national distribution network allow us to
maintain a large customer base that prefers a "one-stop" supplier. We
manufacture the substantial majority of our 18,000 products, which we sell under
a number of well-established brand names. Our national distribution system,
which we believe is the largest in our industry, allows us to efficiently
cross-sell and distribute newly developed and acquired product lines on a
nationwide basis. Through our network of 62 service/distribution centers, we
serve over 6,000 customers, comprised of independent distributors, and a broad
array of precast concrete manufacturers, general contractors, subcontractors and
metal fabricators. This nationwide customer base provides us with a
geographically diversified sales mix and reduces our dependence on the economic
cycles of any one region.
On January 19, 2000, we entered into an agreement and plan of merger
with Stone Acquisition Corp., an affiliate of Odyssey Investment Partners, LLC,
the manager of a New York based private equity investment fund, for $27.00 per
share in cash, for a total transaction value (debt and equity) of approximately
$315 million. Holders of the Company-obligated mandatorily redeemable
convertible trust preferred securities will have the right to receive cash in
the amount of $22.00, plus accrued dividends, per preferred security upon
consummation of the merger. The recapitalization merger is conditioned on
shareholder approval, receipt of financing, government regulatory approvals and
other customary conditions. The closing is currently anticipated to occur in the
second quarter of 2000.
We currently have four principal business units, which are organized
around the following product lines:
Concrete Accessories (Dayton/Richmond(R)). We believe we are the leading
North American manufacturer of concrete accessories which are used in connecting
forms for poured-in-place concrete walls, anchoring or bracing for walls and
floors, supporting bridge framework and positioning steel reinforcing bars. For
the fiscal year ended December 31, 1999, our concrete
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accessories business unit had net sales to external customers of $139.8 million,
or 43%, of our total net sales.
Concrete Forming Systems (Symons(R)). We believe we are the leading
North American manufacturer of concrete forming systems which are comprised of
reusable, engineered forms and related accessories used in the construction of
concrete walls, columns and bridge supports to hold liquid concrete in place
while it hardens. For the fiscal year ended December 31, 1999, our concrete
forming systems business unit had net sales to external customers of $117.6
million, or 37%, of our total net sales.
Paving Products (American Highway Technology(R)). We believe we are the
leading North American manufacturer of welded dowel assemblies and dowel
baskets, which are paving products used in the construction and rehabilitation
of roads, highways and airport runways to extend the life of the pavement. These
consumable products are used to transfer dynamic loads between adjacent slabs of
concrete roadway. For the fiscal year ended December 31, 1999, our paving
products business unit had net sales to external customers of $36.5 million, or
11%, of our total net sales.
Masonry Products (Dur-O-Wal(R)). We believe we are the leading North
American manufacturer of masonry products that are placed between layers of
brick and concrete blocks and covered with mortar to provide additional strength
to walls. Masonry products also include engineered products used to repair or
restore brick and stone buildings. For the fiscal year ended December 31, 1999,
our masonry products business unit had net sales of $28.3 million, or 9%, of our
total net sales.
PRODUCTS
Although almost all of our products are used in concrete or masonry
construction, the function and nature of the products differ widely. Most of our
products are consumable, providing us with a source of recurring revenue. In
addition, while our products represent a relatively small portion of a
construction project's total cost, our products assist in ensuring the on-time,
quality completion of those projects. We continually attempt to increase the
number of products we offer by using engineers and product development teams to
introduce new products and refine existing products.
CONCRETE ACCESSORIES. Our concrete accessories business unit
manufactures and sells concrete accessories primarily under the
Dayton/Richmond(R) brand name. Net sales of our concrete accessories business
unit to external customers accounted for $139.8 million, or 43%, of our total
1999 net sales.
Concrete accessories include:
- WALL-FORMING PRODUCTS. Wall-forming products include shaped metal
ties and accessories that are used with modular forms to hold
concrete in place when walls are poured at a construction site or
are prefabricated off site. These products, which generally are
not reusable, are made of wire or plastic
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or a combination of both materials. We generally manufacture these
products on customized high-speed automatic equipment.
- BRIDGE DECK PRODUCTS. Bridge deck products are metal assemblies of
varying designs used to support the formwork used by contractors
in the construction and rehabilitation of bridges.
- BAR SUPPORTS. Bar supports are non-structural metal or plastic
supports used to position rebar within a horizontal slab or form
to be filled with concrete. Bar supports are often plastic or
epoxy coated, galvanized or equipped with plastic tips to prevent
creating a conduit for corrosion of the embedded rebar.
- PRECAST AND PRESTRESSED CONCRETE CONSTRUCTION PRODUCTS. Precast
and prestressed concrete construction products are metal
assemblies of varying designs used in the manufacture of precast
concrete panels and prestressed concrete beams and structural
members. Precast concrete panels and prestressed concrete beams
are fabricated away from the construction site and transported to
the site. Precast concrete panels are used in the construction of
prisons, freeway sound barrier walls, external building facades
and other similar applications. Prestressed concrete beams use
multiple strands of steel under tension embedded in concrete beams
to provide rigidity and bearing strength, and often are used in
the construction of bridges, parking garages and other
applications where long, unsupported spans are required.
- TILT-UP CONSTRUCTION PRODUCTS. Tilt-up construction products
include a complete line of inserts, lifting hardware and
adjustable beams used in the tilt-up method of construction, in
which the concrete floor slab is used as part of a form for
casting the walls of a building. After the cast walls have
hardened on the floor slab, a crane is used to "tilt-up" the
walls, which then are braced in place until they are secured to
the rest of the structure. Tilt-up construction generally is
considered to be a faster method of constructing low-rise
buildings than conventional poured-in-place concrete construction.
Some of our tilt-up construction products can be rented as well as
sold.
- FORMLINER PRODUCTS. Formliner products include plastic and
elastomeric products that adhere to the inside face of forms to
provide shape to the surface of the concrete.
- CHEMICAL PRODUCTS. Chemical products sold by our concrete
accessories business unit include a broad spectrum of chemicals
for use in concrete construction, including form release agents,
bond breakers, curing compounds, liquid hardeners, sealers, water
repellents, bonding agents, grouts and epoxies, and other
chemicals used in the pouring and placement of concrete.
CONCRETE FORMING SYSTEMS. Our concrete forming systems business unit
manufactures, sells and rents reusable modular concrete forming systems
primarily under the Symons(R) name. These products include standard and
specialty concrete forming systems, shoring systems and accessory products. To
capitalize on the durability and relatively high
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unit cost of prefabricated forming equipment, we also rent forming products. Net
sales of our concrete forming systems business unit to external customers
accounted for $117.6 million, or 37%, of our total 1999 net sales.
Our concrete forming system products include:
- CONCRETE FORMING SYSTEMS. Concrete forming systems are reusable,
engineered modular forms which hold liquid concrete in place on
concrete construction jobs while it cures. Standard forming
systems are made of steel and plywood and are used in the creation
of concrete walls and columns. Specialty forming systems consist
primarily of steel forms that are designed to meet architects'
specific needs for concrete placements. Both standard and
specialty forming systems and related accessories are sold and
rented for use.
- SHORING SYSTEMS. Shoring systems, including aluminum beams and
joists, post shores and shoring frames used to support deck and
other raised forms while concrete is being poured.
- CONSTRUCTION CHEMICALS. Construction chemicals sold by the
concrete forming systems business unit include form release
agents, sealers, water repellents, grouts and epoxies and other
chemicals used in the pouring, stamping and placement of concrete.
PAVING PRODUCTS. Our paving products business unit sells products,
primarily consisting of welded dowel assemblies and dowel baskets, used in the
construction and rehabilitation of roads, highways and airport runways to extend
the life of the pavement. This business unit sells paving products primarily
under the American Highway Technology(R) name, but we also offer some paving
products under the Dayton/Richmond(R) name. We manufacture welded dowel
assemblies primarily using automated and semi-automated equipment. Net sales of
paving products accounted for $36.5 million, or 11%, of our total 1999 net
sales.
Paving products include:
- WELDED DOWEL ASSEMBLIES AND DOWEL BASKETS. Welded dowel assemblies
and dowel baskets are used to transfer dynamic loads between two
adjacent slabs of concrete roadway. Metal dowels are part of a
dowel basket design that is imbedded in two adjacent slabs to
transfer the weight of vehicles as they move over a road.
- CORROSIVE-PREVENTING EPOXY COATINGS. Corrosive-preventing epoxy
coatings are used for infrastructure construction products and a
wide range of industrial and construction uses.
- CONSTRUCTION CHEMICALS. Construction chemicals sold by our paving
products business unit include curing compounds used in concrete
road construction.
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MASONRY PRODUCTS. Our masonry products business unit manufactures and
sells masonry products under the Dur-O-Wal(R) name. Our masonry product line
consists primarily of masonry wall reinforcement products, masonry anchors,
engineered products and other accessories used in masonry construction and
restoration to reinforce brick and concrete walls, anchor inner to outer walls
and provide avenues for water to escape. Net sales of masonry products accounted
for $28.3 million, or 9%, of our total 1999 net sales.
Masonry products are wire products that improve the performance and
longevity of masonry walls by providing crack control, greater elasticity and
higher strength to withstand seismic shocks and better resistance to rain
penetration.
We have the in-house ability to produce hot-dipped zinc galvanized
finishes on masonry wall reinforcement products. Hot-dipped galvanized finishes
are considered to provide superior protection against corrosion compared to
alternative finishes. In recent years, model building codes in a number of
regions of the country in which masonry construction is used have been amended
to require use of hot-dipped galvanized masonry wall reinforcement products.
We also sell other masonry products which connect one form of masonry
to another or masonry to a building structure. Masonry products are used in the
restoration of existing masonry construction, for seismic retrofitting of
existing brick veneer surfaces to strengthen the surfaces against earthquake
damage and for moisture control applications.
MANUFACTURING
We manufacture the substantial majority of the products we sell. Most
of our concrete accessories, paving products and masonry products are
manufactured at eighteen principal facilities in the United States, although
some of our service/distribution facilities also can produce smaller lots of
some products. Our production volumes enable us to design and build or custom
modify much of the equipment we use to manufacture these products, using a team
of experienced manufacturing engineers and tool and die makers.
By developing our own automatic high-speed manufacturing equipment, we
believe we generally have achieved significantly greater productivity, lower
capital equipment costs, lower scrap rates, higher product quality, faster
changeover times, and lower inventory levels than most of our competitors. In
addition, our masonry products business unit's ability to "hot-dip" galvanize
products provides it with an advantage over many competitors' manufacturing
masonry wall reinforcement products, which lack this internal capability. We
also have a flexible manufacturing setup and can make the same products at
several locations using short and discrete manufacturing lines.
We manufacture our concrete forming systems at two facilities in the
United States. These facilities incorporate semi-automated and automated
production lines, heavy metal presses, forging equipment, stamping equipment,
robotic welding machines, drills, punches, and other heavy machinery typical for
this type of manufacturing operation.
We generally operate our manufacturing facilities two shifts per day,
five days per week (six days per week during peak months and, in some instances,
three shifts), with the
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number of employees increasing or decreasing as necessary to satisfy demand on a
seasonal basis.
DISTRIBUTION
We distribute our products through over 3,000 independent distributors,
and our own network of 62 service/distribution centers located in the United
States and Canada. Eighteen of the service/distribution centers are associated
with our manufacturing plants. Of these 62 locations, 24 are dedicated
principally to the distribution of concrete accessories, 30 are dedicated
principally to the distribution of forming systems, 3 are dedicated primarily to
the distribution of paving products, 5 are dedicated principally to the
distribution of masonry products and some locations carry more than one of our
product lines. We ship most of our products to our service/distribution centers
from our manufacturing plants; however, a majority of our centers also are able
to produce smaller batches of some products on an as-needed basis to fill rush
orders.
We have an on-line inventory tracking system for the concrete
accessories, paving products and construction chemicals businesses, which
enables our customer service representatives to identify, reserve and ship
inventory quickly from any of our locations in response to telephone orders.
Our system provides us with a competitive advantage since our service
representatives are able to answer customer questions about availability and
shipping dates while still on the telephone. We primarily use third-party common
carriers to ship our products.
We also use our distribution system to sell products which are
manufactured by others. These products usually are sold under our brand names
and often are produced for us on an exclusive basis. Sales of these products
allow us to utilize our distribution network to increase sales without making
significant capital investments. We believe there is an increasing trend among
our distributors to consolidate into larger entities, which could result in
increased price competition.
SALES AND MARKETING
We employ approximately 400 sales and marketing personnel, of whom
approximately one-half are field sales people and one-half are customer service
representatives. Sales and marketing personnel are located in all of our
locations. We produce product catalogs and promotional materials that illustrate
certain construction techniques in which our products can be used to solve
typical construction problems. We promote our products through seminars and
other customer education efforts and work directly with architects and engineers
to secure the use of our products whenever possible.
We consider our engineers to be an integral part of the sales and
marketing effort. Our engineers have developed proprietary software applications
to conduct extensive pre-testing on both new products and construction projects.
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CUSTOMERS
We have over 6,000 customers, over 50% of which purchase our products
for resale. Our customer base is geographically diverse, with no customer
accounting for more than 4% of net sales in 1999. Our ten largest customers
accounted for less than 15% of our net sales in 1999. Customers who purchase our
products for resale generally do not sell our products exclusively.
CONCRETE ACCESSORIES. Our concrete accessories business unit has
approximately 1,800 customers, consisting of distributors, rebar fabricators and
precast and prestressed concrete manufacturers. We estimate that approximately
80% of the customers of this business unit purchase our products for resale. The
largest customer of the business unit accounted for approximately 3% of the
business unit's 1999 net sales. The business unit's top ten customers accounted
for approximately 20% of its 1999 net sales.
Our concrete accessories business unit has instituted a certified
dealer program for those dealers who handle our tilt-up construction products.
This program was established to educate dealers in the proper use of our tilt-up
products and to assist them in providing engineering assistance to their
customers. Certified dealers are not permitted to carry other manufacturers'
tilt-up products, which we believe are incompatible with ours and, for that
reason, could be unsafe if used with our products. The business unit currently
has 109 certified tilt-up construction product dealers.
CONCRETE FORMING SYSTEMS. Our concrete forming systems business unit
has approximately 3,000 customers, consisting of distributors, precast and
prestressed concrete manufacturers, general contractors and subcontractors. We
estimate that approximately 90% of the customers of this business unit are the
end-users of its products, while approximately 10% of those customers purchase
its products for resale or re-rent. This business unit's largest customer
accounted for approximately 6% of the business unit's 1999 net sales and its ten
largest customers accounted for approximately 25% of its 1999 net sales.
PAVING PRODUCTS. Our paving products business unit has approximately
200 customers, consisting primarily of distributors of construction supplies
and, to a lesser extent, general contractors and subcontractors. This business
unit's largest customer accounted for approximately 16% of the business unit's
1999 net sales and its ten largest customers accounted for approximately 70% of
its 1999 net sales.
MASONRY PRODUCTS. Our masonry products business unit has approximately
1,750 customers consisting of distributors, brick and concrete block
manufacturers, general contractors and sub-contractors. We estimate that
approximately 90% of the business unit's customers purchase its products for
resale. This business unit's largest customer accounted for approximately 4% of
its 1999 net sales and its ten largest customers accounted for approximately 20%
of its 1999 net sales.
RAW MATERIALS
Our principal raw materials are steel wire rod, steel hot rolled bar,
metal stampings and flat steel, aluminum sheets and extrusions, plywood, cement
and cementitious
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ingredients, liquid chemicals, zinc and injection-molded plastic parts. Steel,
in its various forms, constitutes approximately 30-35% of our cost of sales. We
currently purchase materials from over 300 vendors and are not dependent on any
single vendor or small group of vendors for any significant portion of our raw
material purchases.
COMPETITION
Our industry is highly competitive in most product categories and
geographic regions. We compete with a relatively small number of full-line
national manufacturers of concrete accessories, concrete forming systems,
masonry products and paving products, and a much larger number of regional
manufacturers and manufacturers with limited product lines. We believe
competition in our industry is largely based on, among other things, price,
quality, breadth of product lines, distribution capabilities (including quick
delivery times) and customer service. Due primarily to factors such as freight
rates, quick delivery times and customer preference for local suppliers, some
local or regional manufacturers and suppliers may have a competitive advantage
over us in a given region. We believe the size, breadth and quality of our
product lines provide us with advantages of scale in both distribution and
production relative to our competitors.
TRADEMARKS AND PATENTS
We sell most products under the registered trade names Dayton
Superior(R), Dayton/Richmond(R), Symons(R), Dur-O-Wal(R) and American Highway
Technology(R), which we believe are widely recognized in the construction
industry and, therefore, are important to our business. Although some of our
products (and components of some products) are protected by patents, we do not
believe these patents are material to our business. We have approximately 120
trademarks and 90 patents.
EMPLOYEES
As of December 31, 1999, we employed approximately 800 salaried and
1,450 hourly personnel, of whom approximately 1,000 of the hourly personnel and
six of the salaried personnel are represented by labor unions. Employees at our
Miamisburg, Ohio; Parsons, Kansas; Des Plaines, Illinois; New Braunfels, Texas;
Tremont, Pennsylvania; St. Joseph, Missouri; Aurora, Illinois and Kankakee,
Illinois manufacturing/distribution plants and our service/distribution centers
in Baltimore, Maryland; Atlanta, Georgia and Santa Fe Springs, California are
covered by collective bargaining agreements. We believe we have good employee
and labor relations.
SEASONALITY
Our operations are seasonal in nature, with approximately 60% of our
sales historically occurring in the second and third quarters. Working capital
and borrowings fluctuate with sales volume. Historically, more than 50% of our
cash flow from operations is generated in the fourth quarter.
BACKLOG
We typically ship most of our products, other than paving products and
some specialty forming systems, within one week and often within 24 hours after
we receive the
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order. Other product lines, including paving products and specialty forming
systems, may be shipped up to six months after we receive the order, depending
on our customer's needs. Accordingly, we do not maintain significant backlog,
and backlog as of any particular date is not representative of our actual sales
for any succeeding period.
ITEM 2. PROPERTIES.
Our corporate headquarters are located in leased facilities in Dayton,
Ohio. We believe our facilities provide adequate manufacturing and distribution
capacity for our needs. We also believe all of the leases were entered into on
market terms. Our other principal facilities are located throughout North
America, as follows:
<TABLE>
<CAPTION>
Leased/ Size
Location Use Principal Business Unit Owned (Sq. Ft.)
- --------------------------- ---------------------------------- ---------------------------- --------- ---------
<S> <C> <C> <C> <C>
Des Plaines, Illinois Manufacturing/Distribution
and Symons Headquarters Concrete Forming Systems Owned 171,650
Miamisburg, Ohio Manufacturing/Distribution and
Dayton/Richmond Headquarters Concrete Accessories Owned 126,000
Aurora, Illinois Manufacturing/Distribution and
Dur-O-Wal Headquarters Masonry Products Owned 109,000
Kankakee, Illinois Manufacturing/Distribution and
American Highway Technology
Headquarters Paving Products Leased 107,900
Tremont, Pennsylvania Manufacturing/Distribution Concrete Accessories Owned 102,650
Parsons, Kansas Manufacturing/Distribution Paving Products Owned 98,250
New Braunfels, Texas Manufacturing/Distribution Concrete Forming Systems Owned 89,600
Atlanta, Georgia Service/Distribution Concrete Accessories Leased 74,090
Parker, Arizona Manufacturing/Distribution Concrete Accessories Leased 60,000
Birmingham, Alabama Manufacturing/Distribution Concrete Accessories Leased 55,000
Centralia, Illinois Manufacturing/Distribution Concrete Accessories Owned 53,500
St. Joseph, Missouri Manufacturing/Distribution Concrete Accessories Owned 53,342
Grand Prairie, Texas Service/Distribution Concrete Accessories Leased 45,000
Seattle, Washington Service/Distribution Concrete Accessories Leased 42,825
Santa Fe Springs,
California Service/Distribution Concrete Accessories Leased 40,000
Toronto, Ontario Service/Distribution Concrete Accessories Leased 40,000
Oregon, Illinois Manufacturing/Distribution Concrete Accessories Owned 39,000
Helena, Alabama Manufacturing/Distribution Paving Products Leased 32,000
Folcroft, Pennsylvania Service/Distribution Concrete Accessories Owned 32,000
Baltimore, Maryland Service/Distribution Masonry Products Owned 30,000
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
Our Symons business unit currently is a defendant involved in a civil
suit brought by EFCO Corp., a competitor of Symons in one portion of its
business, in 1996 in the United States District Court for the Southern District
of Iowa (Case No. 4-96-CV-80552). EFCO Corp. alleged that Symons engaged in
false advertising, misappropriation of trade secrets, intentional interference
with contractual relations, and certain other activities. After a jury trial,
preliminary damages of approximately $14 million were awarded against Symons in
January 1999. In a ruling on post-trial motions in April 1999, the district
court judge dismissed EFCO's claim of intentional interference with contractual
relations but increased the damages awarded to EFCO by $100,000. Briefs were
filed and oral argument heard before
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the United States Court of Appeals for the Eighth Circuit on March 13, 2000. We
are awaiting the decision of the Court.
We believe Symons has grounds for a successful appeal and we remain
committed to vigorously pursuing our appellate rights. A successful appeal could
overturn the judgment against Symons or result in a new trial. Symons'
liability, if any, cannot finally be determined until all rights of the parties
have been exhausted or have expired by lapse of time. We consider the outcome of
this litigation to be not estimable and, accordingly, we have not recorded any
liability for the resolution of this suit. In the event Symons is unsuccessful
in its appeal, we could be required to pay the full amount of the judgment plus
interest or a potentially higher amount. An unsuccessful appeal could have a
material adverse effect on us.
Our 1997 purchase agreement to acquire Symons provided for a
post-closing purchase price adjustment. We are currently in a dispute with the
former stockholders of Symons regarding this purchase price adjustment. The
dispute includes a lawsuit brought by the former stockholders in Delaware and an
arbitration proceeding which began in July 1999. We have demanded a number of
adjustments that would reduce the purchase price, while the former stockholders
have demanded adjustments that would increase the purchase price by
approximately $5 million if all of their adjustments were made and none of our
adjustments were made. We are unable to determine the final amount of the
adjustment, if any, that will be made to the purchase price. A final decision by
the arbiter is pending. If the former stockholders of Symons prevail in this
dispute, we may be required to make an additional purchase price payment to
them. We would expect to record any such payment as additional goodwill with
respect to the acquisition. A significant payment would adversely affect our
financial condition and results of operations and could reduce our liquidity and
the funds available to us to implement our business strategy.
We and all of our directors and one officer are defendants in a
purported shareholder class action civil suit brought in January 2000 in the
Court of Common Pleas in Montgomery County, Ohio (Case No. 2000 CV 00415). The
plaintiff alleges that we and the other defendants have engaged in self dealing
and breached our fiduciary duties to shareholders with respect to the
recapitalization merger. We believe this suit is without merit and are committed
to vigorously defending ourselves and the other defendants. We have filed with
the court a motion to dismiss the complaint. In the event we are unsuccessful in
our defense, we could be materially and adversely affected.
During the ordinary course of our business, we are from time to time
threatened with, or may become a party to, legal actions and other proceedings.
While we are currently involved in certain other legal proceedings, management
believes the results of these proceedings will not have a material effect on our
results of operations, in part due to certain indemnification arrangements. We
believe that our potential exposure to such legal actions is adequately covered
by product and general liability insurance.
ENVIRONMENTAL MATTERS
Our businesses are subject to regulation under various and changing
federal, state and local laws and regulations relating to the environment and to
employee safety and health.
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These environmental laws and regulations govern the generation, storage,
transportation, disposal and emission of various substances. Permits are
required for operation of our businesses (particularly air emission permits),
and these permits are subject to renewal, modification and, in certain
circumstances, revocation. We believe we are in substantial compliance with
these laws and permitting requirements. Our businesses also are subject to
regulation under various and changing federal, state and local laws and
regulations which allow regulatory authorities to compel (or seek reimbursement
for) cleanup of environmental contamination at our own sites and at
facilities where our waste is or has been disposed.
We expect to incur ongoing capital and operating costs to maintain
compliance with currently applicable environmental laws and regulations;
however, we do not expect those costs, in the aggregate, to be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our common shares are traded on the New York Stock Exchange under the
symbol "DSD." The following table shows the high and low closing prices for our
common shares for the periods indicated.
HIGH LOW
------- -------
FISCAL YEAR 1998
First Quarter................ $20.375 $15.875
Second Quarter............... 22.125 16.500
Third Quarter................ 21.375 16.625
Fourth Quarter............... 20.875 14.375
FISCAL YEAR 1999
First Quarter................ $23.500 $17.313
Second Quarter............... 20.125 16.750
Third Quarter................ 20.750 16.500
Fourth Quarter............... 19.688 11.750
As of March 1, 2000, there were 67 holders of record of common shares,
as shown on our transfer agent's records.
The Company has paid no dividends on its Common Shares. The Company
currently intends to retain its future earnings, if any, to fund the development
and growth of its business and, therefore, does not anticipate declaring or
paying cash dividends on the common shares in the near term. The decision
whether to apply legally available funds to the payment of dividends on common
shares will be made by the Board of Directors of the
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Company from time to time in the exercise of its business judgment, taking into
account, among other things, the Company's results of operations and financial
condition, any then existing or proposed commitments for the use by the Company
of available funds and the Company's obligations with respect to any then
outstanding class or series of its preferred shares.
The Company is restricted by the terms of its credit agreements from
paying cash dividends on the Common Shares and may in the future enter into loan
or other agreements or issue debt securities or preferred shares that restrict
the payment of cash dividends on the Common Shares. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
13
<PAGE> 14
ITEM 6. SELECTED FINANCIAL DATA.
(All dollar amounts in thousands, except share data)
The earnings statement data and the balance sheet data presented
below have been derived from the Company's consolidated financial statements and
should be read in conjunction with Management's Discussion and Analysis of
Financial Condition and Results of Operations and the Consolidated Financial
Statements and Notes thereto, included elsewhere herein.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
EARNINGS STATEMENT DATA:
Net sales $ 92,802 $ 124,486 $ 167,412 $ 282,849 $ 322,170
Cost of sales 63,990 86,021 111,044 177,094 199,464
---------- ---------- ---------- ---------- ----------
Gross profit 28,812 38,465 56,368 105,755 122,706
Selling, general and
administrative expenses 18,698 23,637 36,761 73,721 81,800
Amortization of goodwill and
intangibles 1,491 1,749 1,885 2,213 2,369
---------- ---------- ---------- ---------- ----------
Income from operations 8,623 13,079 17,722 29,821 38,537
Interest expense, net 4,231 4,829 5,556 11,703 11,661
Other expense (income), net (3) 96 (64) (202) 230
Provision for income taxes (1) 690 3,538 5,277 8,244 11,991
---------- ---------- ---------- ---------- ----------
Income before extraordinary item 3,705 4,616 6,953 10,076 14,655
Extraordinary item, net of tax - (2,314)(2) - - -
---------- ---------- ---------- ---------- ----------
Net income $ 3,705 $ 2,302 $ 6,953 $ 10,076 $ 14,655
========== ========== ========== ========== ==========
Net income available to common
shareholders $ 71 $ 2,302 $ 6,953 $ 10,076 $ 14,335
========== ========== ========== ========== ==========
Basic income per share before
extraordinary item $ 0.02 $ 1.02 $ 1.22 $ 1.72 $ 2.41
Basic net income per share $ 0.02 $ 0.51 $ 1.22 $ 1.72 $ 2.41
Basic weighted average common
shares outstanding (3) 2,990,847 4,547,527 5,703,601 5,867,338 5,944,667
Diluted income (loss) per share
before extraordinary item $ 0.02 $ 0.94 $ 1.17 $ 1.65 $ 2.30
Diluted net income per share $ 0.02 $ 0.47 $ 1.17 $ 1.65 $ 2.30
Diluted weighted average
common and common share
equivalents outstanding (3) 3,558,908 4,925,464 5,933,244 6,098,205 6,376,935
<CAPTION>
As of December 31,
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET:
Total assets $ 103,860 $ 107,835 $ 226,930 $ 253,620 $ 278,679
Long-term debt (including current
portion) 53,012 34,769 120,236 118,205 105,173
Shareholders' equity 27,485 52,872 60,529 74,588 88,772
</TABLE>
(1) In 1995, the provision for income taxes was reduced to reflect the
utilization of net operating losses.
(2) During June 1996, the Company prepaid its $40,000 unsecured senior
promissory notes. In conjunction therewith, the Company paid a prepayment
premium of $2,400 and expensed unamortized financing costs and debt
discount of $795 and $538, respectively. The Company recorded an
extraordinary loss of $2,314, net of an income
14
<PAGE> 15
tax effect of $1,419. The Company funded this repayment with $23,041 in
proceeds from its public stock offering and $19,359 from its credit
facility.
(3) Basic net income per share is computed by dividing net income available to
common shareholders by the weighted average number of common shares
outstanding during the year. Diluted net income per share is computed by
dividing net income by the weighted average number of common and common
share equivalents outstanding during the year. Common share equivalents
include, if dilutive, the number of common shares issuable upon the
conversion of the Company-obligated mandatorily redeemable convertible
trust preferred securities. Common share equivalents also include the
number of shares issuable upon the exercise of outstanding options and
warrants, less the shares that could be purchased with the proceeds from
the exercise of the options and warrants, based on the Company's average
trading price for 1999, 1998, 1997, and 1996 and the initial public
offering price of $13.00 per share for 1995.
15
<PAGE> 16
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
We believe we are the largest North American manufacturer and
distributor of metal accessories and forms used in concrete construction and of
metal accessories used in masonry construction. Although almost all of our
products are used in concrete or masonry construction, the function and nature
of the products differ widely. We have four principal business units, which are
organized around the following product lines:
- Concrete Accessories (Dayton/Richmond(R));
- Concrete Forming Systems (Symons(R));
- Paving Products (American Highway Technology(R)); and
- Masonry Products (Dur-O-Wal(R)).
Through our business units, we design, manufacture and distribute metal
accessories and forms to independent distributors for resale to contractors,
brokers and other manufacturers. In some of our product lines, we also may sell
directly to end users and may provide equipment for rental. When our business
was started in 1924, it consisted primarily of the concrete accessories business
and operated primarily in the eastern United States. In 1982, we acquired
Superior Concrete Accessories, Inc., which expanded our geographic reach to
include the rest of the continental United States and doubled the size of our
company. In 1995, we acquired our masonry products business unit through the
acquisition of Dur-O-Wal, which we believe is the leading North American
manufacturer of masonry wall reinforcement products and other metal masonry
accessories. In 1996, we created a separate paving products business unit to
operate a business that was previously a part of our concrete accessories
business unit. In 1997, we again almost doubled our size when we acquired our
concrete forming systems business unit and added to our concrete accessories
business unit through the acquisition of Symons Corporation. With the addition
of Symons, we also approximately doubled the number of our distribution and
manufacturing locations. We believe that Symons is the leading North American
manufacturer of concrete forming systems. We also have expanded some of our
business units through additional smaller acquisitions.
In June 1998, The Transportation Equity Act for the 21st Century, known
as "TEA-21" was enacted. TEA-21 authorizes $218 billion in federal spending on
highway and infrastructure projects through the year 2003 and represents a 44%
increase over the 1991 Intermodal Surface Transportation Act, the previous
six-year federal program. At a minimum, $162 billion of the $218 billion has
been allocated to highway and bridge programs. Our paving products business unit
began to benefit from TEA-21 during the second half of 1999.
Unless otherwise indicated, the discussion of our results of operations
that follows includes information for Symons, Dur-O-Wal and the other
acquisitions only from the dates that we acquired each of those companies.
16
<PAGE> 17
CONCRETE ACCESSORIES (DAYTON/RICHMOND(R))
Our concrete accessories business unit derives its revenues from the
sale of products primarily to independent distributors. We also provide some
equipment on a rental basis. Our concrete accessories business unit manufactures
substantially all of the products it sells, which are shipped to customers based
on orders. We design and manufacture or customize most of the machines we use to
produce concrete accessories, and these proprietary designs allow for quick
changeover of machine set-ups. This flexibility, together with our extensive
distribution system, enable this business unit to deliver many of its products
within 24 hours of a customer order. Therefore, product inventories are
maintained at relatively low levels. Cost of sales for our concrete accessories
business unit consists primarily of purchased steel and other raw materials, as
well as the costs associated with manufacturing, assembly, testing, internal
shipping and associated overhead.
CONCRETE FORMING SYSTEMS (SYMONS(R))
Our concrete forming systems business unit derives its revenues from
the sale and rental of engineered, reusable modular systems and related
accessories to independent distributors and contractors. Sales of concrete
forming systems and specific consumables generally represent approximately
two-thirds of the revenues of this business unit, and rentals represent the
remaining one-third. Sales of concrete forming systems generally are more
sensitive to economic cycles than rentals. Rental equipment also can be sold as
used equipment. The business unit's products include systems with steel frames
and a plywood face, also known as Steel-Ply(R), and systems that use steel in
both the frame and face. All-steel forming systems are characterized by larger,
project-driven orders, which increases backlog relative to the Steel-Ply(R)
forms which are held in inventory for rental and sale. Our concrete forming
systems business unit manufactures and assembles Steel-Ply(R) forms and
outsources some of the manufacturing involved in all-steel forms. This
outsourcing strategy allows us to fulfill larger orders without increased
overhead. Cost of sales for our concrete forming systems business unit consists
primarily of purchased steel, specialty plywood, and other raw materials;
depreciation and maintenance of rental equipment, and the costs associated with
manufacturing, assembly and overhead.
PAVING PRODUCTS (AMERICAN HIGHWAY TECHNOLOGY(R))
Our paving products business unit derives its revenues from sales to
independent distributors and contractors. Orders from customers are affected by
state and local governmental infrastructure expenditures and their related bid
processes. This is our business unit most affected by the demand expected to be
generated as a consequence of TEA-21. Due to the project-oriented nature of
paving jobs, these products generally are made to order. This serves to keep
inventories low but increases the importance of backlog in this business unit.
Our paving products division manufactures nearly all of its products. Cost of
sales for our paving products business unit consists primarily of steel, as well
as the costs associated with manufacturing and overhead.
MASONRY PRODUCTS (DUR-O-WAL(R))
Our masonry products business unit derives its revenues from sales to
independent distributors and brick and concrete block manufacturers who package
our products with other products for resale to customers. Our masonry products
business unit sells two
17
<PAGE> 18
principal categories of products: new construction products and restoration and
repair products. New construction products are used to strengthen masonry walls
or the connection between masonry and other portions of the wall at the time a
building is constructed. Restoration and repair products are used to refurbish
masonry and brick buildings and strengthen connections between masonry and the
interior portions of the wall and are more engineered and generally generate
higher margins than new construction products. The masonry products business
unit manufactures and assembles the majority of its products before shipping to
customers based on orders. Cost of sales for the masonry products business unit
consists primarily of steel, as well as costs associated with manufacturing and
overhead.
ACQUISITIONS
We have completed 9 acquisitions since the beginning of 1997. These are
summarized in the following table:
<TABLE>
<CAPTION>
Purchase Price
Date Business Acquired Business Unit (in millions)
---- ----------------- ------------- -------------
<S> <C> <C> <C>
February 1997 Ironco Paving Products $1.5
September 1997 Baron Steel Concrete Accessories 0.3
September 1997 Symons Concrete Forming Systems 85.0*
Richmond Screw Anchor Concrete Accessories
May 1998 Symons Concrete Forms Concrete Forming Systems 6.7
May 1998 Northwoods Concrete Forming Systems 0.8
June 1998 Secure Paving Products 0.6
January 1999 Cempro Concrete Accessories 5.4
October 1999 Southern Construction Products Masonry Products and 8.3
Concrete Accessories
February 2000 Polytite Masonry Products 1.5
</TABLE>
* Subject to arbitration adjustment.
18
<PAGE> 19
RESULTS OF OPERATIONS
The following table summarizes the Company's results of operations as a
percentage of net sales for the periods indicated.
<TABLE>
<CAPTION>
1999 1998 1997
----- ----- -----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 61.9 62.6 66.3
----- ----- -----
Gross profit 38.1 37.4 33.7
Selling, general and administrative expenses 25.4 26.1 22.0
Amortization of goodwill and intangibles 0.7 0.8 1.1
----- ----- -----
Total selling, general and administrative expenses 26.1 26.9 23.1
----- ----- -----
Income from operations 12.0 10.5 10.6
Interest expense, net 3.6 4.1 3.3
Other expense (income), net 0.1 (0.1) --
----- ----- -----
Income before income taxes and extraordinary item 8.3 6.5 7.3
Provision for income taxes 3.8 2.9 3.1
----- ----- -----
Net income 4.5 3.6 4.2
Dividends on Company-obligated mandatorily
redeemable convertible trust preferred
securities, net of income tax benefit 0.1 -- --
----- ----- -----
Net income available to common shareholders 4.4% 3.6% 4.2%
===== ===== =====
</TABLE>
COMPARISON OF YEARS ENDED DECEMBER 31, 1999 AND 1998
Net Sales
Our 1999 net sales reached $322.2 million, a 13.9% increase from $282.8
million in 1998.
The following table summarizes our net sales by segment for the periods
indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1999 1998
---------------------- ----------------------
(IN THOUSANDS)
NET NET %
SALES % SALES % CHANGE
--------- ----- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Concrete accessories .... $ 144,722 44.9% $ 131,467 46.5% 10.1%
Concrete forming systems 122,720 38.1 104,711 37.0 17.2
Paving products ......... 36,695 11.4 30,967 10.9 18.5
Masonry products ........ 28,265 8.8 24,292 8.6 16.4
Intersegment eliminations (10,232) (3.2) (8,588) (3.0) 19.1
--------- ----- --------- ------
Net sales ...... $ 322,170 100.0% $ 282,849 100.0% 13.9%
========= ===== ========= ======
</TABLE>
19
<PAGE> 20
Net sales of concrete accessories increased by 10.1% to $144.7 million
in 1999 from $131.5 million in 1998, due primarily to increases in volume, new
product initiatives, and the contribution of the acquired Cempro business. Net
sales of concrete forming systems increased by 17.2% to $122.7 million in 1999
from $104.7 million in 1998 due to a full year's sales from the 1998
acquisitions of Symons Concrete Forms and Northwoods and the expansion and
introduction of new products, including exclusive distribution rights to two
European forming systems. Net sales of paving products increased by 18.5% to
$36.7 million in 1999 from $31.0 million in 1998 due to an increase in volume as
a result of TEA-21 and marketing initiatives. Net sales of masonry products
increased by 16.4% to $28.3 million in 1999 from $24.3 million in 1998, due to
the acquisition of Southern Construction Products, higher existing volume, and
strategic pricing initiatives.
Gross Profit
Gross profit for 1999 was $122.7 million, a 16.0% increase over $105.8
million for 1998. Gross margin was 38.1% in 1999 compared to 37.4% in 1998.
Gross margin increased primarily due to higher volume absorbing fixed costs in
all business units, and a better mix of higher gross margin rental revenue in
the concrete forming systems business. This more than offset the effects of the
lower gross margin Cempro and Southern Construction Products businesses.
Selling, General and Administrative Expenses
Our selling, general, and administrative expenses, including the
amortization of goodwill and intangibles ("SG&A expenses") increased to $84.2
million in 1999 from $75.9 million in 1998. The increase is due to the effect of
1998 and 1999 acquisitions, higher distribution costs associated with the higher
net sales volume, increases in new product development and sales personnel, and
legal fees to defend ourselves in the EFCO litigation. These were partially
offset by a $0.7 million non-recurring pension plan termination gain in the
second quarter of 1999. SG&A expenses were lower as a percent of sales to 26.1%
in 1999 from 26.9% in 1998, due to the effect of higher net sales on fixed
costs.
Interest Expense
Interest expense remained flat at $11.7 million in 1999 and 1998.
Interest expense initially increased due to higher debt from the acquisition of
Cempro. However, this was offset by the lower debt as a result of increased
operating cash flow and the fourth quarter issuance of our mandatorily
redeemable convertible preferred trust securities.
Income Before Income Taxes
Income before income taxes in 1999 increased 45.4% to a record $26.6
million from $18.3 million in 1998, and was comprised of the following:
YEARS ENDED
DECEMBER 31,
----------------------
1999 1998
-------- --------
(IN THOUSANDS)
Concrete accessories ........... $ 22,964 $ 19,387
Concrete forming systems ....... 10,876 6,133
Paving products ................ 1,569 1,677
Masonry products ............... 1,058 487
Intersegment eliminations ...... (4,903) (4,153)
Corporate ...................... (4,918) (5,211)
-------- --------
Income before income taxes $ 26,646 $ 18,320
======== ========
20
<PAGE> 21
Concrete accessories income before income taxes of $23.0 million, or
15.9% of net sales, in 1999 increased from $19.4 million, or 14.7% of net sales,
in 1998, due primarily to the increase in net sales of concrete accessories.
Concrete forming systems income before income taxes of $10.9 million, or 8.9% of
net sales, in 1999 increased from $6.1 million, or 5.9% of net sales, in 1998,
due primarily to the full year effect of the 1998 acquisition of Symons Concrete
Forms, and increased sales from the existing business. Income before income
taxes from paving products decreased to $1.6 million, or 4.3% of net sales, in
1999 from $1.7 million, or 5.4% of net sales, in 1998, due to personnel
increases made in anticipation of the growth of the business as a result of
TEA-21. Income before income taxes from masonry products increased to $1.1
million, or 3.7% of net sales, in 1999 from $0.5 million, or 2.0% of net sales,
in 1998, due to the acquisition of Southern Construction Products and a shift to
higher margin engineered products. Corporate expenses decreased to $4.9 million
from $5.2 million due to the non-recurring pension gain which was offset by the
addition of personnel in 1998 and 1999. Elimination of gross profit on
intersegment sales increased to $4.9 million in 1999 from $4.2 million in 1998
due to higher intersegment sales.
Net Income
Our effective tax rate was 45.0% in both 1999 and 1998. Net income
increased $4.6 million to $14.7 million in 1999 from $10.1 million in 1998 due
to the factors described above.
COMPARISON OF YEARS ENDED DECEMBER 31, 1998 AND 1997
Net Sales
Our 1998 net sales reached a record $282.8 million, a 69.0% increase
from $167.4 million in 1997 and a 12.1% increase from pro forma 1997 sales of
$252.3 million as if Symons had been acquired on January 1, 1997.
The following table summarizes our net sales by segment for the periods
indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------
1998 1997
---------------------- ---------------------
(IN THOUSANDS)
NET NET %
SALES % SALES % CHANGE
--------- ---- --------- ---- ------
<S> <C> <C> <C> <C> <C>
Concrete accessories .... $ 131,467 46.5% $ 92,251 55.1% 42.5%
Concrete forming systems 104,711 37.0 21,066 12.6 397.1
Paving products ......... 30,967 10.9 29,177 17.4 6.1
Masonry products ........ 24,292 8.6 24,918 14.9 (2.5)
Intersegment eliminations (8,588) (3.0) -- -- --
--------- ----- --------- -----
Net sales ...... $ 282,849 100.0% $ 167,412 100.0% 69.0%
========= ===== ========= =====
</TABLE>
21
<PAGE> 22
Net sales of concrete accessories increased by 42.5% from $92.2
million in 1997 to $131.5 million in 1998, due primarily to a full year's net
sales from the Richmond Screw Anchor division of Symons that was acquired in
September 1997. Net sales of concrete forming systems increased from $21.1
million in 1997 to $104.7 million in 1998 due to a full year's net sales
resulting from the acquisition of Symons. Net sales of paving products increased
by 6.1% to $31.0 million in 1998 from $29.2 million in 1997 due to increased
market share and sales volume. Net sales of masonry products decreased to $24.3
million in 1998 from $24.9 million in 1997, due to a high level of competition
in the hot dipped and mill galvanized masonry wall reinforcement product
markets, which was somewhat offset by a shift to higher margin, lower volume
engineered products.
Gross Profit
Gross profit for 1998 was $105.8 million, an 87.6% increase over $56.4
million for 1997. Gross margin was 37.4% in 1998 compared to 33.7% in 1997.
Gross margin increased primarily due to the inclusion of the Symons business for
a full year as concrete forming systems have higher gross margins, primarily due
to rental revenues, than our other product lines.
Selling, General, and Administrative Expenses
Our SG&A expenses increased from $38.6 million in 1997 to $75.9 million
in 1998. The increase is due to the inclusion of a full year of expenses
resulting from the acquisition of Symons. SG&A expenses increased as a percent
of sales from 23.1% in 1997 to 26.9% in 1998, due to concrete forming systems
having a higher percentage of SG&A expenses to net sales than our other
operating segments. This reflects the additional distribution costs associated
with the management of the rental equipment fleet.
Interest Expense
Interest expense increased to $11.7 million in 1998 from $5.6 million
in 1997 due primarily to the full year effect of higher debt resulting from the
Symons acquisition, and to a lesser extent, higher capital expenditures.
Income Before Income Taxes
Income before income taxes in 1998 increased 49.8% to $18.3 million
from $12.2 million in 1997, and was comprised of the following:
YEARS ENDED
DECEMBER 31,
----------------------
1998 1997
-------- --------
(IN THOUSANDS)
Concrete accessories .......... $ 19,387 $ 13,723
Concrete forming systems ...... 6,133 364
Paving products ............... 1,677 1,377
Masonry products .............. 487 5
Intersegment eliminations ..... (4,153) -
-------- --------
Corporate ..................... (5,211) (3,239)
-------- --------
Income before income taxes $ 18,320 $ 12,230
======== ========
22
<PAGE> 23
Concrete accessories income before income taxes of $19.4 million, or
14.7% of net sales, in 1998 increased 41.3% from $13.7 million, or 14.9% of net
sales, due primarily to the full year effect of the 1997 acquisition of Richmond
Screw Anchor. Concrete forming systems income before income taxes of $6.1
million, or 5.9% of net sales, in 1998 increased from $0.4 million, or 1.7% of
net sales, in 1997 due primarily to the full year effect of the acquisition of
Symons. Income before income taxes from paving products increased to $1.7
million, or 5.4% of net sales, in 1998 from $1.4 million, or 4.7% of net sales,
in 1997 due to higher net sales. Income before income taxes from masonry
products was $0.5 million in 1998 compared to virtually breakeven in 1997,
despite the decrease in net sales, due to a shift to higher margin, lower volume
engineered products. Corporate expenses increased to $5.2 million from $3.2
million primarily due to the addition of personnel in the finance, treasury,
tax, purchasing, logistics and corporate development functions. Elimination of
profit on intersegment sales was $4.2 million in 1998.
Net Income
Our effective tax rate in 1998 was 45.0%, or $8.2 million, compared to
a rate of 43.1%, or $5.3 million, in 1997. Nondeductible goodwill amortization
and state and local taxes caused our effective tax rate to exceed federal
statutory levels. Net income increased $3.2 million to $10.1 million in 1998
from $6.9 million in 1997 due to the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
Our key statistics for measuring liquidity and capital resources are
net cash provided by operating activities, capital expenditures, debt to total
capitalization ratio, amounts available under our revolving credit facility, and
cash gap. We define cash gap as the number of days our accounts receivable are
outstanding plus the number of days of inventory we have, less the number of
days our accounts payable are outstanding.
Our capital requirements relate primarily to capital expenditures, debt
service and the cost of acquisitions. Historically, our primary sources of
financing have been cash generated from operations, borrowings under our
revolving credit facility and the issuance of long-term debt and equity.
Net cash provided by operating activities for 1999 was $23.6 million.
Sources of operating cash flow for 1999 were comprised of:
- $14.7 million in net income, and
- $11.8 million in non-cash reductions of net income, less
- ($2.9) million of working capital changes.
23
<PAGE> 24
This cash was used for:
- net capital expenditures of $11.5 million, and
- acquisitions of $14.1 million.
The $19.6 million net proceeds from the Company-obligated mandatorily
redeemable convertible trust preferred securities offering were used for $13.0
million of long-term debt repayment, a cash increase of $4.0 million, and net
cash used in operating, investing, and other financing activities of $2.6
million.
Capital expenditures in 1999 included net additions to the rental
equipment fleet of $4.1 million to support the growth of our concrete forming
systems business unit as well as property, plant, and equipment additions of
$7.7 million as we continued to focus on cost improvement programs. We
anticipate that our net capital expenditures in each of 2000 and 2001 will be
comparable to 1999.
At December 31, 1999, working capital was $50.5 million, compared to
$39.7 million at December 31, 1998. The growth in our working capital is due to
higher cash from having no outstanding balance on the revolving credit facility
as a result of the convertible trust preferred securities offering, as well as
higher accounts receivable and inventories from our overall growth.
At December 31, 1999, all of our $50.0 million of the revolving credit
facility was available, none of which was outstanding. The aggregate outstanding
amount of the term loans under our credit agreement at December 31, 1999 was
$100.0 million. We also had other long-term debt, consisting of a $5.0 million
note we owed to one of the former stockholders of Symons and $0.2 million we
owed to the city of Parsons, Kansas. At December 31, 1999, we had a total of
$105.2 million of long-term debt outstanding, of which $5.0 million was current.
Our net long-term debt to total capitalization ratio decreased to 48.2% as of
December 31, 1999 from 61.2% as of December 31, 1998 due primarily to the
issuance of the mandatorily redeemable convertible trust preferred securities.
In the fourth quarter of 1999, we completed an underwritten public
offering of 1,062,500 Company-obligated mandatorily redeemable convertible trust
preferred securities at a price of $20 per security, generating $19.6 million in
net proceeds. The securities were issued by a limited purpose Delaware trust
which used the proceeds to purchase from us the same principal amount of our
convertible junior subordinated debentures. The securities are guaranteed by us
on a subordinated basis.
Dividends are payable on the convertible trust preferred securities at
the rate of 10% per year and the securities are convertible into our Class A
Common Shares at the rate of 0.80 common shares for each preferred security,
which equates to a conversion price of $25 per common share, a 47% premium on
the closing price on the date of issuance.
For 1999, our average net cash gap days were 70, as compared to 79 for
1998, due to an effective cash gap program. We define cash gap as the number of
days our accounts receivable are outstanding plus the number of days of
inventory we have, less the number of days our accounts payable are outstanding.
24
<PAGE> 25
We believe our liquidity, capital resources and cash flows from
operations are sufficient, in the absence of additional acquisitions, to fund
the capital expenditures we have planned and our working capital and debt
service requirements.
We intend to fund future acquisitions with cash, securities or a
combination of cash and securities. To the extent we use cash for all or part of
any future acquisitions, we expect to raise the cash primarily from our business
operations, from borrowings under our credit agreement or, if feasible and
attractive, by issuing long-term debt or selling additional common shares.
SEASONALITY
Our operations are seasonal, with approximately 60% of sales
historically occurring in the second and third quarters of the year. Our working
capital and borrowings fluctuate with the volume of our sales. In 1999 and 1998,
68% and 57% of our annual cash flow from operations was generated in the fourth
quarter.
INFLATION
We do not believe inflation has had a significant impact on our
operations over the past two years. In the past, we have been able to pass along
to our customers all or a portion of increases in the price of steel (our
principal raw material). We may not be able to pass on steel price increases in
the future.
YEAR 2000
Certain software and hardware systems are date sensitive. Older date
sensitive systems often use a two digit dating convention ("00" rather than
"2000") that could have resulted in system failure and disruption of operations.
This is referred to as the "Year 2000" issue. We have not experienced any
significant disruptions to our businesses as a result of the Year 2000 issue.
To date, we have incurred approximately $0.9 million in costs, of which
approximately $0.8 million was capitalized and approximately $0.1 million was
expensed. These costs were to replace existing hardware and third party software
and professional fees for external assistance. We estimate that our future cost
to resolve remaining Year 2000 issues is not significant.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires companies to
recognize all derivative contracts at their fair values, as either assets or
liabilities on the balance sheet. Our only derivatives are our interest rate
swap agreements. Changes in the fair value of the swaps would be recorded each
period as an adjustment to interest expense. We do not expect the adoption of
SFAS No. 133 to have a material impact on the consolidated statements of income.
In June 1999, the FASB issued Statement No. 137, which amended SFAS No. 133
25
<PAGE> 26
such that the effective date of adoption will be for all fiscal quarters
beginning after June 15, 2000. We do not intend to adopt SFAS No. 133 prior to
its effective date.
FORWARD-LOOKING STATEMENTS
This Form 10-K includes, and future filings by us on Form 10-K, Form 10-Q, and
Form 8-K, and future oral and written statements by us and our management may
include, certain forward-looking statements, including (without limitation)
statements with respect to anticipated future operating and financial
performance, growth opportunities and growth rates, acquisition and divestitive
opportunities and other similar forecasts and statements of expectation. Words
such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and "should," and variations of these words and similar expressions,
are intended to identify these forward-looking statements. Forward-looking
statements by us and our management are based on estimates, projections, beliefs
and assumptions of our management and are not guarantees of future performance.
We disclaim any obligation to update or revise any forward-looking statement
based on the occurrence of future events, the receipt of new information, or
otherwise.
Actual future performance, outcomes and results may differ materially
from those expressed in forward-looking statements made by us and our management
as the result of a number of important factors. Representative examples of these
factors include (without limitation) the cyclical nature of nonresidential
building and infrastructure construction activity, which can be affected by
factors outside our control such as weakness in the general economy, a decrease
in governmental spending, interest rate increases, and changes in banking and
tax laws; an unsuccessful outcome in our legal proceedings and disputes; our
ability to successfully identify, finance, complete and integrate acquisitions;
increases in the price of steel (the principal raw material in our products) and
our ability to pass along such price increases to our customers; the effects of
weather and seasonality on the construction industry; increasing consolidation
of our customers; the mix of products we sell; the competitive nature of our
industry; and the amount of debt we must service. This list of factors is not
intended to be exhaustive, and additional information concerning relative risk
factors can be found in our Registration Statement on Form S-3 (Reg. No.
333-84613) filed with the Securities and Exchange Commission. In addition to
these factors, actual future performance, outcomes and results may differ
materially because of other, more general, factors including (without
limitation) general industry and market conditions and growth rates, domestic
economic conditions, governmental and public policy changes and the continued
availability of financing in the amounts, at the terms and on the conditions
necessary to support our future business.
26
<PAGE> 27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As of December 31, 1999, we had financial instruments which were
sensitive to changes in interest rates. These financial instruments consist of:
- $50.0 million revolving credit facility, none of which was
outstanding;
- $100.0 million term loan;
- $5.2 million in other fixed-rate, long-term debt; and
- variable-to-fixed interest rate swaps on $50.0 million on the term
loan.
Our revolving credit facility terminates in 2002 and has several
interest rate options which re-price on a short-term basis.
Our $100.0 million term loan is due in 2005. The term loan permits us
to choose from various interest rate options which re-price on a short-term
basis. Accordingly, the fair value of the term loan as of December 31, 1999
approximated its face value. The term loan has a weighted average interest rate
of 8.93% at December 31, 1999.
Our other long-term debt at December 31, 1999 consisted of a $5.0
million, 10.5% note payable due in 2004 with an estimated fair value of $5.3
million and a $0.2 million, 7% loan due in installments of $31,500 per year with
an estimated fair value as of December 31, 1999 of $0.2 million.
We have two interest rate swap agreements on a total of $50.0 million
of our term loan that fixed the LIBOR-based component of the interest rate
formula (as required by our credit agreement). The swaps have a fixed 90-day
LIBOR component of 6.30% and 6.33% and expire on November 1, 2000. The 90-day
LIBOR as of December 31, 1999 was 6.18%. These swaps are contracts to exchange
floating rate for fixed rate interest payments without the exchange of
underlying amounts. The estimated fair value of the interest rate swaps as of
December 31, 1999 was a liability of $16,000.
In the ordinary course of our business, we also are exposed to price
changes in raw materials (particularly steel rod and steel bar) and products
purchased for resale. The prices of these items can change significantly due to
changes in the markets in which our suppliers operate. We generally do not,
however, use financial instruments to manage our domestic or international
exposure to changes in commodity prices.
27
<PAGE> 28
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Report Of Independent Public Accountants
To the Shareholders of Dayton Superior Corporation:
We have audited the accompanying consolidated balance sheets of Dayton Superior
Corporation (an Ohio corporation) and Subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, shareholders' equity,
cash flows and comprehensive income for each of the three years in the period
ended December 31, 1999. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dayton Superior Corporation and
Subsidiaries as of December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed under Part IV, Item
14(a)(2) is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Dayton, Ohio
February 4, 2000
28
<PAGE> 29
Dayton Superior Corporation And Subsidiaries
Consolidated Balance Sheets
As of December 31
(Amounts in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
ASSETS (Note 4) 1999 1998
Current assets: --------- ---------
<S> <C> <C>
Cash $ 4,553 $ 560
Accounts receivable, net of allowances for doubtful accounts and sales
returns and allowances of $5,589 and $4,432 45,085 42,996
Inventories (Note 3) 39,340 36,058
Prepaid expenses and other current assets 5,551 4,396
Prepaid income taxes 1,038 828
Future income tax benefits (Notes 3 and 8) 3,998 3,521
--------- ---------
Total current assets 99,565 88,359
--------- ---------
Rental equipment, net (Note 3) 58,748 52,586
--------- ---------
Property, plant and equipment (Note 3)
Land and improvements 4,553 5,481
Building and improvements 22,478 20,030
Machinery and equipment 46,620 38,339
--------- ---------
73,651 63,850
Less accumulated depreciation (29,741) (22,069)
--------- ---------
Net property, plant and equipment 43,910 41,781
Goodwill and intangible assets, net of accumulated amortization (Note 3) 75,522 70,130
Other assets 934 764
--------- ---------
Total assets $ 278,679 $ 253,620
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 4) $ 5,032 $ 5,032
Accounts payable 22,802 20,749
Accrued compensation and benefits 11,302 12,443
Other accrued liabilities 9,960 10,408
--------- ---------
Total current liabilities 49,096 48,632
Long-term debt (Note 4) 100,141 113,173
Deferred income taxes (Notes 3 and 8) 16,566 11,544
Other long-term liabilities (Note 7) 4,548 5,683
--------- ---------
Total liabilities 170,351 179,032
--------- ---------
Company-obligated mandatorily redeemable convertible trust preferred
securities of Dayton Superior Capital Trust which holds solely
debentures, $20 liquidation value per security; 1,062,500 and 0 securities
authorized, issued and outstanding (Note 5) 19,556 -
--------- ---------
Shareholders' equity (Note 6)
Class A common shares; no par value; 20,539,500 shares authorized;
5,962,200 and 5,200,372 shares issued and 5,943,183 and 5,193,174 shares 47,417 42,316
outstanding; 1 vote per share
Class B common shares; no par value; 0 and 757,569 shares authorized, issued,
and outstanding; 10 votes per share -- 5,037
Class A treasury shares, at cost, 19,017 and 7,298 shares (387) (145)
Cumulative other comprehensive income (254) (281)
Retained earnings 41,996 27,661
--------- ---------
Total shareholders' equity 88,772 74,588
--------- ---------
Total liabilities and shareholders' equity $ 278,679 $ 253,620
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated balance sheets.
29
<PAGE> 30
Dayton Superior Corporation and Subsidiaries
Consolidated Statements of Income
Years Ended December 31
(Amounts in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net sales (Note 3) $ 322,170 $ 282,849 $ 167,412
Cost of sales 199,464 177,094 111,044
----------- ----------- -----------
Gross profit 122,706 105,755 56,368
Selling, general and administrative expenses 81,800 73,721 36,761
Amortization of goodwill and intangibles 2,369 2,213 1,885
----------- ----------- -----------
Income from operations 38,537 29,821 17,722
Other expenses
Interest expense, net 11,661 11,703 5,556
Other expense (income), net 230 (202) (64)
----------- ----------- -----------
Income before income taxes 26,646 18,320 12,230
Provision for income taxes (Note 8) 11,991 8,244 5,277
----------- ----------- -----------
Net income 14,655 10,076 6,953
Dividends on Company-obligated mandatorily redeemable
convertible trust preferred securities, net of income tax
benefit 320 -- --
----------- ----------- -----------
Net income available to common shareholders $ 14,335 $ 10,076 $ 6,953
=========== =========== ===========
Basic net income per share $ 2.41 $ 1.72 $ 1.22
=========== =========== ===========
Weighted average common shares outstanding 5,944,667 5,867,338 5,703,601
=========== =========== ===========
Diluted net income per share $ 2.30 $ 1.65 $ 1.17
=========== =========== ===========
Weighted average common and common share equivalents
Outstanding 6,376,935 6,098,205 5,933,244
=========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
30
<PAGE> 31
Dayton Superior Corporation and Subsidiaries
Consolidated Statements of Shareholders' Equity
Years Ended December 31, 1999, 1998, and 1997
(Amounts in thousands, except share amounts)
<TABLE>
<CAPTION>
Cumulative
Class A Class B Class A Foreign
Common Shares Common Shares Treasury Shares Currency
--------------------- ----------------------- ------------------- Translation
Shares Amount Shares Amount Shares Amount Adjustment
--------- -------- --------- ------- ------ ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996 4,199,200 $ 32,636 1,466,350 $ 9,749 - $ - (145)
Net income
Foreign currency translation adjustment (46)
Issuance of Class A common stock in
lieu of directors' fees 8,258 104
Issuance of Class A common shares in
conjunction with acquisition (Note 2) 26,254 346
Exercise of stock options, net 28,094 300
--------- -------- --------- ------- ------ ------ ------
Balances at December 31, 1997 4,261,806 33,386 1,466,350 9,749 - - (191)
Net income
Foreign currency translation adjustment (75)
Excess pension liability adjustment
Issuance of Class A common stock in
lieu of directors' fees 6,363 124
Issuance of Class A common shares in
conjunction with acquisition (Note 2) 222,396 4,078
Exercise of stock options, net 1,026 16
Conversion of Class B common shares
into Class A common shares 708,781 4,712 (708,781) (4,712)
Purchase of Class A treasury shares 7,298 (145)
--------- -------- --------- ------- ------ ------ ------
Balances at December 31, 1998 5,200,372 42,316 757,569 5,037 7,298 (145) (266)
Net income
Dividends on Company-obligated
mandatorily redeemable convertible
trust preferred securities
Foreign currency translation adjustment 12
Excess pension liability adjustment
Issuance of Class A common stock in
lieu of directors' fees 7,731 153
Return of Class A common shares in
conjunction with acquisition (Note 2) (6,456) (117)
Exercise of stock options, net 2,984 28
Conversion of Class B common shares
into Class A common shares 757,569 5,037 (757,569) (5,037)
Purchase of Class A treasury shares 11,719 (242)
--------- -------- --------- ------- ------ ------ ------
Balances at December 31, 1999 5,962,200 $ 47,417 - $ - 19,017 $ (387) $ (254)
========= ======== ========= ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Excess
Pension Retained
Liability Earnings Total
--------- --------- --------
<S> <C> <C> <C>
Balances at December 31, 1996 $ - $ 10,632 $ 52,872
Net income 6,953 6,953
Foreign currency translation adjustment (46)
Issuance of Class A common stock in
lieu of directors' fees 104
Issuance of Class A common shares in
conjunction with acquisition (Note 2) 346
Exercise of stock options, net 300
----- --------- --------
Balances at December 31, 1997 - 17,585 60,529
Net income 10,076 10,076
Foreign currency translation adjustment (75)
Excess pension liability adjustment (15) (15)
Issuance of Class A common stock in
lieu of directors' fees 124
Issuance of Class A common shares in
conjunction with acquisition (Note 2) 4,078
Exercise of stock options, net 16
Conversion of Class B common shares
into Class A common shares -
Purchase of Class A treasury shares (145)
----- --------- --------
Balances at December 31, 1998 (15) 27,661 74,588
Net income 14,655 14,655
Dividends on Company-obligated
mandatorily redeemable convertible (320) (320)
trust preferred securities
Foreign currency translation adjustment 12
Excess pension liability adjustment 15 15
Issuance of Class A common stock in
lieu of directors' fees 153
Return of Class A common shares in
conjunction with acquisition (Note 2) (117)
Exercise of stock options, net 28
Conversion of Class B common shares
into Class A common shares -
Purchase of Class A treasury shares (242)
----- --------- --------
Balances at December 31, 1999 $ - $ 41,996 $ 88,772
===== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
31
<PAGE> 32
Dayton Superior Corporation and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31
(Amounts in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
Cash Flows From Operating Activities: --------- --------- ---------
<S> <C> <C> <C>
Net income $ 14,655 $ 10,076 $ 6,953
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 11,717 10,076 5,131
Amortization of goodwill and intangibles 2,369 2,213 1,885
Deferred income taxes 3,801 1,792 1,017
Amortization of deferred financing costs and issuance costs on
Company-obligated mandatorily redeemable convertible trust
preferred securities 848 821 565
Gain on sales of rental equipment and property, plant and
equipment (6,904) (8,236) (2,871)
Change in assets and liabilities, net of effects of acquisitions:
Accounts receivable 37 (4,830) 3,111
Inventories (1,701) (2,110) 527
Prepaid expenses and other current assets (826) (1,332) (165)
Prepaid income taxes (343) 1,259 (865)
Accounts payable 1,435 3,991 (2,136)
Accrued liabilities and other long-term liabilities (897) 5,487 (2,690)
Other, net (623) 518 9
--------- --------- ---------
Net cash provided by operating activities 23,568 19,725 10,471
--------- --------- ---------
Cash Flows From Investing Activities:
Property, plant and equipment additions (7,728) (7,215) (4,410)
Proceeds from sale of fixed assets 259 1,097 --
Rental equipment additions (16,029) (18,081) (4,875)
Proceeds from sales of rental equipment 11,977 11,298 3,628
Acquisitions, net of cash acquired (Note 2) (13,734) (1,784) (33,467)
Other investing activities (320) -- (15)
--------- --------- ---------
Net cash used in investing activities (25,575) (14,685) (39,139)
--------- --------- ---------
Cash Flows From Financing Activities:
Repayments of long-term debt (13,032) (4,276) (67,203)
Issuance of long-term debt -- -- 100,000
Issuance of Class A common shares 28 16 300
Financing costs and fees -- -- (4,586)
Purchase of treasury shares (242) (145) --
Issuance of Company-obligated mandatorily redeemable
convertible trust preferred securities, net of issuance costs 19,554 -- --
Dividends on Company-obligated mandatorily redeemable
convertible trust preferred securities, net of income tax benefit (320) -- --
--------- --------- ---------
Net cash provided by (used in) financing activities 5,988 (4,405) 28,511
--------- --------- ---------
Effect of Exchange Rate Changes on Cash 12 (75) (46)
--------- --------- ---------
Net increase (decrease) in cash 3,993 560 (203)
Cash, beginning of year 560 -- 203
--------- --------- ---------
Cash, end of year $ 4,553 $ 560 $ --
========= ========= =========
Supplemental Disclosures:
Cash paid for income taxes $ 8,146 $ 5,055 $ 4,919
Cash paid for interest 9,833 10,763 4,736
Issuance of long-term debt to seller in conjunction with acquisition -- -- 5,000
Issuance of Class A common shares in conjunction with acquisitions (117) 4,078 346
Issuance of Class A common shares in lieu of directors' fees 153 124 104
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
32
<PAGE> 33
Dayton Superior Corporation and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31
(Amounts in thousands)
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net income $ 14,655 $ 10,076 $ 6,953
Dividends on Company-obligated
mandatorily redeemable convertible trust
preferred securities (320) -- --
Other comprehensive income
Foreign currency translation adjustment 12 (75) (46)
Excess pension liability adjustment 15 (15) --
-------- -------- --------
Comprehensive income $ 14,362 $ 9,986 $ 6,907
======== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these consolidated statements.
33
<PAGE> 34
Dayton Superior Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1999, 1998 and 1997
(Dollar amounts in thousands, except share and per share amounts)
(1) The Company
The accompanying consolidated financial statements include the accounts
of Dayton Superior Corporation and its wholly owned subsidiaries,
Dayton Superior Canada Ltd., Dur-O-Wal, Inc., Dur-O-Wal, Ltd., and
commencing September 29, 1997, Symons Corporation ("Symons")
(collectively referred to as the "Company"). All significant
intercompany transactions have been eliminated.
The Company is the largest North American manufacturer and distributor
of metal accessories and forms used in concrete construction and of
metal accessories used in masonry construction. As of December 31,
1999, the Company has a distribution network consisting of 18
manufacturing/distribution plants and 44 service/distribution centers
in the United States and Canada. The Company employs approximately 800
salaried and 1,450 hourly personnel, of whom approximately 1,000 of the
hourly personnel and six of the salaried personnel are represented by
labor unions. There are six collective bargaining agreements expiring
in 2000. The agreements cover 430 employees at the St. Joseph's, MO;
Santa Fe Springs, CA; Atlanta, GA; Parson, KS; Los Angeles, CA; and Des
Plaines, IL facilities.
On January 19, 2000, the Company signed a definitive merger agreement
with an affiliate of Odyssey Investment Partners, LLC, the manager of a
New York based private equity investment fund, for $27.00 per share in
cash, for a total transaction value (debt and equity) of approximately
$315 million. Holders of the Company-obligated mandatorily redeemable
convertible trust preferred securities will have the right to receive
cash in the amount of $22.00, plus accrued dividends, per preferred
security upon consummation of the recapitalization merger. The
recapitalization merger is conditioned on Company shareholder approval,
receipt of financing, government regulatory approvals and other
customary conditions. The closing is currently anticipated to occur in
the second quarter of 2000.
(2) Acquisitions
(a) SYMONS CORPORATION - On September 29, 1997, the Company
purchased the stock of Symons Corporation ("Symons"). The
purchase agreement between the Company and the former
stockholders of Symons ("the Former Stockholders") relating to
the Acquisition ("the Purchase Agreement") provides for an
adjustment to the purchase price under certain circumstances.
The Company has advised the Former Stockholders that it
believes it is entitled to a purchase price adjustment in its
favor, and the Former Stockholders similarly advised the
Company that they believe they are entitled to a purchase
price adjustment in their favor. The dispute has been referred
to a mutually satisfactory accounting firm, which is expected
to resolve such differences in accordance with the Purchase
Agreement.
34
<PAGE> 35
On June 12, 1998, the Former Stockholders filed a lawsuit in
Delaware Chancery Court seeking a determination with respect
to a limited number of issues involved in the dispute, which
the Company believes can be resolved only through arbitration.
On October 28, 1998, the court granted the Company's motion to
dismiss with respect to certain of these issues (as to which
the Company intends to proceed with arbitration) and retained
jurisdiction with respect to the remainder of the issues. On
December 28, 1998, the Court stayed the proceeding with
respect to the issues as to which it had retained
jurisdiction, pending the outcome of arbitration commenced by
the parties with respect to the purchase price adjustment.
Either party may seek to reopen the proceedings following the
arbitration.
At this time, the Company can make no determination as to the
amount of the adjustment, if any, which will be made to the
purchase price. The Company intends to vigorously pursue its
rights under the Purchase Agreement.
(b) SOUTHERN CONSTRUCTION PRODUCTS, INC. -- Effective October 4,
1999, the Company acquired substantially all of the assets and
assumed certain of the liabilities of Southern Construction
Products, Inc. ("Southern") for approximately $8,300 in cash,
including acquisition costs, and net of a purchase price
reduction of approximately $300 received in January 2000. The
business is being operated as part of the Company's masonry
products and concrete accessories businesses.
The acquisition has been accounted for as a purchase, and the
results of Southern have been included in the accompanying
consolidated financial statements since the date of
acquisition. The purchase price has been allocated based on
the estimated fair values of the assets acquired and
liabilities assumed. Certain appraisals and evaluations are
preliminary and may change. Pro forma financial information is
not required.
(c) CEMPRO, INC. -- Effective January 1, 1999, the Company
acquired substantially all of the assets and assumed certain
of the liabilities of Cempro, Inc. ("Cempro") for
approximately $5,400 in cash, including acquisition costs of
approximately $100. The business is being operated as a part
of the Company's concrete accessories business.
The acquisition has been accounted for as a purchase, and the
results of Cempro have been included in the accompanying
consolidated financial statements since the date of
acquisition. The purchase price has been allocated based on
the estimated fair values of the assets acquired and
liabilities assumed. Pro forma financial information is not
required.
(d) SECURE, INC. -- In June 1998, the Company purchased
substantially all of the assets of Secure, Inc. ("Secure"), a
subsidiary of The Lofland Company, for approximately $700 in
cash, including acquisition costs of approximately $100. This
business is being operated as a part of the Company's paving
products division.
The acquisition has been accounted for as a purchase, and the
results of Secure have been included in the accompanying
consolidated financial statements since the date of
acquisition. The purchase price has been allocated based on
the estimated fair values of the assets acquired. Pro forma
financial information is not required.
35
<PAGE> 36
(e) SYMONS CONCRETE FORMS, INC. -- In May 1998, the Company
purchased the stock of Symons Concrete Forms, Inc. (formerly
known as CAI). The purchase price was approximately $6,600,
including acquisition costs of approximately $200, and was
paid in cash of approximately $400, assumption of long-term
debt of approximately $2,200, and delivery of 215,940 Class A
Common Shares valued at approximately $4,000, which is net of
a purchase price reduction of approximately $100 (6,456 Class
A Common Shares) in 1999 related primarily to uncollected
accounts receivable. The business is being operated as a part
of the Company's concrete forming systems division.
The acquisition has been accounted for as a purchase, and the
results of Symons Concrete Forms have been included in the
accompanying consolidated financial statements since the date
of acquisition. The purchase price has been allocated based on
the estimated fair values of the assets acquired and
liabilities assumed. Pro forma financial information is not
required.
(f) NORTHWOODS -- In May 1998, the Company purchased the assets of
the Northwoods branches of Concrete Forming, Inc.
("Northwoods") for approximately $800 in cash. The Northwoods
branches are being operated as a part of the Company's
concrete forming systems division.
The acquisition has been accounted for as a purchase, and the
results of the Northwoods branches have been included in the
accompanying consolidated financial statements since the date
of acquisition. The purchase price has been allocated based on
the estimated fair values of the assets acquired. Pro forma
financial information is not required.
(g) IRONCO MANUFACTURING CO., INC. -- In February 1997, the
Company acquired certain of the assets and assumed certain of
the liabilities of Ironco Manufacturing Co., Inc. and
Birmingham Bar Coating, Inc. The purchase price, including
acquisition costs, was approximately $1,500 and was paid in
cash of approximately $1,200 and 26,254 Class A Common Shares
valued at approximately $300.
The acquisition was accounted for as a purchase and the
results of the companies have been included in the
accompanying consolidated financial statements since the date
of acquisition. The purchase price has been allocated based on
the fair value of the assets acquired and liabilities assumed.
Pro forma financial information is not required.
(3) Summary of Significant Accounting Policies
(a) Inventories -- Substantially all inventories of the domestic
concrete accessories, paving products and masonry products
operations are stated at the lower of last-in, first-out
("LIFO") cost (which approximates current cost) or market. All
other inventories of the Company are stated at the lower of
first-in, first-out ("FIFO") cost or market. The Company
provides net realizable value reserves which reflect the
Company's best estimate of the excess of the cost of potential
obsolete and slow moving inventory over the expected net
realizable value. The Company had no LIFO reserve as of
December 31, 1999 and 1998. Following is a summary of the
components of inventories as of
36
<PAGE> 37
December 31, 1999 and December 31,1998:
December 31, December 31,
1999 1998
-------- --------
Raw materials $ 8,787 $ 7,659
Finished goods and work in progress 32,920 30,022
-------- --------
41,707 37,681
Net realizable value reserve (2,367) (1,623)
-------- --------
$ 39,340 $ 36,058
======== ========
(b) Rental Equipment -- Rental equipment is manufactured by the
Company for resale and for rent to others on a short-term
basis. Rental equipment is recorded at the lower of FIFO cost
or market and is depreciated over the estimated useful life of
the equipment, twelve to fifteen years, on a straight-line
method. The balances as of December 31, 1999 and 1998 are net
of accumulated depreciation of $9,855 and $6,796,
respectively. Rental revenues and cost of sales associated
with rental revenue are as follows:
<TABLE>
<CAPTION>
For the year ending
---------------------------------------------
December 31, December 31, December 31,
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Rental revenue $51,079 $44,242 $11,336
Cost of sales 8,402 7,114 1,991
</TABLE>
(c) Property, Plant and Equipment -- Property, plant and equipment
are valued at cost and depreciated using straight-line and
accelerated methods over their estimated useful lives of 10-30
years for buildings and improvements and 3-10 years for
machinery and equipment.
Leasehold improvements are amortized over the lesser of the
term of the lease or the estimated useful life of the
improvement. Improvements and replacements are capitalized,
while expenditures for maintenance and repairs are charged to
expense as incurred.
(d) Goodwill and Intangible Assets -- Goodwill and intangible
assets are recorded at the date of acquisition at their
allocated cost. Amortization is provided over the estimated
useful lives of 40 years for goodwill, the term of the loan (5
to 8 years) for deferred financing costs and the term of the
agreement (3 to 10 years) for non-compete agreements.
In accordance with Statement of Financial Accounting Standard
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of" ("SFAS 121"), the
carrying value of goodwill and other long-lived assets is
assessed for recoverability by management when changes in
circumstances indicate that the carrying amount may not be
recoverable, based on an analysis of undiscounted future
expected cash flows from the use and ultimate disposition of
the asset. Management believes there has been no impairment of
the carrying values of the Company's long-lived assets as of
December 31, 1999 and 1998.
37
<PAGE> 38
(e) Income Taxes -- Deferred income taxes are determined by
applying current statutory tax rates to the cumulative
temporary differences between the carrying value of assets and
liabilities for financial reporting and tax purposes.
(f) Environmental Remediation Liabilities -- The Company accounts
for environmental remediation liabilities in accordance with
the American Institute of Certified Public Accountants issued
Statement of Position 96-1, "Environmental Remediation
Liabilities," ("SOP 96-1"). The Company accrues for losses
associated with environmental remediation obligations when
such losses are probable and reasonably estimable. Accruals
for estimated losses from environmental remediation
obligations generally are recognized no later than completion
of the remedial feasibility study. Such accruals are adjusted
as further information develops or circumstances change. Costs
of future expenditures for environmental remediation
obligations are not discounted to their present value.
Recoveries of environmental remediation costs from other
parties are recorded as assets when their receipt is deemed
probable.
(g) Foreign Currency Translation Adjustment -- The financial
statements of foreign subsidiaries and branches are maintained
in their functional currency (Canadian dollars) and are then
translated into U.S. dollars. The balance sheets are
translated at end of year rates while revenues, expenses and
cash flows are translated at weighted average rates throughout
the year. Translation adjustments, which result from changes
in exchange rates from period to period, are accumulated in a
separate component of shareholders' equity. Transactions in
foreign currencies are translated into U.S. dollars at the
rate in effect on the date of the transaction. Changes in
foreign exchange rates from the date of the transaction to the
date of the settlement of the asset or liability is recorded
as income or expense.
(h) Net Income Per Share -- Basic net income per share is computed
by dividing net income available to common shareholders by the
weighted average number of common shares outstanding during
the year.
Diluted net income per share is computed by dividing net
income by the weighted average number of common and common
share equivalents outstanding during the year. Common share
equivalents include, if dilutive, the number of common shares
issuable upon the conversion of the Company-obligated
mandatorily redeemable convertible trust preferred securities.
Common share equivalents also include the number of shares
issuable upon the exercise of outstanding options, less the
shares that could be purchased with the proceeds from the
exercise of the options, based on the Company's average
trading price.
<TABLE>
<CAPTION>
1999 1998 1997
---------- ---------- ---------
<S> <C> <C> <C>
Net income $ 14,655 $ 10,076 $ 6,953
Dividends on Company-obligated
mandatorily redeemable convertible trust
preferred securities, net of income tax
benefit 320 -- --
---------- ---------- ---------
Net income available to common
shareholders $ 14,335 $ 10,076 $ 6,953
========== ========== =========
Weighted average number of Class A and
Class B common shares outstanding 5,944,667 5,867,338 5,703,601
Dilutive effect of stock options (Note 6a) 220,350 230,867 229,643
Dilutive effect of Company-obligated
mandatorily redeemable convertible trust
preferred securities, assuming conversion 211,918 -- --
---------- ---------- ---------
Diluted shares outstanding 6,376,935 6,098,205 5,933,244
========== ========== =========
Basic net income per share $ 2.41 $ 1.72 $ 1.22
========== ========== =========
Diluted net income per share $ 2.30 $ 1.65 $ 1.17
========== ========== =========
</TABLE>
38
<PAGE> 39
(i) Financial Instruments -- The Company uses interest rate swaps
to manage interest rate risk associated with its floating rate
borrowings. The swap agreements are contracts to exchange
floating rate for fixed rate interest payments periodically
over the life of the agreements without the exchange of the
underlying amounts. The differential paid or received on the
interest rate swap agreements is recognized as an adjustment
to interest expense.
(j) Revenue Recognition -- The Company recognizes revenue on
product and rental equipment sales on the date of shipment.
Rental revenues are recognized ratably over the terms of the
rental agreements.
(k) Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in
the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities at the balance sheet date and the reported amounts
of revenues and expenses during the year. Actual results could
differ from those estimates. Examples of accounts in which
estimates are used include the reserve for excess and obsolete
inventory, the allowance for doubtful accounts and sales
returns and allowances, the accrual for self-insured employee
medical claims, the self-insured product and general liability
accrual, the self-insured workers' compensation accrual,
accruals for litigation losses, the valuation allowance for
deferred tax assets, actuarial assumptions used in determining
pension benefits, and actuarial assumptions used in
determining other post-retirement benefits.
(l) Reclassifications -- Certain reclassifications have been made
to prior years' amounts to conform to their 1999
classification.
(4) Credit Arrangements
The Company has a Credit Agreement to provide for a term loan and
revolving credit facility, each of which is secured by substantially
all of the assets of the Company. The $100,000 Term Loan requires
quarterly interest payments, with principal amount due in 2005. The
Term Loan permits the Company to choose from various interest rate
options and has a weighted average interest rate of 8.93% at December
31, 1999.
Amounts available under the Revolving Credit Facility are equal to the
lesser of (i) $50,000 or (ii) the sum of (x) 85% of eligible accounts
receivable, and (y) 60% of eligible inventories. The
39
<PAGE> 40
amount available under the Revolving Credit Facility was $50,000 at
December 31, 1999. The Revolving Credit Facility will terminate in
2002, and has interest options based on (a) Bank One, Dayton, NA's
prime rate (8.50% at December 31, 1999) plus an amount between 0% and
1% depending on the level of certain financial ratios (0.25% at
December 31, 1999), or (b) LIBOR plus an amount between 0.75% and 2.00%
depending on the level of certain financial ratios (1.25% at December
31, 1999). A commitment fee of between 0.125% and 0.400% per annum will
be payable on the average unused amount depending on the level of
certain financial ratios (0.175% at December 31, 1999).
The Company used the proceeds of the Credit Agreement to fund the
acquisition of all outstanding shares of Symons and to repay all
amounts outstanding on the existing term and revolving loans of both
the Company and Symons. As a result, deferred financing costs of $255
related to the Company's term and revolving loans were expensed and
reflected as interest expense in the accompanying 1997 statement of
income.
The average borrowings, maximum borrowings, and weighted average
interest rate for the periods indicated are as follows:
For the year ended
----------------------------------------
December 31, December 31, December 31,
1999 1998 1997
------------ ------------ ------------
Average borrowings $22,027 $19,679 $25,266
Maximum borrowings 37,140 26,620 32,403
Weighted average interest rate 7.0% 7.7% 7.6%
To manage its interest rate risk, the Company entered into two interest
rate swap agreements on a total of $50,000 of long-term debt that fixed
the LIBOR-based component of the interest rate formula. The swaps have
a fixed ninety-day LIBOR component of 6.30% and 6.33%, and expire on
November 1, 2000. The ninety-day LIBOR as of December 31, 1999 was
6.18%. All fluctuations in rate resulting from the swaps are accounted
for as interest expense. These swaps are required by the Company's
Credit Agreement and are contracts to exchange floating rate for fixed
rate interest payments without the exchange of underlying amounts.
The Credit Agreement contains certain restrictive covenants, which
require that, among other things, the Company not exceed a certain
leverage ratio, maintain a minimum fixed charge coverage ratio and
limit its ability to pay dividends on Common Shares. The Company was in
compliance with its loan covenants as of December 31, 1999.
In conjunction with the acquisition of Symons, the Company issued a
$5,000, seven-year unsecured note to one of the Former Stockholders.
The note requires monthly interest payments, with principal due in
September 2004. The note bears interest at a fixed rate of 10.5%. The
Former Stockholder has the right to put the note to the Company at any
time prior to its maturity. Accordingly, this note is classified as a
current liability.
The Company has an Economic Development Loan from the city of Parsons,
Kansas. The loan bears interest at 7.0% and is payable in quarterly
installments of $8 through July 2005. The loan is secured by real
estate in Parsons.
40
<PAGE> 41
Following is a summary of the Company's long-term debt as of December
31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Revolving lines of credit $ -- $ 13,000
Term Loan 100,000 100,000
Note payable to one of the Former Stockholders 5,000 5,000
City of Parsons, Kansas Economic Development Loan 173 205
--------- ---------
Total long-term debt 105,173 118,205
Less current portion (5,032) (5,032)
--------- ---------
Long-term portion $ 100,141 $ 113,173
========= =========
</TABLE>
Scheduled maturities of long-term debt are:
Year Amount
---- --------
2000 $ 5,032
2001 32
2002 32
2003 32
2004 32
Thereafter 100,013
--------
$105,173
========
The fair market value of the Company's fixed rate long-term debt is
estimated using discounted cash flow analyses based on current
incremental borrowing rates for similar types of borrowing
arrangements. At December 31, 1999, the estimated fair value of the
Note payable to the Former Stockholder of Symons is $5,345. The
estimated fair value of the City of Parsons, Kansas Economic
Development Loan is $165. The estimated fair value of the Term Loan
approximates, its face value, as these facilities have variable
interest rates tied to market rates. The estimated fair value of the
interest rate swap agreements is a liability of $16.
(5) Company-obligated Mandatorily Redeemable Convertible Trust Preferred
Securities
In October 1999, the Company completed an underwritten public offering
of 1,062,500 Company-obligated mandatorily redeemable convertible trust
preferred securities at a price of $20 per security. Net proceeds to
the Company after issuance costs were $19,554. The securities were
issued by a limited purpose Delaware trust which used the proceeds to
purchase from the Company the same principal amount of convertible
junior subordinated debentures. The securities are guaranteed by the
Company on a subordinated basis.
Dividends are payable on the preferred securities at the rate of 10%
per year and the securities are convertible into Class A Common Shares
at the rate of 0.80 common shares for each preferred security, which
equates to a conversion price of $25 per common share.
(6) Common Shares
(a) Stock Option Plans- The Company has five stock option plans,
the 1994 Stock Option Plan ("the 1994 Plan"), the 1995 Stock
Option Plan ("the 1995 Plan"), the 1996 Stock
41
<PAGE> 42
Option Plan ("the 1996 Plan"), the 1997 Stock Option and
Restricted Stock Plan ("the 1997 Restricted Plan") and the
1997 Non-employee Director Stock Option Plan ("the 1997
Director Plan"). Under all Plans, the option exercise price
equals the stock's market price on date of grant. The Company
accounts for these plans under APB Opinion No. 25, under which
no compensation costs have been recognized. Had compensation
cost for these plans been determined consistent with Statement
of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), the Company's net
income and earnings per share would have been reduced to the
following pro forma amounts:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- ------
<S> <C> <C> <C> <C>
Net income available to common
shareholders:
As Reported $14,335 $10,076 $6,953
Pro Forma 13,933 9,835 6,857
Basic net income per share: As Reported 2.41 1.72 1.22
Pro Forma 2.34 1.68 1.20
Diluted net income per share: As Reported 2.30 1.65 1.17
Pro Forma 2.25 1.62 1.16
</TABLE>
Because the SFAS 123 method of accounting has not been applied
to options granted prior to January 1, 1995, the resulting pro
forma compensation cost may not be representative of that to
be expected in future years.
As of December 31, 1999, the Company may grant options for up
to 152,766 and 12,667 shares under the 1997 Restricted Plan
and the 1997 Director Plan, respectively. No further options
may be granted under the 1994, 1995 and 1996 Plans. The
Company granted 92,600 options during 1999, of which 12,000
vested immediately, and the other 80,600 vest ratably over
three years. All options expire ten years after the date of
grant. All options will immediately vest upon completion of
the merger discussed in Note 1.
A summary of the status of the Company's stock option plans at
December 31, 1999, 1998, and 1997, and changes during the
years then ended is presented in the table and narrative
below:
<TABLE>
<CAPTION>
Number of Weighted Average Exercise
Shares Price Per Share
--------- -------------------------
<S> <C> <C>
Outstanding at December 31, 1996 297,750 $ 3.11
Granted at a weighted average fair value of $5.25 31,000 12.52
Exercised (40,000) 4.17
Canceled (12,500) 10.38
--------- -------------------------
Outstanding at December 31, 1997 276,250 3.57
Granted at a weighted average fair value of $6.83 83,833 17.11
Exercised (2,050) 2.46
--------- -------------------------
Outstanding at December 31, 1998 358,033 6.75
Granted at a weighted average fair value of $8.27 92,600 19.44
Exercised (2,984) 4.80
Canceled (5,366) 18.04
--------- -------------------------
Outstanding at December 31, 1999 442,283 $ 9.28
========= =========================
</TABLE>
42
<PAGE> 43
Price ranges and other information for stock options
outstanding at December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Outstanding Exercisable
------------------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Remaining Exercise
Range of Exercise Prices Shares Price Life Shares Price
------------------------ ------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C>
$ 1.96 - $ 4.00 240,650 $2.44 4.7 years 240,650 $ 2.44
$12.50 - $12.63 31,000 12.52 7.5 31,000 12.52
$16.81 - $19.91 170,633 18.35 8.7 46,166 18.06
------- ----- --------- ------- ------
442,283 $9.28 6.5 years 317,816 $ 5.69
======= ===== ========= ======= ======
</TABLE>
The fair value of each option grant is estimated on the date
of grant using the Black Scholes options pricing model with
the following weighted average assumptions used for grants in
1999, 1998, and 1997, respectively:
<TABLE>
<CAPTION>
1999 1998 1997
------- -------------- --------------
<S> <C> <C> <C>
Risk-free interest rates 4.68% 5.67% to 5.70% 6.17% to 6.56%
Expected dividend yield 0% 0% 0%
Expected lives 6 years 6 years 6 years
Expected volatility 34.10% 27.87% 28.50%
</TABLE>
(b) Treasury Shares - The Company agreed to repurchase Class A
Common Shares issued to the former shareholders of Symons
Concrete Forms. During the period December 1, 1998 through May
22, 1999, under certain circumstances, the former shareholders
could require the Company to purchase Class A Common Shares at
the previous day's closing price per share. As of December 31,
1999, 19,017 Class A Common Shares had been repurchased for
$387 under such agreement.
(7) Retirement Plans
(a) Company-Sponsored Pension Plans - During 1999, the Company
completed its process of merging and terminating certain of
its pension plans. As a result, the Company recorded a $797
non-recurring pension gain related to the termination of its
pension plan for salaried employees. As of December 31, 1999,
only one pension plan remained, which covers virtually all
salaried and hourly employees not covered by multi-employer
pension plans and provides benefits of stated amounts for each
year of credited service. The Company funds such plans at a
rate that meets or exceeds the minimum amounts required by
applicable regulations. The plans' assets are primarily
invested in mutual funds comprised primarily of common stocks
and corporate and U.S. government obligations.
43
<PAGE> 44
Postretirement Benefits - The Company provides postretirement
health care benefits on a contributory basis and life
insurance benefits for Symons salaried and hourly employees
that retired prior to May 1, 1995.
<TABLE>
<CAPTION>
PENSION PENSION OTHER OTHER
BENEFITS BENEFITS BENEFITS BENEFITS
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $ 30,481 $ 29,169 $ 875 $ 681
Service cost 378 619 - -
Interest cost 412 1,630 57 71
Amendments (360) (360) -- 312
Actuarial loss (gain) 557 135 (8) (128)
Benefits paid (23,023) (712) (61) (61)
Terminated plan (2,976) - - -
-------- -------- -------- --------
Benefit obligation at end of year $ 5,469 $ 30,481 $ 863 $ 875
======== ======== ======== ========
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 29,155 $ 27,249 $ - $ -
Actual return on plan assets 438 2,402 - -
Employer contribution 194 216 61 61
Transfer to other Company-sponsored
defined contribution plan (984) - - -
Benefits paid (23,023) (712) (61) (61)
-------- -------- -------- --------
Fair value of plan assets at end of year $ 5,780 $ 29,155 $ - $ -
======== ======== ======== ========
FUNDED STATUS $ 311 $ (1,326) $ (863) $ (875)
Unrecognized prior service cost (152) (155) 264 288
Unrecognized net gain (470) (759) (130) (124)
-------- -------- -------- --------
Net amount recognized $ (311) $ (2,240) $ (729) $ (711)
======== ======== ======== ========
AMOUNTS RECOGNIZED IN THE STATEMENT OF
FINANCIAL POSITION CONSIST OF:
Accrued benefit liability $ (311) $ (2,440) $ (863) $ (875)
Intangible asset - 185 134 164
Accumulated other comprehensive income - 15 - -
-------- -------- -------- --------
Net amount recognized $ (311) $ (2,240) $ (729) $ (711)
======== ======== ======== ========
ASSUMPTIONS AS OF DECEMBER 31
Discount rate 6.75% 6.75% 7.0% 6.75%
Expected return on plan assets 8% 8% N/A N/A
Rate of compensation increase N/A 4% N/A N/A
COMPONENTS OF NET PERIODIC BENEFIT COST
Service cost $ 378 $ 619 $ - $ -
Interest cost 412 1,630 57 70
Expected return on plan assets (396) (1,655) (3) (4)
Amortization of prior service cost (3) (3) 24 24
Recognized actuarial gain - (3) - -
-------- -------- -------- --------
Recurring net periodic pension cost 391 588 78 90
Termination gain (797) - - -
-------- -------- -------- --------
Total net pension cost $ (406) $ 588 $ 78 $ 90
======== ======== ======== ========
</TABLE>
As of December 31, 1999, the plan's accumulated benefit
obligation did not exceed its plan assets. The projected
benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated
benefit obligations in excess of plan assets were $2,893,
$2,855, and $2,692, respectively, as of December 31, 1998.
44
<PAGE> 45
The weighted average assumed rate of increase in the per
capita cost of covered benefits is 6.5% for 1999 and
subsequent years. Assumed health care cost trend rates have a
significant effect on the amounts reported for the health care
plan. A one percentage point change in assumed health care
cost trend rates would have the following effects:
<TABLE>
<CAPTION>
1 Percentage 1 Percentage
Point Increase Point Decrease
-------------- --------------
<S> <C> <C>
Effect on total of service and interest $ 3 $ (3)
cost components
Effect on the postretirement benefit 46 (42)
obligation
</TABLE>
(b) Multi-Employer Pension Plan- Approximately 10% of the
Company's employees are currently covered by collectively
bargained, multi-employer pension plans. Contributions are
determined in accordance with the provisions of negotiated
union contracts and generally are based on the number of hours
worked. The Company does not have the information available to
determine its share of the accumulated plan benefits or net
assets available for benefits under the multi-employer pension
plans. The aggregate amount charged to expense under these
plans was $330, $287, and $157, for the years ended December
31, 1999, 1998, and 1997, respectively.
(c) 401(k) Savings Plan- Most employees are eligible to
participate in Company sponsored 401(k) savings plans. Company
matching contributions vary from 0% to 50% (on the first 2%)
according to terms of the individual plans and collective
bargaining agreements. The aggregate amount charged to expense
under these plans was $724, $531, and $345, for the years
ended December 31, 1999, 1998, and 1997, respectively.
(d) Retirement Contribution Account- During 1998, the Company
implemented a defined contribution plan for substantially all
salaried employees to replace the terminated defined benefit
plan discussed in Note 7a. No contributions are permitted by
the employees, and the Company contributes 1.5% to 6.0% of
eligible compensation, depending on the age of the employee.
The amount expensed for the years ended December 31, 1999 and
1998 was $1,393 and $1,167, respectively.
(8) Income Taxes
The following is a summary of the components of the Company's income
tax provision for the years ended December 31, 1999, 1998, and 1997:
1999 1998 1997
------- ------- -------
Currently payable:
Federal $ 8,014 $ 5,312 $ 3,521
State and local 1,444 1,398 704
Deferred 2,533 1,534 1,052
------- ------- -------
Total provision $11,991 $ 8,244 $ 5,277
======= ======= =======
45
<PAGE> 46
<TABLE>
<CAPTION>
The effective income tax rate differs from the statutory federal income
tax rate for the years ended December 31, 1999, 1998, and 1997 for the
following reasons:
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Statutory income tax rate 35.0% 35.0% 34.0%
State income taxes (net of federal 3.9 4.8 4.0
tax benefit)
Nondeductible goodwill
amortization and other
permanent differences 3.7 5.2 5.1
Other, net 2.4 - -
---- ---- ----
Effective income tax rate 45.0% 45.0% 43.1%
==== ==== =====
</TABLE>
The components of the Company's future income tax benefits and deferred
tax liabilities as of December 31, 1999 and 1998 are as follows:
1999 1998
Current deferred taxes:
Inventory reserves $ 432 $ 50
Accounts receivable reserves 1,138 1,712
Accrued liabilities 2,406 2,280
Other 22 (521)
Total 3,998 3,521
Long-term deferred taxes:
Accelerated depreciation (16,261) (13,034)
Other long-term liabilities 1,828 2,428
Other (2,133) (938)
Total (16,566) (11,544)
Net deferred taxes $(12,568) $ (8,023)
(9) Segment Reporting
The Company operates in four segments, each with a general manager:
concrete accessories (Dayton/Richmond(R)), concrete forming systems
(Symons(R)), paving products (American Highway Technology(R)) and
masonry products (Dur-O-Wal(R)). The segments are differentiated by
their products and services, all of which serve the construction
industry.
Sales between segments for the years ended December 31, 1999 and
December 31, 1998 are recorded at normal selling price by the selling
division and at cost for the buying division, with the profit recorded
as an intersegment elimination. For the year ended December 31, 1997
intersegment sales were not significant. Segment assets include
accounts receivable; inventories; property, plant, and equipment;
rental equipment; and an allocation of goodwill. Corporate and
unallocated assets include cash, prepaid income taxes, future tax
benefits, and financing costs. Export sales and sales by non-U.S.
affiliates are not significant.
46
<PAGE> 47
<TABLE>
<CAPTION>
Information about the profit (loss) of each segment and the
reconciliations to the consolidated amounts for the years ended
December 31, 1999, 1998, and 1997 is as follows:
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Concrete Accessories $ 139,844 $ 128,119 $ 92,251
Concrete Forming Systems 117,555 99,471 21,066
Paving Products 36,506 30,967 29,177
Masonry Products 28,265 24,292 24,918
--------- --------- ---------
Net sales to external customers $ 322,170 $ 282,849 $ 167,412
========= ========= =========
Concrete Accessories $ 4,878 $ 3,348 $ --
Concrete Forming Systems 5,165 5,240 --
Paving Products 189 -- --
--------- --------- ---------
Net sales to other segments $ 10,232 $ 8,588 $ --
========= ========= =========
Concrete Accessories $ 3,587 $ 4,053 $ 2,744
Concrete Forming Systems 6,899 6,543 1,903
Paving Products 629 567 466
Masonry Products 546 540 443
--------- --------- ---------
Interest expense $ 11,661 $ 11,703 $ 5,556
========= ========= =========
Concrete Accessories $ 22,964 $ 19,387 $ 13,723
Concrete Forming Systems 10,876 6,133 364
Paving Products 1,569 1,677 1,377
Masonry Products 1,058 487 5
Intersegment Eliminations (4,903) (4,153) --
Corporate (4,918) (5,211) (3,239)
--------- --------- ---------
Income before income taxes $ 26,646 $ 18,320 $ 12,230
========= ========= =========
Concrete Accessories $ 3,755 $ 3,383 $ 2,618
Concrete Forming Systems 5,735 4,992 891
Paving Products 839 379 311
Masonry Products 1,333 1,279 1,264
Corporate 55 43 47
--------- --------- ---------
Depreciation $ 11,717 $ 10,076 $ 5,131
========= ========= =========
Concrete Accessories $ 1,437 $ 1,265 $ 1,225
Concrete Forming Systems 298 341 24
Paving Products 170 177 206
Masonry Products 464 430 430
--------- --------- ---------
Amortization of goodwill and intangibles $ 2,369 $ 2,213 $ 1,885
========= ========= =========
</TABLE>
47
<PAGE> 48
Information regarding each segment's assets and the reconciliation to
the consolidated amounts as of December 31, 1999 and 1998 is as
follows:
1999 1998
-------- --------
Concrete Accessories $ 97,360 $ 89,985
Concrete Forming Systems 121,836 116,064
Paving Products 14,085 13,358
Masonry Products 33,350 26,115
Corporate and Unallocated 12,048 8,098
-------- --------
Total Assets $278,679 $253,620
======== ========
Information regarding capital expenditures by segment and the
reconciliation to the consolidated amounts for the years ended December
31, 1999, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Concrete Accessories $ 3,033 $ 3,348 $ 2,449
Concrete Forming Systems 2,199 2,044 1,231
Paving Products 2,035 1,200 401
Masonry Products 397 439 320
Corporate 64 184 9
------- ------- -------
Property, Plant, and Equipment Additions $ 7,728 $ 7,215 $ 4,410
======= ======= =======
Concrete Accessories $ 1,457 $ 2,860 $ 1,966
Concrete Forming Systems 14,449 15,221 2,909
Masonry Products 123 -- --
------- ------- -------
Rental Equipment Additions $16,029 $18,081 $ 4,875
======= ======= =======
</TABLE>
(10) Commitments and Contingencies
(a) Operating Leases - Rental expense for property, plant and
equipment (principally office and warehouse facilities and
office equipment) was $4,608, $4,233, and $2,758, for the
years ended December 31, 1999, 1998 and 1997, respectively.
Lease terms generally range from one to ten years and some
contain renewal options.
Aggregate minimum annual rental commitments under
non-cancelable operating leases are as follows:
Year Amount
---- -------
2000 $ 3,687
2001 2,496
2002 2,016
2003 1,352
2004 978
Thereafter 1,019
-------
Total $11,548
=======
(b) Litigation - (i) Symons currently is a defendant in a civil
suit brought by EFCO Corp., a competitor of Symons in one
portion of its business, in 1996 in the United States District
48
<PAGE> 49
Court for the Southern District of Iowa (Case No.
4-96-DV-80552). EFCO Corp. alleged that Symons engaged in
false advertising, misappropriation of trade secrets,
intentional interference with contractual relations, and
certain other activities. After a jury trial, preliminary
damages of approximately $14,000 were awarded against Symons
in January 1999. In ruling on post-trial motions in April
1999, the Judge dismissed EFCO's claim of intentional
interference with contractual relations but increased the
damages awarded to EFCO by $100. This case is currently on
appeal before the United States Court of Appeals for the
Eighth Circuit. Symons and EFCO have filed their briefs with
the Court and have presented oral arguments. The Company is
awaiting the decision of the Court.
The Company believes that Symons has grounds for a successful
appeal and remains committed to vigorously pursuing its
appellate rights. A successful appeal could overturn the
judgment against Symons or result in a new trial. Symons'
liability, if any, cannot finally be determined until such
time as all rights of the parties have been exhausted or have
expired by lapse of time. The Company considers the outcome of
this litigation to be not estimable and, accordingly, the
Company has not recorded any liability for the resolution of
this suit. In the event the Company is unsuccessful in its
appeals, we could be required to pay the full amount of the
judgment plus interest or a potentially higher amount. An
unsuccessful appeal may have a material adverse effect on the
Company's consolidated financial position, results of
operations, or cash flows.
(ii) The Company, all of its directors and one officer are
defendants in a purported shareholder class action civil suit
brought in January 2000 in the Court of Common Pleas in
Montgomery County, Ohio (Case No. 2000 CV 00415). The
plaintiff alleges that the Company and the other defendants
have engaged in self dealing and breached their fiduciary
duties to shareholders with respect to the recapitalization
merger discussed in Note 1. The Company believes this suit is
without merit and is committed to vigorously defending itself
and the other defendants. The Company has filed a motion to
dismiss the complaint with the Court. In the event the Company
is unsuccessful in its defense, it may have a material adverse
effect on its consolidated financial position, results of
operations, or cash flows.
(c) Self-Insurance - The Company is self-insured for certain of
its group medical, workers' compensation and product and
general liability claims. The Company has stop loss insurance
coverage at various per occurrence and per annum levels
depending on type of claim. The Company consults with third
party administrators to estimate the reserves required for
these claims. No material revisions were made to the estimates
for the years ended December 31, 1999, 1998 and 1997. The
Company has reserved $3,844 and $4,737 as of December 31, 1999
and 1998, respectively.
(11) Related Party Transactions
On February 17, 1999, Ripplewood informed the Company that it was
converting all 757,569 Class B Common Shares held by it into an equal
number of Class A Common Shares and sold those Class A Common Shares.
As a result of the conversion, no Class B Common Shares remain
outstanding.
49
<PAGE> 50
During 1997, the Company paid Ripplewood a fee of $400 for financial
advisory services in connection with the acquisition of Symons
Corporation and related financing transactions.
(12) Quarterly Financial Information (Unaudited)
<TABLE>
<CAPTION>
1999
-----------------------------------------------------------
First Second Third Fourth Full
Quarterly Operating Data Quarter Quarter Quarter Quarter Year
------------------------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 68,196 $ 88,636 $ 93,729 $ 71,609 $ 322,170
Gross profit 23,425 32,883 37,872 28,526 122,706
Net income (loss) (355) 5,271 7,501 1,918 14,335
Basic net income (loss) per share (a) $ (0.06) $ 0.89 $ 1.26 $ 0.32 $ 2.41
Diluted net income (loss) per share (a) $ (0.06) $ 0.85 $ 1.22 $ 0.31 $ 2.30
Stock Price:
High $ 23.500 $ 20.125 $ 20.750 $ 19.688 $ 23.500
Low $ 17.313 $ 16.750 $ 16.500 $ 11.750 $ 11.750
</TABLE>
<TABLE>
<CAPTION>
1998
-----------------------------------------------------------
First Second Third Fourth Full
Quarterly Operating Data Quarter Quarter Quarter Quarter Year
------------------------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $ 59,227 $ 76,754 $ 82,809 $ 64,059 $ 282,849
Gross profit 19,717 27,783 33,297 24,958 105,755
Net income (loss) (1,009) 3,731 6,226 1,128 10,076
Basic net income (loss) per share (a) $ (0.18) $ 0.64 $ 1.05 $ 0.19 $ 1.72
Diluted net income (loss) per share (a) $ (0.18) $ 0.61 $ 1.01 $ 0.18 $ 1.65
Stock Price:
High $ 20.375 $ 22.125 $ 21.375 $ 20.875 $ 22.125
Low $ 15.875 $ 16.500 $ 16.625 $ 14.375 $ 14.375
</TABLE>
(a) The total of the quarterly income (loss) per share does not equal
the annual income per share due to the timing of the issuance of the
Company's common shares and common share equivalents and the omission
of common share equivalents in quarters with net losses.
50
<PAGE> 51
Dayton Superior Corporation and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 1999, 1998 and 1997
(Amounts in thousands)
<TABLE>
<CAPTION>
Additions Deductions
----------------------- -----------------------
Charges for
Which
Balance at Charged to Reserves Balance
Beginning Costs and Other Were at End
of Year Expenses Additions Created Other of Year
---------- ---------- --------- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Allowances for Doubtful Accounts and
Sales Returns and Allowances
For the year ended December 31, 1999 $4,432 3,420 - (2,263) - $5,589
For the year ended December 31, 1998 $5,015 3,086 - (2,422) (1,247)(2) $4,432
For the year ended December 31, 1997 $ 449 27 4,788(1) (249) - $5,015
</TABLE>
(1) Acquisition of Symons Corporation
(2) Reduction of amount from acquisition of Symons Corporation
51
<PAGE> 52
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Our directors and executive officers and their ages as of March 21,
2000, positions and principal occupation during the past five years (unless
otherwise stated, their positions are with us) are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------- ------- ---------------------------------------------------------------
<S> <C> <C>
John A. Ciccarelli 60 President, Chief Executive Officer and Director
Raymond E. Bartholomae 53 Vice President and General Manager, Symons
Michael C. Deis, Sr. 49 Vice President and General Manager, Dayton/Richmond
James W. Fennessy 56 Vice President and General Manager, Dayton Superior Canada Ltd.
Mark K. Kaler 42 Vice President and General Manager, American Highway Technology
Alan F. McIlroy 49 Vice President and Chief Financial Officer
William C. Mongole 50 Vice President and General Manager, Dur-O-Wal
John R. Paine, Jr. 57 Vice President, Sales and Marketing, Dayton/Richmond
Thomas W. Roehrig 34 Corporate Controller
John M. Rutherford 39 Treasurer and Assistant Secretary
James C. Stewart 52 Vice President, Corporate Development
Jaime Taronji, Jr. 55 Vice President, General Counsel and Secretary
William F. Andrews 68 Director
Matthew O. Diggs, Jr. 67 Director and non-executive Chairman of the Board
Daniel W. Duval 63 Director
Matthew M. Guerreiro 43 Director
Robert B. Holmes 68 Director
</TABLE>
- -----------
John A. Ciccarelli has been President since 1989 and has been Chief
Executive Officer and a director since 1994.
Raymond E. Bartholomae has been Vice President and General Manager,
Symons, since February 1998, and was Executive Vice President and General
Manager of Symons from 1986 to February 1998.
Michael C. Deis, Sr. has been Vice President and General Manager,
Dayton/Richmond since February 1998. From 1987 to February 1998, Mr. Deis was
Vice President, Eastern Division of Dayton/Richmond (formerly, Concrete
Accessories).
James W. Fennessy has been Vice President and General Manager, Dayton
Superior Canada, Ltd. since 1988.
Mark K. Kaler has been Vice President and General Manager, American
Highway Technology since April 1996. From 1990 to April 1996, Mr. Kaler was Vice
President, Engineering and Product Manager, Paving Division.
52
<PAGE> 53
Alan F. McIlroy has been Vice President and Chief Financial Officer
since July 1997. From January 1994 until July 1997, Mr. McIlroy was President of
The Greenock Group, a private operational investment company.
William C. Mongole has been Vice President and General Manager,
Dur-O-Wal since May 1999. From 1987 until May 1999, he was a Vice President of
our Dur-O-Wal business unit.
John R. Paine, Jr. has been Vice President, Sales and Marketing of
Dayton/Richmond (formerly, Concrete Accessories) since 1984.
Thomas W. Roehrig has been Corporate Controller since April 1998. From
1987 until March 1998, Mr. Roehrig was employed by Arthur Andersen LLP, an
international public accounting firm, most recently as a Manager in the
Assurance and Business Advisory division.
John M. Rutherford has been Treasurer and Assistant Secretary since
February 1998. From January 1993 until January 1998, Mr. Rutherford was Director
of Treasury and Risk Management for Gibson Greetings, Inc., a greeting card
manufacturer.
James C. Stewart has been Vice President, Corporate Development since
February 1998. From 1984 to February 1998, Mr. Stewart was Vice President,
Western Division of Dayton/Richmond (formerly Concrete Accessories).
Jaime Taronji, Jr. joined us in August 1999 and was elected Vice
President, General Counsel and Secretary in October 1999. From 1996 to 1999, Mr.
Taronji was Law Vice President of NCR Corporation. From 1988 to 1995, Mr.
Taronji was Vice President, General Counsel and Assistant Secretary of Packaging
Corporation of America, a subsidiary of Tenneco, Inc.
William F. Andrews has been a director since February 1997. He has been
Chairman of the Board of Scovill Fasteners Inc., a manufacturer of apparel and
industrial fasteners, since 1995 and has been Chairman of the Board of
Northwestern Steel and Wire Company, a producer of structural steel products and
rod and wire products, since November 1998. Mr. Andrews was Chairman of the
Board of Schrader-Bridgeport International, Inc., a manufacturer of tire valves
and automotive accessories, from 1995 to 1998 and was Chairman, President and
Chief Executive Officer of Amdura Corporation (formerly American Hoist & Derrick
Co.), a specialty manufacturer, from 1993 until 1995. Mr. Andrews also is a
director of Black Box Corp., Johnson Controls, Inc., Katy Industries, Navistar
International Corporation, and Trex Company.
Matthew O. Diggs, Jr. has been a director since October 1995 and
non-executive Chairman of the Board of Directors since December 1995. Mr. Diggs
has been Chief Executive Officer of The Diggs Group, a private investment firm,
since 1990. Mr. Diggs also has been the non-executive Chairman of Ripplewood
Holdings L.L.C. since its inception in October 1995 until June 1999. Mr. Diggs
also is a director of Helix Technologies Corporation and Price Brothers Co.
Daniel W. Duval has been a director since May 1999. Until December
1999, Mr. Duval was Vice Chairman of the Board of Directors of Robbins & Myers,
Inc., an international manufacturer and marketer of fluids management products
and systems, and was President and Chief Executive Officer from 1986 until 1998.
Mr. Duval also serves on the Board of Directors of Arrow Electronics, Inc.,
ABC-NACO Inc., and several privately-held companies.
53
<PAGE> 54
Matthew M. Guerreiro has been a director since February 1994. Mr.
Guerreiro has been a private investor since June 1999. From September 1997 until
June 1999, Mr. Guerreiro was a Managing Director of Salomon Smith Barney, Inc.,
an investment banking firm. From October 1995 until September 1997, Mr.
Guerreiro was a principal of Ripplewood Holdings L.L.C., a private holding
company, and from August 1992 to October 1995, he was a principal in the New
York office of Onex Investment Corp. (New York).
Robert B. Holmes has been a director since March 1996. Mr. Holmes is a
director of Mitsubishi International Corporation, an advisory director of
Ripplewood Holdings L.L.C., a private holding company, and a principal of the
Lens Fund, a private investment company.
We currently have six directors. Each director is elected to serve
until the next annual meeting of shareholders or until a successor is elected.
Our executive officers are elected by the directors to serve at the pleasure of
the directors. There are no family relationships between any of our directors or
executive officers.
Our Board of Directors has three committees:
An Executive Committee (Messrs. Ciccarelli (Chair) and Diggs), which
may exercise any of the Board's authority between meetings of the Board.
An Audit Committee (Messrs. Andrews, Diggs, Duval and Holmes (Chair)),
which:
- recommends the engagement of the independent public accountants;
- reviews the professional services provided by, and the fees charged
by, the independent public accounts;
- reviews the scope of the internal and external audit; and
- reviews the financial statements and matters relating to the audit.
A Compensation and Benefits Committee (Messrs. Andrews, Diggs (Chair)
and Guerreiro), which is responsible for assuring that officers and other key
management are effectively compensated and that compensation is internally
equitable and externally competitive.
We do not have a Nominating Committee.
DIRECTOR COMPENSATION
Directors who are not employees receive for their service an annual
retainer of $20,000 plus an additional $2,000 for each committee of which the
director serves as chairman (a total of $50,000, in the case of the Chairman of
the Board) payable in common shares and an annual grant of an option to purchase
2,000 common shares at an exercise price per share equal to the fair market
value of a common share on the grant date. The nonemployee directors also
receive a $500 cash fee for each meeting of the Board of Directors or committee
they attend. Directors who are employed by us receive no additional compensation
for serving as directors.
54
<PAGE> 55
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers and owners of more than 10% of the outstanding
common shares to file an initial ownership report with the Securities and
Exchange Commission and the New York Stock Exchange and a monthly or annual
report listing any subsequent change in their ownership of common shares. Copies
of these reports also must be furnished to us.
Based solely upon our review of copies of the forms filed under Section
16(a) and furnished to us and written representations to us from reporting
persons, we believe that all filing requirements applicable to such reporting
persons with respect to 1999 were complied with, except that Timothy C. Collins,
formerly one of our directors, filed late a Form 4 for the month of February
1999 reporting the conversion of 757,569 of our Class B common shares into an
equal number of our common shares and the sale of those shares. Mr. Collins also
filed late a Form 5 reporting the exempt grant to him, for his services as a
director, of 1,046 common shares and options to purchase 2,000 common shares.
ITEM 11. EXECUTIVE COMPENSATION.
The following table summarizes the 1999, 1998, and 1997
compensation for our chief executive officer and each of the other four most
highly compensated executive officers who was serving as an executive officer at
December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------ ---------------- --------------
OTHER ANNUAL SHARES LONG TERM ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION UNDERLYING INCENTIVE COMPENSATION
POSITION YEAR ($) ($) ($) OPTIONS (#) PAYOUTS ($) ($)(1)
- ------------------------------ ----- ---------- ----------- ------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Ciccarelli 1999 $310,961 $315,000 $ 0 15,000(2) $0 $12,800
President and Chief 1998 293,077 275,000 0 15,000(2) 0 12,800
Executive Officer 1997 227,692 160,000 0 0 0 3,000
Alan F. McIlroy 1999 $197,423 $150,000 $10,000(4) 8,000(2) $0 $10,400
Vice President and 1998 191,154 148,000 16,202(4) 6,000(2) 0 10,400
Chief Financial Officer (3) 1997 65,856 37,000 39,617(4) 25,000(5) 0 0
Raymond E. Bartholomae 1999 $185,000 $120,000 $ 0 6,000(2) $0 $10,400
Vice President and 1998 173,000 126,000 0 6,000(2) 0 9,515
General Manager,
Symons (6)
Michael C. Deis, Sr. 1999 $151,500 $120,000 $ 0 8,000(2) $0 $10,400
Vice President and 1998 146,154 129,000 0 6,000(2) 0 10,400
General Manager, 1997 105,231 60,000 0 0 0 3,166
Dayton/Richmond
James C. Stewart 1999 $151,500 $101,787 $ 0 7,000(2) $0 $10,400
Vice President, 1998 146,231 110,000 0 6,000(2) 0 10,400
Corporate Development 1997 107,538 60,000 1,600(4) 0 0 3,166
</TABLE>
- -------------
(1) For 1999 and 1998, consists of (a) our retirement account contributions
to our Savings Plan in the amount of $9,600 for Mr. Ciccarelli and $7,200
for each of the other named executive officers and
55
<PAGE> 56
(b) our matching section 401(k) contributions to the Savings Plan in the
amount of $3,200 and $2,315, respectively, for Mr. Bartholomae and $3,200
in both years for each of the other named executive officers. For 1997,
consists only of Company matching section 401(k) contributions to the
Savings Plan.
(2) Options to purchase common shares were granted under our stock option
plans at an exercise price of $19.44 per share (in the case of options
granted in 1999), and $16.81 per share (in the case of options granted in
1998), the average of the high and low prices on the date of the grant.
The options have a term of ten years and become exercisable in three
equal annual installments, commencing on the first anniversary of the
date of grant; however, the options will become fully exercisable upon
completion of our proposed recapitalization merger with Stone Acquisition
Corp.
(3) Mr. McIlroy was elected an executive officer on July 17, 1997.
(4) Relocation expense paid by us.
(5) Options to purchase 25,000 common shares were granted to Mr. McIlroy in
July 1997 under our 1996 Stock Option Plan in connection with Mr.
McIlroy's employment by us. The options have an exercise price of
$12.5625 per share, the average of the high and low prices on the date of
the grant, and a term of ten years. The options were exercisable on the
date of grant with respect to 12,500 shares and become exercisable with
respect to an additional 6,250 shares on the first and second
anniversaries of the date of grant.
(6) Mr. Bartholomae was elected an executive officer on February 26, 1998
following the acquisition of Symons Corporation by us in September 1997.
FISCAL 1999 STOCK OPTION GRANTS
The stock options granted in 1999 to each of the executive officers named
in the Summary Compensation Table are shown in the following table. The table
also shows the hypothetical gains that would exist for the options at the end of
their ten year terms, assuming compound rates of stock appreciation of 5% and
10%, respectively. The actual future value of the options will depend on the
market value of the common shares.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
-----------------------------------------------------------
INDIVIDUAL GRANTS (1) POTENTIAL REALIZABLE
----------------------------------------------------------- VALUE AT ASSUMED
NUMBER % OF TOTAL ANNUAL RATES OF
OF SHARES OPTIONS STOCK PRICE
UNDERLYING GRANTED APPRECIATION FOR
OPTIONS TO EXERCISE OPTION TERM(3)
GRANTED EMPLOYEES PRICE EXPIRATION -------------------------
NAME (#) IN 1999 ($/SH)(2) DATE 5%($) 10%($)
- ---- ------------- --------------- -------------- -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John A. Ciccarelli 15,000 18.6% $19.44 2/1/09 $183,362 $464,676
Alan F. McIlroy 8,000 9.9 19.44 2/1/09 97,793 247,827
Raymond E.
Bartholomae 6,000 7.4 19.44 2/1/09 73,345 185,870
Michael C. Deis, Sr. 8,000 9.9 19.44 2/1/09 97,793 247,827
James C. Stewart 7,000 8.7 19.44 2/1/09 85,569 216,849
</TABLE>
- ---------------
56
<PAGE> 57
(1) The options become exercisable in three equal annual installments,
commencing on February 1, 2000. In the event of a change in control (as
defined in the Company's option plans), the options will become
exercisable in full.
(2) The average of the high and low sale prices on the date the option was
granted.
(3) These amounts are calculated in accordance with rules adopted by the
Securities and Exchange Commission assuming annual compounding at the
specified rates over the term of the options and are not intended to
forecast future appreciation of the price of the common shares.
FISCAL YEAR-END OPTION VALUES
The number and value of all unexercised options held by each of the
executive officers named in the Summary Compensation Table at December 31, 1999
are shown in the following table. No options were exercised by any of the named
executive officers in 1999.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
12/31/99 (#) AT 12/31/99 ($)(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
John A. Ciccarelli ......... 149,000/25,000 $1,976,160/$0
Alan F. McIlroy ............ 27,000/12,000 92,188/ 0
Raymond E. Bartholomae...... 2,000/10,000 0/ 0
Michael C. Deis, Sr ........ 20,600/12,000 259,674/ 0
James C. Stewart ........... 20,600/11,000 259,674/ 0
</TABLE>
(1) Represents the excess of the aggregate closing price on December 31,
1999 of the common shares subject to the options over the aggregate
option exercise price.
We have entered into employment agreements with each of the executive
officers named in the Summary Compensation Table which become effective only if
the proposed recapitalization merger between Stone Acquisition Corp. and is
completed.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the common shares beneficially owned by each
director, each executive officer and all directors and executive officers as a
group as of March 3, 2000:
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES BENEFICIALLY
OWNED AS OF % OF COMMON
INDIVIDUAL OR GROUP MARCH 3, 2000(1) SHARES(1)
- ------------------- ------------------- -----------
<S> <C> <C>
William F. Andrews(2) ..................................... 16,834 *
Raymond E. Bartholomae(3) ................................. 14,800 *
John A. Ciccarelli(4) ..................................... 211,500 3.5%
Michael C. Deis, Sr.(5) ................................... 38,950 *
Matthew O. Diggs, Jr.(6) .................................. 139,260 2.3%
Daniel W. Duval(7) ........................................ 5,013 *
James W. Fennessy(8) ...................................... 14,650 *
Matthew M. Guerreiro(9) ................................... 8,095 *
Robert B. Holmes(10) ...................................... 14,437 *
Mark K. Kaler(11) ......................................... 30,900 *
Alan F. McIlroy(12) ....................................... 40,400 *
William C. Mongole(13) .................................... 30,300 *
John R. Paine, Jr.(14) .................................... 24,400 *
Thomas W. Roehrig(15) ..................................... 3,800 *
John M. Rutherford(16) .................................... 3,050 *
James C. Stewart(17) ...................................... 37,950 *
Jaime Taronji, Jr ......................................... - -
Directors and Executive Officers As a Group (17 persons)(18) 634,339 10.0%
</TABLE>
- -------------------------
* Signifies less than 1%.
57
<PAGE> 58
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes sole or shared voting or investment power
with respect to the shares. Includes the number of common shares
subject to all outstanding options, including those that will become
exercisable as a result of the proposed recapitalization merger with
Stone Acquisition Corp. and those that are to be cashed out in the
proposed recapitalization merger. Unless otherwise indicated, voting
and investment power are exercised solely by each individual and/or a
member of his household. Based on a total of 5,946,233 common shares
outstanding on March 3, 2000.
(2) Includes 6,000 common shares which may be acquired upon the exercise of
stock options.
(3) Includes 12,000 common shares which may be acquired upon the exercise
of stock options.
(4) Includes 174,000 common shares which may be acquired upon the exercise
of stock options.
(5) Includes 32,600 common shares which may be acquired upon the exercise
of stock options.
(6) Includes 125,000 common shares owned by EJJM, an Ohio limited
partnership, a family limited partnership of which Mr. Diggs is a
general partner. Also includes 6,000 common shares which may be
acquired upon the exercise of stock options.
(7) Includes 2,000 common shares which may be acquired upon the exercise of
stock options.
(8) Includes 11,700 common shares which may be acquired upon the exercise
of stock options.
(9) Includes 5,333 common shares which may be acquired upon the exercise of
stock options.
(10) Includes 6,000 common shares which may be acquired upon the exercise of
stock options.
(11) Includes 26,900 common shares which may be acquired upon the exercise
of stock options.
58
<PAGE> 59
(12) Includes 39,000 common shares which may be acquired upon the exercise
of stock options.
(13) Includes 2,800 common shares which may be acquired upon the exercise of
stock options.
(14) Consists only of common shares which may be acquired upon the exercise
of stock options.
(15) Includes 2,800 common shares which may be acquired upon the exercise of
stock options.
(16) Includes 2,800 common shares which may be acquired upon the exercise of
stock options.
(17) Includes 31,600 common shares which may be acquired upon the exercise
of stock options.
(18) Includes 385,933 common shares which may be acquired by directors and
executive officers upon the exercise of stock options.
PRINCIPAL SHAREHOLDERS
The following table shows information about the only shareholders known
by us to be the beneficial owner of more than 5% of the outstanding common
shares:
<TABLE>
<CAPTION>
NUMBER OF COMMON
SHARES
NAME AND ADDRESS BENEFICIALLY OWNED % OF COMMON SHARES(1)
- ---------------- ------------------ ---------------------
<S> <C> <C>
Brinson Partners, Inc.(2) ................... 511,628 8.6%
UBS AG
209 South LaSalle
Chicago, Illinois 60604-1295
David L. Babson and Company Incorporated(3).. 449,600 7.6%
One Memorial Drive
Cambridge, Massachusetts 02142-1300
Fleet Boston Corporation (4) ................ 435,000 7.3%
One Federal Street
Boston, Massachusetts 02110
Skyline Asset Management, L.P.(5) ........... 383,600 6.5%
311 South Wacker Drive
Suite 4500
Chicago, Illinois 60606
Dimensional Fund Advisors, Inc.(6) .......... 374,000 6.3%
1299 Ocean Ave., 11th Floor
Santa Monica, California 90401
Dalton, Greiner, Hartman, Maher & Co.(7) .... 325,600 5.5%
1100 Fifth Ave. South, Suite 301
Naples, Florida 34102
</TABLE>
- -------------------
(1) Based on a total of 5,943,183 common shares outstanding on December 31,
1999.
(2) As reported in Amendment No. 3 to Schedule 13G dated February 4, 2000
filed with the SEC jointly by Brinson Partners, Inc. and UBS AG
(Bahnhofstrasse 45, 8021, Zurich, Switzerland) with respect to 511,628
common shares held by Brinson Partners, Inc., a registered investment
59
<PAGE> 60
advisor. Brinson Partners, Inc. is an indirect wholly-owned subsidiary
of UBS AG, a bank. They reported shared voting and dispositive power
with respect to all 511,628 common shares.
(3) As reported in Schedule 13G dated February 9, 2000 filed with the SEC
by David L. Babson and Company Incorporated, a registered investment
adviser, with respect to common shares held by its clients. David L.
Babson and Company Incorporated reported sole voting and dispositive
power with respect to all 449,600 common shares.
(4) As reported in Schedule 13G dated February 14, 2000 filed with the SEC
by Fleet Boston Corporation, a parent holding company of Fleet National
Bank, Fleet Trust & Investment Services Company and Fleet Investment
Advisors. Fleet Boston Corporation reported sole voting power with
respect to 293,800 common shares beneficially owned by its subsidiaries
and sole dispositive power with respect to 435,000 common shares
beneficially owned by its subsidiaries.
(5) As reported in an Amendment to Schedule 13G dated February 16, 2000
filed with the SEC by Skyline Asset Management, L.P., a registered
investment adviser, with respect to common shares held by its clients.
Skyline Asset Management, L.P. reported shared voting and dispositive
power with respect to 383,600 common shares.
(6) As reported in Schedule 13G dated February 4, 2000 filed with the SEC
by Dimensional Fund Advisors, Inc., a registered investment advisor,
with respect to common shares held by investment companies, commingled
group trusts and separate accounts. In this role, Dimensional Fund
Advisors, Inc. reported sole voting and dispositive power with respect
to all 374,000 common shares.
(7) As reported in Amendment No. 1 to Scheduled 13G dated February 10, 2000
filed with the SEC by Dalton, Greiner, Hartman, Maher & Co., a
registered investment adviser. It reported sole voting and dispositive
power with respect to all 325,600 common shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In connection with the proposed recapitalization merger of Stone
Acquisition Corp. into us, we have entered into employment and other "rollover"
agreements with John A. Ciccarelli, Raymond E. Bartholomae, Michael C. Deis,
Sr., James W. Fennessy, Mark K. Kaler, Alan F. McIlroy, William C. Mongole,
James C. Stewart, and Jaime Taronji, Jr., each of whom is an executive officer.
These agreements become effective only if the recapitalization merger is
completed. Generally, the "rollover" agreements require each executive officer
to retain common shares and, in most cases, stock options, with a specified
aggregate value following the recapitalization merger. In some cases, the
executive officer has agreed to exercise stock options in order to obtain some
of the common shares which he has agreed to retain following the merger. These
agreements provide that:
- The executive officer is required to vote his common shares in favor
of the merger.
- Stock options which are not to be exercised or retained by the
executive following the merger will be cancelled at the time of the
merger in exchange for a cash payment equal to the spread between
$27.00 per share and the exercise price of the option.
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<PAGE> 61
- If the executive officer must exercise stock options in order to
obtain some of the common shares he is required to retain and he so
requests, we will make a non-interest bearing, recourse loan to him
in a maximum amount equal to the exercise price of the options plus
the estimated federal and state income tax liability he will incur in
connection with the exercise. These loans will be secured by a pledge
of the shares issued upon exercise of the options.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements The following consolidated financial
statements of the Company and subsidiaries are incorporated by
reference as part of this Report under Item 8.
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Income for the years ended December
31, 1999, 1998, and 1997.
Consolidated Statements of Shareholders' Equity for the years
ended December 31, 1999, 1998, and 1997.
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997.
Consolidated Statements of Comprehensive Income for the years
ended December 31, 1999, 1998, and 1997.
Notes to Consolidated Financial Statements.
(a)(2) FINANCIAL STATEMENT SCHEDULE
Schedule II - Valuation and Qualifying Accounts (at Item 8 of
this Report)
All other schedules are omitted because they are not applicable,
or not required, or because the required information is included
in the consolidated financial statements or notes thereto.
(a)(3) Exhibits. See Index to Exhibits following the signature
pages to this Report for a list of exhibits.
(b) Reports on Form 8-K. During the quarter ended December 31,
1999, the Company did not file any Current Reports on Form 8-K.
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<PAGE> 62
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Dayton Superior Corporation has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DAYTON SUPERIOR CORPORATION
March 29, 2000
/s/ John A. Ciccarelli
By_______________________________
John A. Ciccarelli
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
Dayton Superior Corporation and in the capacities and on the dates indicated.
NAME TITLE DATE
/s/ John A. Ciccarelli
_______________________ Director, President and March 29, 2000
John A. Ciccarelli Chief Executive Officer
/s/ Alan F. McIlroy
_______________________ Vice President and Chief Financial March 28, 2000
Alan F. McIlroy Officer (Principal Financial Officer)
/s/ Thomas W. Roehrig
_______________________ Corporate Controller March 29, 2000
Thomas W. Roehrig (Principal Accounting Officer)
/s/ Matthew O. Diggs, Jr.
_______________________ Non-Executive Chairman of the Board March 29, 2000
Matthew O. Diggs, Jr.
/s/ William F. Andrews
_______________________ Director March 28, 2000
William F. Andrews
/s/ Daniel W. Duval
_______________________ Director March 27, 2000
Daniel W. Duval
/s/ Matthew M. Guerreiro
_______________________ Director March 28, 2000
Matthew M. Guerreiro
/s/ Robert B. Holmes
_______________________ Director March 25, 2000
Robert B. Holmes
62
<PAGE> 63
INDEX OF EXHIBITS
-----------------
Exhibit No. Description
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Amended Articles of Incorporation of the Company
[Incorporated herein by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-3 (Reg. No.
333-84613)] +
3.2 Code of Regulations of the Company (as amended)
[Incorporated herein by reference to Exhibit 3.3 to the
Company's Registration Statement on Form S-1 (Reg. No.
333-2974)] +
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 Senior Unsubordinated Redeemable Note of the Company in
the principal amount of $5,000,000 [Incorporated herein
by reference to Exhibit A to the Agreement set forth as
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated June 2, 1997] +
4.2 Credit Agreement dated as of September 29, 1997 among
the Company and the other parties thereto [Incorporated
herein by reference to Exhibit 4.2 to the Company's
Current Report on Form 8-K dated October 13, 1997] +
4.2.1 First Amendment to Credit Agreement dated as of October
23, 1997 [Incorporated herein by reference to Exhibit
4.2.1 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1998] +
4.2.2 Second Amendment to Credit Agreement dated as of June
26, 1998 [Incorporated herein by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for
the Quarter ended April 2, 1999] +
4.2.3 Third Amendment to Credit Agreement dated as of May 14,
1999 [Incorporated herein by reference to Exhibit 4.2.3
to the Company's Registration Statement on Form S-3
(Reg. 333-84613)] +
4.2.4 Form of Fourth Amendment to Credit Agreement dated as of
September 3, 1999 [Incorporated by reference to Exhibit
4.2.3 to the Company's Registration Statement on Form
S-3 (Reg. 333-84613)] +
4.4 Certificate of Trust of Dayton Superior Capital
Trust.[Incorporated herein by reference to Exhibit 4.2.3
to the Company's Registration Statement on Form S-3
(Reg. 333-84613)] +
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<PAGE> 64
4.5 Form of Amended and Restated Trust Agreement of Dayton
Superior Capital Trust among Dayton Superior
Corporation, as depositor, Firstar Bank, N.A., as
Property Trustee, Mark A. Ferrucci, as Delaware Trustee,
and the Administrative Trustees named therein
[Incorporated herein by reference to Exhibit 4.2.3 to
the Company's Registration Statement on Form S-3 (Reg.
333-84613)] +
4.6 Form of Junior Convertible Subordinated Indenture
between Dayton Superior Corporation and Firstar Bank,
N.A., as Indenture Trustee [Incorporated herein by
reference to Exhibit 4.2.3 to the Company's Registration
Statement on Form S-3 (Reg. 333-84613)] +
4.6.1 First Supplemental Indenture dated January 17, 2000
between Dayton Superior Corporation and Firstar
Bank, N.A., as Trustee **
4.7 Form of Preferred Security (included as Exhibit D to
Exhibit 4.5) [Incorporated herein by reference to
Exhibit 4.2.3 to the Company's Registration Statement on
Form S-3 (Reg. 333-84613)] +
4.8 Form of Junior Convertible Subordinated Debenture
(included as Sections 2.2 and 2.3 to Exhibit 4.6)
[Incorporated herein by reference to Exhibit 4.2.3 to
the Company's Registration Statement on Form S-3 (Reg.
333-84613)] +
4.9 Form of Guarantee Agreement between Dayton Superior
Corporation, as Guarantor, and Firstar Bank, N.A. as
Guarantee Trustee, with respect to the Preferred
Securities of the Dayton Superior Capital Trust
[Incorporated herein by reference to Exhibit 4.2.3 to
the Company's Registration Statement on Form S-3 (Reg.
333-84613)] +
(10) MATERIAL CONTRACTS
10.1 1994 Stock Option Plan [Incorporated herein by
reference to Exhibit 10.9 to the Company's
Registration Statement on Form S-1 (Reg. No.
333-2974)] + *
10.1.1 First Amendment to 1994 Stock Option Plan
[Incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for
the Quarter ended September 26, 1997] + *
10.2 1995 Stock Option Plan [Incorporated herein by
reference to Exhibit 10.10 to the Company's
Registration Statement on Form S-1 (Reg. No.
333-2974)] + *
10.2.1 First Amendment to 1995 Stock Option Plan
[Incorporated herein reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10-Q for the
Quarter ended September 26, 1997] + *
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<PAGE> 65
10.3 1996 Stock Option Plan [Incorporated herein by
reference to Exhibit 10.12 to the Company's
Registration Statement on Form S-1 (Reg. No.
333-2974)] + *
10.4 1997 Stock Option and Restricted Stock Plan
[Incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for
the Quarter ended June 27, 1997] + *
10.5 1997 Nonemployee Director Stock Option Plan
[Incorporated herein by reference to Exhibit 10.2
to the Company's Quarterly Report on Form 10-Q for
the Quarter ended June 27, 1997] + *
10.6 Nonemployee Directors Compensation Program
[Incorporated herein by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for
the Quarter ended July 3, 1998] + *
10.7 Management Incentive Plan [Incorporated herein by
reference to Exhibit 10.7 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1998] + *
10.8 Agreement dated as of May 9, 1997 by and among
Symons Corporation, the stockholders of Symons
Corporation and the Company [Incorporated herein by
reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K dated June 2, 1997] +
10.9 Agreement and Plan of Merger dated January 19, 2000
by and between the Company and Stone Acquisition
Corp. [Incorporated herein by reference to Appendix
A to the Company's preliminary proxy statement
filed with the Securities and Exchange Commission
on February 18, 2000] +
10.10 Employment Agreement dated January 19, 2000 by and
between Dayton Superior Corporation and John A.
Ciccarelli * **
10.11 Employment Agreement dated January 19, 2000 by and
between Dayton Superior Corporation and Alan F.
McIlroy * **
10.12 Employment Agreement dated January 19, 2000 by and
between Dayton Superior Corporation and Raymond E.
Bartholomae * **
10.13 Employment Agreement dated January 19, 2000 by and
between Dayton Superior Corporation and Michael C.
Deis, Sr. * **
10.14 Employment Agreement dated January 19, 2000 by and
between Dayton Superior Corporation and James C.
Stewart * **
65
<PAGE> 66
10.15 Form of Option Exercise, Cancellation and Equity Rollover
Agreement dated January 19, 2000 by and among Stone
Acquisition, Dayton Superior Corporation and each
of John A. Ciccarelli, Alan F. McIlroy, Raymond E.
Bartholomae, Michael C. Deis, Sr., and James C.
Stewart * **
(21) SUBSIDIARIES OF THE REGISTRANT
21.1 Subsidiaries of the Company **
(23) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
23.1 Consent of Arthur Andersen LLP **
(27) FINANCIAL DATA SCHEDULE
27.1 Financial Data Schedule **
- ----------------------------
* Compensatory plan, contract or arrangement in which one or more directors
or named executive officers participates.
** Filed herewith
+ Previously filed
66
<PAGE> 1
Exhibit 4.6.1
FIRST SUPPLEMENTAL INDENTURE
This First Supplemental Indenture, dated as of January 17, 2000, is
between DAYTON SUPERIOR CORPORATION, an Ohio corporation (the "Company"), and
FIRSTAR BANK, N.A., as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the Company and the Trustee entered into a Junior
Convertible Subordinated Indenture dated as of October 5, 1999 (the
"Indenture"), authorizing the issuance of the Company's 10% Convertible
Subordinated Debentures due September 30, 2029 (the "Debentures");
WHEREAS, Section 9.1 of the Indenture permits the Company and
the Trustee to enter into one or more indentures supplemental to the
Indenture for the purpose of curing any ambiguity, correcting or
supplementing any provision in the Indenture that may be inconsistent
with any other provision in the Indenture, or making any other
provisions with respect to matters or questions arising under the
Indenture, so long as any such action does not materially adversely
affect the interest of the holders of the Debentures and, for so long
as any of the preferred securities of Dayton Superior Capital Trust are
outstanding, the holders of such preferred securities; and
WHEREAS, the Company desires to clarify the provisions of the
Indenture relating to the conversion features of the Debentures in the
event of certain merger, reclassifications and other transactions
involving the Company, and such clarifying language does not materially
adversely affect the interest of the holders of the Debentures or the
holders of the preferred securities of Dayton Superior Capital Trust;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and contained in the Indenture, the Company and the
Trustee agree as follows:
SECTION 1. Section 13.5(a) of the Indenture is hereby amended in its
entirety to read as follows:
"(a) In the event that the Company is a party to any
transaction (including, without limitation, a merger other than a
merger that does not result in a reclassification, conversion, exchange
or cancellation of Common Stock), consolidation, sale of all or
substantially all of the assets of the Company, recapitalization or
reclassification of Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value or as
a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing being referred to as a
"TRANSACTION"), in each case, as a result of which shares of Common
Stock shall be
<PAGE> 2
converted into the right to receive, or shall be exchanged for, (i) in
the case of any Transaction other than a Transaction involving a Common
Stock Fundamental Change (and subject to funds being legally available
for such purpose under applicable law and the time of such conversion),
securities, cash or other property, each Debenture shall thereafter be
convertible into the kind and amount of securities, cash and other
property receivable upon the consummation of such Transaction by a
holder of that number of shares of Common Stock into which a Debenture
was convertible immediately prior to such Transaction, or (ii) in the
case of a Transaction involving a Common Stock Fundamental Change,
common stock, each Debenture shall thereafter be convertible (in the
manner described herein) into common stock of the kind received by
holders of Common Stock (but in each case after giving effect to any
adjustment discussed in paragraphs (b) and (c) relating to a
Fundamental Change if such Transaction constitutes a Fundamental
Change). The holders of Debentures or Preferred Securities will have no
voting rights with respect to any Transaction."
SECTION 2. This First Supplemental Indenture shall become effective on
the date first set forth above.
SECTION 3. Except as specifically amended hereby, all of the terms and
conditions of the Indenture shall remain in full force and effect and unamended
hereby. No reference to this First Supplemental Indenture need be made in any
instrument or document at any time referring to the Indenture, a reference to
the Indenture in any of such to be deemed to be reference to the Indenture as
amended hereby. This First Supplemental Indenture may be executed in any number
of counterparts and by separate parties hereto on separate counterparts, each of
which when executed shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective seals to be
hereunder affixed and attested, all as of the day and year first written above.
DAYTON SUPERIOR CORPORATION
(SEAL)
By /s/ ALAN F. MCILROY
Attest: Name: Alan F. McIlroy
Title: Vice President and Chief
/s/ Jaime Taronji, Jr. Financial Officer
Secretary
FIRSTAR BANK, N.A., as Trustee
(SEAL)
By: /s/ KEITH A MAURMEIER
Attest: Name: Keith A. Maurmeier
Title: Vice President and Trust Officer
-2-
<PAGE> 1
Exhibit 10.10
EMPLOYMENT AGREEMENT
--------------------
THIS AGREEMENT, dated as of January 19, 2000 and effective as of the
Effective Date (as hereinafter defined), is made by and between Dayton Superior
Corporation, an Ohio corporation (the "Company"), and John A. Ciccarelli (the
"Executive").
RECITALS:
WHEREAS, the Executive has heretofore been employed by the Company as
Chief Executive Officer; and
WHEREAS, it is the desire of the Company to assure itself of the
continuity of the management services of the Executive following the
consummation of the merger contemplated by the Agreement and Plan of Merger by
and between the Company and Stone Acquisition Corp. dated as of January 19, 2000
(the "Merger Agreement"); and
WHEREAS, the Company and the Executive intend this Agreement to be
effective as of the consummation of the merger contemplated in the Merger
Agreement (the "Effective Date"); and
WHEREAS, the Company and the Executive intend that if the merger
contemplated in the Merger Agreement is not consummated, this Employment
Agreement shall be of no force or effect;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "ANNUAL BASE SALARY" shall have the meaning set forth in Section
4(a).
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) The Company shall have "CAUSE" to terminate the Executive's
employment and/or service as non-executive Chairman hereunder upon the
Executive's:
(i) willful or gross misconduct or material failure in the
performance of his duties and responsibilities hereunder, other than
any such failure resulting from the Executive's Disability, which
misconduct or failure continues beyond 14 days after the company
notifies the Executive, in writing, of the Company's finding of such
misconduct or failure; or
<PAGE> 2
(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.
(d) "CHANGE IN CONTROL" shall mean a change in ownership or control of
the Company effected through a transaction or series of transactions (other than
an offering of Common Stock to the general public through a registration
statement filed with the Securities and Exchange Commission) 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 fifty
percent (50%) of the total combined voting power of the Company's securities
outstanding immediately after such acquisition.
(e) "COMMON STOCK" shall mean the common shares of the Company, without
par value.
(f) "COMPANY" shall have the meaning set forth in the preamble hereto.
(g) "COMPENSATION COMMITTEE" shall mean the Compensation Committee of
the Board whose members shall be appointed by the Board from time to time and
shall initially include William Hopkins, as Chairman, Muzzafar Mirza and Douglas
Rotatori.
(h) "DATE OF TERMINATION" shall mean (i) if the Executive's employment
is terminated by reason of his death, the date of his death, and (ii) if the
Executive's employment is terminated pursuant to Sections 5(a)(ii) - (viii), the
date specified in the Notice of Termination; PROVIDED, HOWEVER, that, as set
forth in Section 4(k)(i)(A), for purposes of the Management Stockholders'
Agreement, the Executive shall not be deemed to have incurred a termination of
employment upon the commencement of the Non-Executive Term, if any, and
PROVIDED, FURTHER, that as set forth in Section 4(k)(i)(B) the date of
termination of employment for purposes of the Management Stockholders' Agreement
shall be the date of termination of the Non-Executive Term, if any.
(i) "DISABILITY" shall mean the inability of the Executive to perform
his duties and responsibilities as an officer or employee of the Company or any
of its subsidiaries on a full-time basis for more than six months within any
12-month period because of a physical, mental or emotional incapacity resulting
from injury, sickness or disease.
2
<PAGE> 3
(j) "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 the effect of extraordinary items), as determined by the Company's
independent certified public accountants in accordance with generally accepted
accounting principles consistently applied, as such principles are in effect at
the date hereof, 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.
(k) "EFFECTIVE DATE" shall have the meaning set forth in the recitals
hereto.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "EXECUTIVE" shall have the meaning set forth in the preamble
hereto.
(n) "EXERCISABLE OPTIONS" as of any date of determination, shall mean
those Options (or portions thereof) held by the Executive that are then vested
and exercisable.
(o) "FAIR MARKET VALUE" shall have the meaning ascribed to such term
under the Management Stockholders' Agreement.
(p) "GOOD REASON" shall mean the occurrence of any of the following:
(i) a material diminution in the Executive's title, duties or responsibilities,
without his prior written consent, (ii) a reduction of the Executive's aggregate
cash compensation (including bonus opportunities), benefits or perquisites,
without his prior written consent or (iii) the occurrence of a Change in
Control.
(q) "MANAGEMENT STOCKHOLDERS' AGREEMENT" shall mean that certain
Management Stockholders' Agreement to be entered into by and among the Company,
Odyssey Investment Partners Fund, LP, the Executive and the other employee
stockholders party thereto, effective as of the Effective Date, the terms of
which have previously been accepted by the Executive pursuant to that certain
letter agreement and Management Compensation and Equity Term Sheet dated as of
the date hereof.
(r) "MERGER AGREEMENT" shall have the meaning set forth in the recitals
hereto.
(s) "NOTICE OF TERMINATION" shall have the meaning set forth in Section
5(b).
(t) "NON-EXECUTIVE TERM" shall have the meaning set forth in Section
2(b).
(u) "OPTION AGREEMENTS" shall mean the written agreements between the
Company and the Executive pursuant to which the Executive holds or is granted
options to purchase
3
<PAGE> 4
Common Stock, including, without limitation, agreements evidencing options
granted under the Option Plan and agreements governing the terms of "Roll-Over
Options" (as defined in the Management Stockholders' Agreement).
(v) "OPTION PLAN" shall mean the 2000 Stock Option Plan of Dayton
Superior Corporation, as amended from time to time.
(w) "OPTIONS" as of any date of determination shall mean options held
by the Executive as of such date to purchase Common Stock of the Company.
(x) "PRINCIPAL STOCKHOLDER" shall mean Odyssey Investment Partners
Fund, LP and any of its Permitted Assignees (as such term is defined in the
Management Stockholders' Agreement).
(y) "PROHIBITED COMPETITION" shall have the meaning set forth in
Section 8(b).
(z) "RETIREMENT" shall mean the voluntary termination of the
Executive's services with the Company as a result of his retirement from active
service as the President and Chief Executive Officer of the Company upon or
after the third anniversary of the Effective Date; PROVIDED, HOWEVER, that as
set forth in Section 4(k)(i)(A), for purposes of the Management Stockholders'
Agreement, the Executive shall not be deemed to have incurred a "Retirement"
upon the commencement of the Non-Executive Term, if any, and PROVIDED, FURTHER,
that as set forth in Section 4(k)(i)(C), for purposes of the Management
Stockholders' Agreement, the last day of the Non-Executive Term, if any, shall
be deemed the date of the Executive's termination of employment either by reason
of "Retirement" or "Termination by the Company for Cause" as the case may be.
(aa) "TERM" shall have the meaning set forth in Section 2(a).
2. EMPLOYMENT.
(a) The Company shall continue to employ the Executive and the
Executive shall remain in the employ of the Company, for the period set forth in
this Section 2, in the positions set forth in Section 3 and upon the other terms
and conditions herein provided. The initial term of employment under this
Agreement (the "Initial Term") shall be for the period beginning on the
Effective Date and ending on the third anniversary thereof unless earlier
terminated as provided in Section 5; PROVIDED, HOWEVER, that unless so earlier
terminated or unless the Executive or the Company shall give written notice to
the other of his or its intention not to renew this Agreement no less than sixty
days prior to the scheduled expiration thereof, upon the third anniversary of
the Effective Date, this Agreement shall automatically be renewed for an
additional two year period (the "Extension Term" and collectively with the
Initial Term, the "Term").
4
<PAGE> 5
(b) At any time prior to the scheduled expiration of the Initial Term (or of the
Extension Term, if any), the Company and the Executive may mutually agree that
effective as of such scheduled expiration date the Executive shall resign as the
President and Chief Executive Officer of the Company but continue to provide
services to the Company as a non-executive Chairman, in which case the Executive
shall be entitled to compensation for his services commensurate with his duties
and responsibilities to the Company, as mutually agreed to by the Company and
the Executive at such time. The period of time, if any, during which the
Executive serves as non-executive Chairman shall be referred to as the
"Non-Executive Term." The Non-Executive Term shall terminate upon the date the
Executive ceases to serve as non-executive Chairman for any reason, including
but not by way of limitation, a termination by resignation, removal, failure to
be elected or appointed, death or retirement.
3. POSITION AND DUTIES.
(a) During the Term, the Executive shall serve as the Chairman of the
Board, President and Chief Executive Officer of the Company with such customary
responsibilities, duties and authority as may from time to time be assigned to
the Executive by the Board. During the period of the Executive's active
employment as President and Chief Executive Officer, the Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company; PROVIDED, that it shall not be considered a violation of the
foregoing for the Executive to (i) with the prior consent of the Board (which
consent shall not unreasonably be withheld), serve on corporate, industry, civic
or charitable boards or committees and (ii) manage his personal investments, so
long as none of such activities significantly interferes with the Executive's
duties hereunder.
(b) The Executive shall serve as the Chairman of the Board during the
Term and during the Non-Executive Term, if any. During the Term, the Board shall
propose the Executive for re-election to the Board and the Principal
Stockholders shall vote all of their shares of Common Stock in favor of such
re-election. If elected or appointed thereto, and only for the duration of such
elected term or appointment, the Executive shall also serve as a director of any
of the Company's subsidiaries and/or in one or more executive offices of any
entities owned by the Company.
4. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. During the Term, the Executive shall receive a
base salary at a rate that is no less than $350,000 per annum (the "Annual Base
Salary"), payable in accordance with the Company's normal payroll practices. The
rate of the Annual Base Salary shall be reviewed by the Compensation Committee
on or prior to each anniversary of the Effective Date during the Term and may be
increased, but not decreased, upon such review.
(b) BONUS. For each fiscal year during the Term, the Executive shall be
eligible to participate in the Company's annual cash bonus plan in accordance
with terms and provisions
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<PAGE> 6
which shall be consistent with the Company's executive bonus policy in effect as
of the Effective Date.
(c) LONG TERM INCENTIVE COMPENSATION. During the Term, the Executive
shall be entitled to participate in the Option Plan or any successor plan
thereto.
(d) BENEFITS. During the Term, the Executive shall be entitled to
participate in the employee benefit plans, programs and arrangements of the
Company in effect as of the date hereof (or, to the extent determined by the
Board or Compensation Committee, in effect hereafter) which are applicable to
the senior officers of the Company generally, subject to and on a basis
consistent with the terms, conditions and overall administration thereof.
Furthermore, during the first 12 months of the Term following the Effective
Date, the benefits provided under such employee benefit plans, programs and
arrangements (other than any stock option, restricted stock or other equity
based plan) shall, in the aggregate, be substantially equivalent to the benefits
provided by the Company as of the Effective Date (other than pursuant to any
stock option, restricted stock or other equity based plan).
(e) EXPENSES. Pursuant to the Company's customary policies in force at
the time of payment, the Executive shall be reimbursed for all expenses properly
incurred by the Executive on the Company's behalf in the performance of the
Executive's duties hereunder.
(f) VACATION. During the Term, the Executive shall be entitled to an
amount of annual vacation days, and to compensation in respect of earned but
unused vacation days in accordance with the Company's vacation policy as in
effect as of the Effective Date. The Executive shall also be entitled to paid
holidays in accordance with the Company's practices with respect to same as in
effect as of the Effective Date.
(g) AUTOMOBILE. During the Term, the Company shall provide the
Executive with an annual automobile allowance at a rate not less than that in
effect as of the Effective Date.
(h) CLUB MEMBERSHIP. During the Term, the Company shall pay on behalf
of the Executive, or reimburse the Executive for, annual membership fees payable
in connection with the Executive's membership in two country, alumni, or social
clubs of the Executive's choice.
(i) TAX AND FINANCIAL PLANNING ASSISTANCE. During the Term, the Company
shall, upon submission of proper documentation, pay on behalf of the Executive,
or reimburse the Executive for, reasonable expenses incurred for professional
assistance in planning and preparing his tax returns and managing his financial
affairs, consistent with the Company's practices as in effect on the date of
execution of this Agreement.
(j) LOAN TO PURCHASE SHARES OF COMMON STOCK. In the event that during
the Term or the Non-Executive Term, if any, the Executive elects to purchase
shares of Common Stock pursuant to the Management Stockholders' Agreement, the
Company shall, or shall cause one of
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<PAGE> 7
its affiliates to, lend to the Executive up to $500,000 in the aggregate (or
such greater amount as determined by the Compensation Committee in its
discretion) as payment for such shares pursuant to the terms of a secured,
recourse promissory note or notes bearing interest of the lowest rate specified
pursuant to Section 1274 of the Internal Revenue Code so as to avoid imputed
interest, and the parties shall enter into security agreement(s) under which the
Executive shall pledge such shares to the Company (or affiliate thereof, as
applicable) as security for repayment of such loan(s). Any interest due on such
loan shall be converted into principal and shall not be payable currently as it
is accrued, but rather shall be payable when the underlying shares are sold. Any
such note and security agreement shall have terms consistent with the forgoing
and shall be in a form acceptable to the Company's (or its affiliate's) lenders
under the terms of the Financing Documents (as such term is defined in the
Management Stockholders' Agreement).
(k) RIGHT OF THE EXECUTIVE TO SELL COMMON STOCK TO THE COMPANY.
(i) For purposes of the Management Stockholders' Agreement, (A) if
the Company and the Executive mutually agree to permit the Executive to
resign as President and Chief Executive Officer but to continue to
provide services to the Company as non-executive Chairman pursuant to
Section 2(b), such resignation shall not constitute a resignation,
"Retirement" or other termination of employment thereunder; (B) the
date on which the Executive ceases to serve as non-executive Chairman
shall be deemed to be the date of his termination of employment for
purposes of the Management Stockholders' Agreement and (C) (I) unless
he shall have been removed from such position for Cause, for purposes
of the Management Stockholders' Agreement, the Executive shall be
deemed to have terminated employment by reason of "Retirement" and (II)
if he shall have been removed from such position for Cause, for
purposes of the Management Stockholders' Agreement, the Executive shall
be deemed to have terminated employment by reason of termination by the
Company for Cause.
(ii) If the Executive remains employed by the Company through the
scheduled expiration of the Initial Term, then subject to the
Management Stockholders' Agreement, for the two-year period following
such date (the "Put Period"), the Executive shall have the right to
sell to the Company, and the Company shall have the obligation to
purchase from the Executive, at the Fair Market Value per share, that
number of shares of Common Stock not to exceed in the aggregate 80% of
the sum of (A) the number of shares of Common Stock held by the
Executive as of the third anniversary of the Effective Date and (B) the
number of shares of Common Stock that could be acquired by the
Executive upon the exercise of Exercisable Options as of such date (the
"Aggregate Stock"), in accordance with the provisions of this Section
4(k)(ii) (the "Executive Put"). The Executive shall have the right to
exercise the Executive Put at any time during the Put Period as of
which EBITDA for the fiscal year ending December 31, 2002 or for any
four consecutive fiscal quarters thereafter equals or exceeds $72.4
million (excluding the
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<PAGE> 8
effect of acquisitions completed after the execution date of this
Agreement); PROVIDED, HOWEVER, that (x) the Executive may not exercise
the Executive Put within six months following a prior exercise of the
Executive Put; (y) the Executive Put may not be exercised for less than
10% of the Aggregate Stock and (z) the Executive Put may only be
exercised with respect to shares which the Executive has held for at
least six months. If the Executive desires to exercise the Executive
Put pursuant to this Section 4(k)(ii), he shall notify the Company in
writing, specifying the number of shares to be sold pursuant to the
exercise of the Executive Put hereunder. Subject to the Management
Stockholders' Agreement, payment for shares of Common Stock sold by the
Executive pursuant to this Section 4(k)(ii) shall be made on or prior
to the date 60 days (or the first business day thereafter if the 60th
day is not a business day) following the date of the receipt by the
Company of the Executive's notice described herein; PROVIDED, HOWEVER,
that if such payment is being made on or after the first day of the
seventh month of any fiscal year, then such payment shall be made on or
prior to the date that is 60 days (or the first business day thereafter
if the 60th day is not a business day) following the date of the
determination of Fair Market Value in a manner consistent with the
provisions of the Management Stockholders' Agreement.
(iii) If the Executive holds Exercisable Options as of the date he
notifies the Company of the exercise of the Executive Put pursuant to
Section 4(k)(ii) and together with such notice notifies the Company
that he desires to exercise a specified portion of such Exercisable
Options (the "Specified Options"), the Company shall, or shall cause an
affiliate of the Company to, lend to the Executive within 30 days after
the Company's receipt of such notice from the Executive an amount equal
to the aggregate exercise price payable with respect to the Specified
Options and the aggregate federal, state and local income tax
liability, including any alternative minimum tax obligations, that will
actually be incurred by the Executive as a result of his exercise of
the Specified Options in accordance with such notice. Any such loan
pursuant to this Section 4(k)(iii) shall be pursuant to the terms of a
secured, recourse promissory note or notes which (i) shall be payable
in full no later than the earliest of (A) the date on which the
Executive receives any payment from the Company for the repurchase of
the shares acquired upon exercise of the Specified Options, (B) the
date on which the Executive transfers any such shares and (C) the first
date following the expiration of the Put Period, (ii) shall bear
interest at the applicable federal mid-term rate determined pursuant to
Section 1274(d) of the Internal Revenue Code of 1986, as amended, (iii)
shall provide that any interest due on such loan shall be converted
into principal and shall not be payable currently as it is accrued, but
rather shall be payable when the principal amount is due and (iv) shall
be in a form acceptable to the Company's (or its affiliate's) lenders
under the terms of the Financing Documents. The parties hereto agree
that to the extent any of the foregoing provisions of this Section
4(k)(iii) result in adverse accounting consequences to the Company,
such provisions shall be modified in a manner mutually acceptable to
the parties hereto.
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<PAGE> 9
5. TERMINATION.
(a) The Executive's employment hereunder may be terminated by the
Company or the Executive, as applicable, without any breach of this Agreement
only under the following circumstances and in accordance with subsection (b):
(i) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(ii) DISABILITY. If the Company determines in good faith that the
Executive has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such Notice
of Termination by the Executive, provided that within such 30 day
period the Executive shall not have returned to full-time performance
of his duties.
(iii) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause.
(iv) RESIGNATION FOR GOOD REASON. The Executive may terminate his
employment hereunder for Good Reason.
(v) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without Cause.
(vi) RESIGNATION WITHOUT GOOD REASON. The Executive may resign his
employment hereunder without Good Reason.
(vii) RETIREMENT. The Executive may elect to terminate his
employment by reason of retirement effective no earlier than the third
anniversary of the Effective Date.
(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive under this Section 5 (other than
termination pursuant to subsection (a)(i)) shall be communicated by a written
notice from the Board or the Executive to the other, indicating the specific
termination provision in this Agreement relied upon, setting forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated, and specifying a
Date of Termination (a "Notice of Termination"). For purposes of this Agreement,
the "Date of Termination" shall be (i) with respect to any termination by reason
of the Executive's Disability, 30 days following the receipt of the notice
described in Section 5(a)(ii); (ii) with respect to the Executive's termination
for Cause, the date of the Notice of Termination, and (iii) with respect to the
Executive's termination of employment for any other reason, at least 30 days
following the date of the Notice of Termination. The Executive shall continue to
receive his Annual Base Salary, annual bonus
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<PAGE> 10
and all other compensation and perquisites referenced in Section 4 through the
Date of Termination.
6. SEVERANCE PAYMENTS.
(a) TERMINATION FOR ANY REASON. In the event the Executive's employment
with the Company is terminated for any reason, the Company shall pay the
Executive (or his beneficiary in the event of his death) any unpaid Annual Base
Salary that has accrued as of the Date of Termination, any unreimbursed expenses
due to the Executive and an amount for accrued but unused sick days and vacation
days. The Executive shall also be entitled to accrued, vested benefits under the
Company's benefit plans and programs as provided therein. The Executive shall be
entitled to the additional payments and benefits described below only as set
forth herein.
(b) TERMINATION WITHOUT CAUSE, RESIGNATION FOR GOOD REASON OR
TERMINATION BY REASON OF DEATH OR DISABILITY. In the event of the Executive's
Termination without Cause (pursuant to Section 5(a)(v)), Resignation for Good
Reason (pursuant to Section 5(a)(iv)) or termination by reason of Death or
Disability (pursuant to Section 5(a)(i) or (ii), respectively), the Company
shall pay to the Executive the amounts described in subsection (a), and:
(i) subject to the Executive's compliance with Sections 8 and 9,
pay to the Executive, for the twenty-four month period following the
Date of Termination, in accordance with its regular payroll practice,
his Annual Base Salary as in effect on the Date of Termination; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time; and
(iii) continue for one year the Executive's coverage under the
Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or terminates any such
plan or program following such Date of Termination, the Company medical
and dental plans provided to employees similarly situated to
Executive), as if the Executive were an active employee during such
time, subject to standard employee contributions by the Executive as
are required under such plans, and further subject to the Executive's
election of "COBRA" continuation coverage during such period. All
post-employment coverage under such plans shall be co-extensive with
COBRA continuation coverage required by federal (and where applicable
by state) law, and shall cease if the Executive becomes eligible for
coverage under another employer's plans.
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<PAGE> 11
7. OTHER TERMINATION PROVISIONS.
Notwithstanding any provision of this Agreement or the Management
Stockholders' Agreement to the contrary, in the event that as a consequence of a
termination of the Executive's employment for any reason, the Executive is
compelled to exercise any Options in order to prevent such Options from expiring
in accordance with their terms and the Company is unable to repurchase the
Executive's stock at such time, the Company shall either (i) provide the
Executive with an interest-free recourse loan equal to the actual aggregate
federal, state and local income tax liability (including alternative minimum tax
obligations) incurred as a consequence of the Option exercise, which loan shall
(A) be secured by a pledge of the shares acquired upon exercise of such Options,
(B) be payable in full, with respect to each Option (or portion) so exercised,
upon the earliest of (I) the tenth anniversary of the date of grant of such
Option, (II) five days after the date on which the Executive sells, transfers or
otherwise disposes or conveys for consideration the shares acquired upon
exercise of such Option, and (III) the date specified in the Management
Stockholders' Agreement for the expiration of certain provisions thereof, (ii)
permit the Executive to extend the post-termination exercise period of such
Options (but not beyond the tenth anniversary of the date of Option grant) until
such time as the Company is able to repurchase the underlying shares of Common
Stock, or (iii) devise such other method that is reasonably acceptable to the
Executive so as to prevent the Executive from incurring tax liability upon
Option exercise at a time when he is not able to receive payment from the
Company (or a third party) for the shares acquired upon such exercise.
8. COMPETITION.
(a) The Executive shall not engage in any Prohibited Competition (as
defined below in Section 8(b)) at any time during the Term or the Non-Executive
Term, if any, and for a period of two years after the later to end of the Term
and the Non-Executive Term.
(b) For purposes of this Agreement, the Executive shall be considered
to engage in prohibited competition ("Prohibited Competition") if the Executive
shall: directly or indirectly, engage in or own, manage, join, operate or
control, or participate in the ownership, management, operation or control of,
or be connected as a director, officer, employee, partner, consultant or
otherwise with, or permit his name to be used by or in connection with, any
business or organization which produces, designs, conducts research on,
provides, sells, leases, distributes or markets accessories, chemicals, forming
and related products used in concrete and masonry construction (the "Business")
which, directly or indirectly, competes with the Business conducted by Company
and its subsidiaries in North America, South America and Europe, it being
understood that the foregoing shall not limit the Executive from making passive
investments of less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system.
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<PAGE> 12
(c) In the event any of the terms of this Section 8 shall be determined
by any court of competent jurisdiction to be unenforceable by reason of
extending for too great a period of time or over too great a geographical area
or by reason of being too extensive in any other respect, it will be interpreted
to extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
9. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of the Executive's
duties hereunder or pursuant to subsection (c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets, and any other information that would
be protected under the Uniform Trade Secrets Act in Ohio, of or relating to the
Company, including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business practices,
business strategy, business development, finances, principals, vendors,
distributors, suppliers, customers, potential customers, manufacturing methods,
sales methods, marketing methods, costs, prices, contractual relationships,
information systems, regulatory status, compensation paid to employees or other
terms of employment, or deliver to any person, firm, corporation or other entity
any document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). The parties hereto agree that
"confidential or proprietary information" shall not include information that (i)
is a matter of public knowledge (other than by act of the Executive in violation
hereof); (ii) was provided to the Executive (without breach of any obligation of
confidence owed to the Company) by a third party which is not an affiliate of
the Company or (iii) is required to be disclosed by law or judicial or
administrative process.
(b) Upon termination of the Executive's employment with Company for any
reason and upon the Company's request, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning, without limitation, the Company's operations, processes, products,
inventions, business practices, business strategy, business development,
finances, principals, vendors, distributors, suppliers, customers, potential
customers, manufacturing methods, sales methods, marketing methods, costs,
prices, contractual relationships, information systems, regulatory status,
compensation paid to employees or other terms of employment and/or which contain
proprietary information or trade secrets.
12
<PAGE> 13
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice thereof,
shall, as much in advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to such process.
10. INJUNCTIVE RELIEF.
It is recognized and acknowledged by the Executive that a breach of the
covenants contained in Sections 8 and 9 will cause irreparable damage to the
Company and its goodwill, the exact amount of which will be difficult or
impossible to ascertain, and that the remedies at law for any such breach will
be inadequate. Accordingly, the Executive agrees that in the event of a breach
of any of the covenants contained in Sections 8 and 9, in addition to any other
remedy which may be available at law or in equity, the Company shall be entitled
to specific performance and injunctive relief.
11. SURVIVAL.
The expiration or termination of the Term shall not impair the rights
or obligations of any party hereto which shall have accrued hereunder prior to
such expiration.
12. BINDING ON SUCCESSORS.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Executive and their respective successors, assigns, personnel and
legal representatives, executors, administrators, heirs, distributees, devisees,
and legatees, as applicable.
13. GOVERNING LAW.
This Agreement shall be governed, construed, interpreted and enforced
in accordance with the substantive laws of the State of Ohio.
14. VALIDITY.
The invalidity or unenforceability of any provision or provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
15. NOTICES.
Any notice, request, claim, demand, document or other communication
hereunder to any party shall be effective upon receipt (or refusal of receipt)
and shall be in writing and delivered personally or sent by telex, telecopy, or
certified or registered mail, postage prepaid, as follows:
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<PAGE> 14
(a) If to the Company, to:
Dayton Superior Corporation
7777 Washington Village Drive, Suite 130
Dayton, OH 45459
Attention: Corporate Secretary
Phone: (937) 428-6360
Fax: (937) 428-9115
with copies to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attention: William Hopkins
Phone: (212) 351-7900
Fax: (212) 351-7925
and
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Maureen A. Riley, Esq.
Phone: (212) 906-1200
Fax: (212) 751-4864
(b) If to the Executive, to him at the address set forth below under his
signature, with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44144-1304
Attention: Mary Ann Jorgenson
Phone: (216) 479-8654
Fax: (216) 479-8776
or at any other address as any party shall have specified by notice in writing
to the other party in accordance with this Section 15.
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<PAGE> 15
16. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same Agreement.
17. ENTIRE AGREEMENT.
The terms of this Agreement, together with the Management Stockholders'
Agreement, the Option Plan and the Option Agreements, are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement, and the aforementioned contemporaneous documents, shall
constitute the complete and exclusive statement of its terms and that no
extrinsic evidence whatsoever may be introduced in any judicial, administrative,
or other legal proceeding to vary the terms of this Agreement. Notwithstanding
any of the foregoing to the contrary, in the event of a conflict between the
terms of this Agreement and the Management Stockholders' Agreement, the terms of
this Agreement shall govern.
18. AMENDMENTS; WAIVERS.
This Agreement may not be modified, amended, or terminated except by an
instrument in writing, signed by the Executive and the Chairman of the
Compensation Committee. By an instrument in writing similarly executed, the
Executive or the Company may waive compliance by the other party or parties with
any provision of this Agreement that such other party was or is obligated to
comply with or perform; PROVIDED, HOWEVER, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy or power
hereunder shall preclude any other or further exercise of any other right,
remedy or power provided herein or by law or in equity.
19. NO INCONSISTENT ACTIONS.
The parties hereto shall not voluntarily undertake or fail to undertake
any action or course of action inconsistent with the provisions or essential
intent of this Agreement. Furthermore, it is the intent of the parties hereto to
act in a fair and reasonable manner with respect to the interpretation and
application of the provisions of this Agreement.
20. ARBITRATION.
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators in Cleveland, Ohio, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; PROVIDED, HOWEVER, that the
Company shall be entitled to seek a restraining order or injunction in any court
15
<PAGE> 16
of competent jurisdiction to prevent any continuation of any violation of the
provisions of Section 8 or 9 of this Agreement and the Executive hereby consents
that such restraining order or injunction may be granted without the necessity
of the Company's posting any bond; and PROVIDED FURTHER, that the Executive
shall be entitled to seek specific performance of his right to be paid until the
Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Agreement. Each of the parties hereto shall
bear its share of the fees and expenses of any arbitration hereunder.
21. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES.
During the Term and so long as the Executive has not breached any of
his obligations set forth in Sections 8 and 9, the Company shall indemnify the
Executive to the fullest extent permitted by the laws of the State of Delaware,
as in effect at the time of the subject act or omission, and shall advance to
the Executive reasonable attorneys' fees and expenses as such fees and expenses
are incurred (subject to an undertaking from the Executive to repay such
advances if it shall be finally determined by a judicial decision which is not
subject to further appeal that the Executive was not entitled to the
reimbursement of such fees and expenses) and he shall be entitled to the
protection of any insurance policies the Company shall elect to maintain
generally for the benefit of its directors and officers ("Directors and Officers
Insurance") against all costs, charges and expenses incurred or sustained by him
in connection with any action, suit or proceeding to which he may be made a
party by reason of his being or having been a director, officer or employee of
the Company or any of its subsidiaries or his serving or having served any other
enterprise as a director, officer or employee at the request of the Company
(other than any dispute, claim or controversy arising under or relating to this
Agreement). The Company covenants to maintain during the Term for the benefit of
the Executive (in his capacity as an officer and director of the Company)
Directors and Officers Insurance providing customary benefits to the Executive.
[signature page follows]
16
<PAGE> 17
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
DAYTON SUPERIOR CORPORATION
By: /s/ Alan F. McIlroy
-------------------
Name: Alan F. McIlroy
Title: Chief Financial Officer
EXECUTIVE
/s/ John A Ciccarelli
---------------------
John A. Ciccarelli
President and Chief Executive Officer
2626 Indian Wells Trail
Xenia, Ohio 45385
Upon the Effective Date, accepted and agreed to for purposes of Section
3(b)
ODYSSEY INVESTMENT PARTNERS FUND, LP
By: ODYSSEY CAPITAL PARTNERS, LLC,
its general partner
By:
-------------------------------
Name:
Title:
Date:
-------------------------------
17
<PAGE> 1
Exhibit 10.11
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of January 19, 2000 and effective as
of the Effective Date (as defined below), is made by and between Dayton Superior
Corporation, an Ohio corporation (together with any successor thereto, the
"Company"), and Alan F. McIlroy (the "Executive").
RECITALS
--------
WHEREAS, the Executive has prior to the date hereof been employed by
the Company (or one of its subsidiaries) as Vice President and Chief Financial
Officer; and
WHEREAS, it is the desire of the Company to assure itself of the
continuity of the management services of the Executive following the
consummation of the merger contemplated by the Agreement and Plan of Merger by
and between the Company and Stone Acquisition Corp. dated as of January 19, 2000
(the "Merger Agreement"); and
WHEREAS, it is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such services
under the terms hereof, and the Executive desires to commit himself to serve the
Company on the terms herein provided; and
WHEREAS, the Company and the Executive intend this Agreement to be
effective as of the consummation of the merger contemplated in the Merger
Agreement (the "Effective Date"); and
WHEREAS, the Company and the Executive intend that if the merger
contemplated in the Merger Agreement is not consummated, this Employment
Agreement shall be of no force or effect.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Annual Base Salary" shall have the meaning set forth in SECTION 4.
(b) "Board" shall mean the Board of Directors of the Company.
(c) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
<PAGE> 2
(i) willful or gross misconduct or material failure in the
performance of his duties and responsibilities hereunder, other than
any such failure resulting from the Executive's Disability, which
misconduct or failure continues beyond 14 days after the Company
notifies the Executive, 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.
(d) "Common Stock" shall mean the common stock of the Company, $0.01
par value per share.
(e) "Company" shall have the meaning set forth in the preamble hereto.
(f) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, or, (ii) if the Executive's
employment is terminated pursuant to SECTION 5(a)(II) - (v), the date specified
in the Notice of Termination.
(g) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a total of 180 days
during any twelve month period as a result of physical, mental or emotional
incapacity due to illness, injury or disease.
(h) "Effective Date" shall have the meaning set forth in the recitals
hereto.
(i) "Executive" shall have the meaning set forth in the preamble
hereto.
(j) "Management Stockholders' Agreement" shall mean that certain
Management Stockholders' Agreement to be entered into by and among the Company,
Odyssey Investment Partners Fund, LP, the Executive and the other stockholders
party thereto effective as of the Effective Date, the terms of which have
previously been accepted by Executive pursuant to that certain letter agreement
and Management Compensation and Equity Term Sheet dated as of the date hereof
and attached hereto.
(k) "Merger Agreement" shall have the meaning set forth in the recitals
hereto.
(l) "Notice of Termination" shall have the meaning set forth in SECTION
5(b).
(m) "Option Agreements" shall mean the written agreements between the
Company and the Executive pursuant to which the Executive holds or is granted
options to purchase Common Stock, including, without limitation, agreements
evidencing options granted under the Option Plan and agreements governing the
terms of "Roll-Over Options" (as defined in the Management Stockholders'
Agreement).
(n) "Option Plan" shall mean the 2000 Stock Option Plan of Dayton
Superior Corporation, as amended from time to time.
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(o) "Options" as of any date of determination shall mean options held
by the Executive as of such date to purchase Common Stock of the Company.
(p) "Stock Option Agreement" shall have the meaning set forth in
SECTION 4(c).
(q) "Prohibited Competition" shall have the meaning set forth in
SECTION 9(b).
(r) "Term" shall have the meaning set forth in SECTION 2(b).
2. EMPLOYMENT.
(a) The Company shall employ the Executive, and the Executive shall
continue in the employ of the Company, for the period set forth in this SECTION
2, in the positions set forth in SECTION 3 and upon the other terms and
conditions herein provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period of 3 years beginning on the
Effective Date, unless earlier terminated as provided in SECTION 5.
(b) The employment term hereunder shall automatically be extended for
successive one (1) year periods ("Extension Terms" and, collectively with the
Initial Term, the "Term") unless either party gives notice of non-extension to
the other no later than 90 days prior to the expiration of the then-applicable
Term.
3. POSITION AND DUTIES. The Executive shall serve as Vice President and
Chief Financial Officer of the Company with such responsibilities, duties and
authority as are customary for someone serving in such position at companies
similar in size to the Company, together with such other duties and
responsibilities as may from time to time be assigned to the Executive by the
Board and the Chief Executive Officer of the Company, consistent with his
position. The Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company; provided that it shall not
be considered a violation of the foregoing for the Executive to (i) with the
prior consent of the Board (which consent shall not unreasonably be withheld),
serve on corporate, industry, civic or charitable boards or committees, and (ii)
manage his personal investments, so long as none of such activities
significantly interferes with the Executive's duties hereunder.
4. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. During the Term, the Executive shall receive a
base salary at a rate of $225,000 per annum ("Annual Base Salary"), payable in
accordance with the Company's standard payroll procedures. The rate of Annual
Base Salary shall be subject to increase as determined by the Board in its
discretion.
(b) BONUS. During the Term, the Executive shall be eligible to
participate in the Company's executive annual bonus plan as in effect from time
to time.
(c) STOCK OPTIONS. Effective as of the Effective Date, the Executive
shall be awarded options to purchase shares of Common Stock pursuant to the
Option Plan and one or more
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<PAGE> 4
written Stock Option Agreements to be entered into by and between the Company
and the Executive.
(d) BENEFITS. During the Term, the Executive shall be entitled to
participate in the employee benefit plans, programs and arrangements of the
Company (including vacation) in effect as of the date hereof (or, to the extent
determined by the Board, in effect hereafter) which are applicable to the senior
officers of the Company, subject to and on a basis consistent with the terms,
conditions and overall administration generally thereof. Furthermore, during the
first 12 months of the Term following the Effective Date, the benefits provided
under such employee benefit plans, programs and arrangements (other than any
stock option, restricted stock or other equity based plan) shall, in the
aggregate, be substantially equivalent to the benefits provided by the Company
as of the Effective Date (other than any stock option, restricted stock or other
equity based plan).
(e) EXPENSES. The Company shall reimburse the Executive for all
reasonable travel and other business expenses properly incurred by him in the
performance of his duties to the Company, in accordance with the Company's
documentation and other policies with respect thereto.
5. TERMINATION.
The Executive's employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:
(a) CIRCUMSTANCES.
(i) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(ii) DISABILITY. If the Company determines in good faith that the
Executive has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of his
duties. The Executive shall continue to receive his Annual Base Salary
until the Date of Termination.
(iii) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time.
(iv) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without Cause at any time.
(v) RESIGNATION. The Executive may resign his employment upon 30
days written notice to the Company.
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<PAGE> 5
(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive under this SECTION 5 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a written
notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and specifying a Date of
Termination (a "Notice of Termination"). For purposes of this Agreement, the
"Date of Termination" shall be (i) with respect to any termination by reason of
Executive's Disability, 30 days following the receipt of the notice described in
SECTION 5(A)(II), (ii) with respect to Executive's termination for Cause, the
date of the Notice of Termination, and (iii) with respect to the Executive's
termination for any other reason, at least 30 days following the date of the
Notice of Termination.
6. SEVERANCE PAYMENTS.
(a) TERMINATION FOR ANY REASON. In the event the Executive's employment
with the Company is terminated for any reason, the Company shall pay the
Executive (or his beneficiary in the event of his death) any unpaid Annual Base
Salary that has accrued as of the Date of Termination, any unreimbursed expenses
due to the Executive and an amount for accrued but unused sick days and vacation
days. The Executive shall also be entitled to accrued, vested benefits under the
Company's applicable employee benefit plans, programs and arrangements as
provided therein. The Executive shall be entitled to the additional payments and
benefits described below only as set forth herein.
(b) TERMINATION WITHOUT CAUSE. If the Executive's employment shall
terminate without Cause (pursuant to SECTION 5(a)(iv)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive, for the twenty-four month period following the
Date of Termination, in accordance with its regular payroll practice,
his Annual Base Salary as in effect on the Date of Termination; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time; and
(iii) continue for one year the Executive's coverage under the
Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or terminates any such
plan or program following such Date of Termination, the Company medical
and dental plans provided to employees similarly situated to
Executive), as if the Executive were an active employee during such
time, subject to standard employee contributions by the Executive as
are required under such plans, and further subject to the Executive's
election of "COBRA" continuation coverage during such period. All
post-employment coverage under such plans shall be co-extensive with
COBRA continuation coverage required by federal (and where applicable
by state) law, and shall cease if the Executive becomes eligible for
coverage under another employer's plans.
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<PAGE> 6
(c) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment shall terminate by reason of his death or Disability (pursuant to
SECTION 5(a)(i) or (ii)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive (or to his estate or beneficiaries in the event of
his death), for the twenty-four month period following the Date of
Termination, in accordance with its regular payroll practice, the
excess of his Annual Base Salary as in effect on the Date of
Termination over the aggregate amount of any payments made to or on
behalf of the Executive during such 24-month period under any life
insurance, disability insurance or death benefit program maintained by
the Company; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time.
7. SURVIVAL. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto which shall have accrued hereunder
prior to such expiration.
8. Intentionally Left Blank
9. COMPETITION.
(a) The Executive shall not engage in any Prohibited Competition (as
defined below in SECTION 9(b)) at any time during the Term and for a period of
two years thereafter.
(b) For purposes of this Agreement, the Executive shall be considered
to engage in prohibited competition ("Prohibited Competition") if the Executive
shall: directly or indirectly, engage in or own, manage, join, operate or
control, or participate in the ownership, management, operation or control of,
or be connected as a director, officer, employee, partner, consultant or
otherwise with, or permit his name to be used by or in connection with, any
business or organization which produces, designs, conducts research on,
provides, sells, leases, distributes or markets accessories, chemicals, forming
and related products used in concrete and masonry construction (the "Business")
which, directly or indirectly, competes with the Business conducted by Company
and its subsidiaries in North America, South America and Europe, it being
understood that the foregoing shall not limit the Executive from making passive
investments of less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system.
(c) In the event any the terms of this SECTION 9 shall be determined by
any court of competent jurisdiction to be unenforceable by reason of extending
for too great a period of time or over too great a geographical area or by
reason of being too extensive in any other respect, it will be interpreted to
extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
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<PAGE> 7
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of the Executive's
duties hereunder or pursuant to subsection (c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets, and any other information that would
be protected under the Uniform Trade Secrets Act in Ohio, of or relating to the
Company, including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business practices,
business strategy, business development, finances, principals, vendors,
distributors, suppliers, customers, potential customers, manufacturing methods,
sales methods, marketing methods, costs, prices, contractual relationships,
information systems, regulatory status, compensation paid to employees or other
terms of employment, or deliver to any person, firm, corporation or other entity
any document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). The parties hereto agree that
"confidential or proprietary information" shall not include information that (i)
is a matter of public knowledge (other than by act of the Executive in violation
hereof); (ii) was provided to the Executive (without breach of any obligation of
confidence owed to the Company) by a third party which is not an affiliate of
the Company or (iii) is required to be disclosed by law or judicial or
administrative process.
(b) Upon termination of the Executive's employment with Company for any
reason and upon the Company's request, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning, without limitation, the Company's operations, processes, products,
inventions, business practices, business strategy, business development,
finances, principals, vendors, distributors, suppliers, customers, potential
customers, manufacturing methods, sales methods, marketing methods, costs,
prices, contractual relationships, information systems, regulatory status,
compensation paid to employees or other terms of employment and/or which contain
proprietary information or trade secrets.
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice thereof,
shall, as much in advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to such process.
11. INJUNCTIVE RELIEF. It is recognized and acknowledged by the Executive
that a breach of the covenants contained in SECTIONS 9 AND 10 will cause
irreparable damage to Company and its goodwill, the exact amount of which will
be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate. Accordingly, the Executive agrees that in the
event of a breach of any of the covenants contained in SECTIONS 9 AND 10, in
addition to any
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<PAGE> 8
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.
12. BINDING ON SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company, the Executive and their respective successors,
assigns, personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
13. GOVERNING LAW. This Agreement shall be governed, construed, interpreted
and enforced in accordance with the substantive laws of the State of Ohio.
14. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Dayton Superior Corporation
7777 Washington Village Dr., Suite 130
Dayton, OH 45459
Attn: General Counsel
Phone: (937) 428-6360
Fax: (937) 428-9115
With copies to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attn: William Hopkins
Phone: (212) 351-7900
Fax: (212) 351-7925
and
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attn: Maureen A. Riley
Phone: (212) 906-1200
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Fax: (212) 751-4864
(b) If to the Executive, to him at the address set forth below under
his signature;
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44144-1304
Attn: Mary Ann Jorgenson
Phone: (216) 479-8654
Fax: (216) 479-8776
or at any other address as any party shall have specified by notice in writing
to the other parties.
16. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
17. ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
18. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and the
Chairman of the Board. By an instrument in writing similarly executed, the
Executive or the Company may waive compliance by the other party or parties with
any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder preclude any other or further exercise of any other right, remedy, or
power provided herein or by law or in equity.
19. NO INCONSISTENT ACTIONS. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
20. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in Cleveland, Ohio in accordance with the
rules of the American Arbitration
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<PAGE> 10
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of the provisions of
SECTIONS 9 OR 10 of this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the necessity of the
Company's posting any bond. Each of the parties hereto shall bear its share of
the fees and expenses of any arbitration hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
THE COMPANY
-----------
DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
----------------------
Name: John A. Ciccarelli
Title: President and Chief Executive Officer
THE EXECUTIVE
-------------
/s/ Alan F. McIlroy
--------------------
Alan F. McIlroy
Address: 9668 Preserve Place
Centerville, OH 45458
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<PAGE> 1
Exhibit 10.12
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of January 19, 2000 and effective as
of the Effective Date (as defined below), is made by and between Dayton Superior
Corporation, an Ohio corporation (together with any successor thereto, the
"Company"), and Raymond E. Bartholomae (the "Executive").
RECITALS
--------
WHEREAS, the Executive has prior to the date hereof been employed by
the Company (or one of its subsidiaries) as Vice President and General Manager,
Symons; and
WHEREAS, it is the desire of the Company to assure itself of the
continuity of the management services of the Executive following the
consummation of the merger contemplated by the Agreement and Plan of Merger by
and between the Company and Stone Acquisition Corp. dated as of January 19, 2000
(the "Merger Agreement"); and
WHEREAS, it is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such services
under the terms hereof, and the Executive desires to commit himself to serve the
Company on the terms herein provided; and
WHEREAS, the Company and the Executive intend this Agreement to be
effective as of the consummation of the merger contemplated in the Merger
Agreement (the "Effective Date"); and
WHEREAS, the Company and the Executive intend that if the merger
contemplated in the Merger Agreement is not consummated, this Employment
Agreement shall be of no force or effect.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Annual Base Salary" shall have the meaning set forth in SECTION 4.
(b) "Board" shall mean the Board of Directors of the Company.
(c) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
<PAGE> 2
(i) willful or gross misconduct or material failure in the
performance of his duties and responsibilities hereunder, other than
any such failure resulting from the Executive's Disability, which
misconduct or failure continues beyond 14 days after the Company
notifies the Executive, 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.
(d) "Common Stock" shall mean the common stock of the Company, $0.01
par value per share.
(e) "Company" shall have the meaning set forth in the preamble hereto.
(f) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, or, (ii) if the Executive's
employment is terminated pursuant to SECTION 5(a)(ii) - (v), the date specified
in the Notice of Termination.
(g) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a total of 180 days
during any twelve month period as a result of physical, mental or emotional
incapacity due to illness, injury or disease.
(h) "Effective Date" shall have the meaning set forth in the recitals
hereto.
(i) "Executive" shall have the meaning set forth in the preamble
hereto.
(j) "Management Stockholders' Agreement" shall mean that certain
Management Stockholders' Agreement to be entered into by and among the Company,
Odyssey Investment Partners Fund, LP, the Executive and the other stockholders
party thereto effective as of the Effective Date, the terms of which have
previously been accepted by Executive pursuant to that certain letter agreement
and Management Compensation and Equity Term Sheet dated as of the date hereof
and attached hereto.
(k) "Merger Agreement" shall have the meaning set forth in the recitals
hereto.
(l) "Notice of Termination" shall have the meaning set forth in SECTION
5(b).
(m) "Option Agreements" shall mean the written agreements between the
Company and the Executive pursuant to which the Executive holds or is granted
options to purchase Common Stock, including, without limitation, agreements
evidencing options granted under the Option Plan and agreements governing the
terms of "Roll-Over Options" (as defined in the Management Stockholders'
Agreement).
(n) "Option Plan" shall mean the 2000 Stock Option Plan of Dayton
Superior Corporation, as amended from time to time.
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(o) "Options" as of any date of determination shall mean options held
by the Executive as of such date to purchase Common Stock of the Company.
(p) "Stock Option Agreement" shall have the meaning set forth in
SECTION 4(c).
(q) "Prohibited Competition" shall have the meaning set forth in
SECTION 9(b).
(r) "Term" shall have the meaning set forth in SECTION 2(b).
2. EMPLOYMENT.
(a) The Company shall employ the Executive, and the Executive shall
continue in the employ of the Company, for the period set forth in this SECTION
2, in the positions set forth in SECTION 3 and upon the other terms and
conditions herein provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period of 3 years beginning on the
Effective Date, unless earlier terminated as provided in SECTION 5.
(b) The employment term hereunder shall automatically be extended for
successive one (1) year periods ("Extension Terms" and, collectively with the
Initial Term, the "Term") unless either party gives notice of non-extension to
the other no later than 90 days prior to the expiration of the then-applicable
Term.
3. POSITION AND DUTIES. The Executive shall serve as Vice President and
General Manager, Symons with such responsibilities, duties and authority as are
customary for someone serving in such position at companies similar in size to
the Company, together with such other duties and responsibilities as may from
time to time be assigned to the Executive by the Board and the Chief Executive
Officer of the Company, consistent with his position. The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company; provided that it shall not be considered a violation of the
foregoing for the Executive to (i) with the prior consent of the Board (which
consent shall not unreasonably be withheld), serve on corporate, industry, civic
or charitable boards or committees, and (ii) manage his personal investments, so
long as none of such activities significantly interferes with the Executive's
duties hereunder.
4. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. During the Term, the Executive shall receive a
base salary at a rate of $197,000 per annum ("Annual Base Salary"), payable in
accordance with the Company's standard payroll procedures. The rate of Annual
Base Salary shall be subject to increase as determined by the Board in its
discretion.
(b) BONUS. During the Term, the Executive shall be eligible to
participate in the Company's executive annual bonus plan as in effect from time
to time.
(c) STOCK OPTIONS. Effective as of the Effective Date, the Executive
shall be awarded options to purchase shares of Common Stock pursuant to the
Option Plan and one or more
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<PAGE> 4
written Stock Option Agreements to be entered into by and between the Company
and the Executive.
(d) BENEFITS. During the Term, the Executive shall be entitled to
participate in the employee benefit plans, programs and arrangements of the
Company (including vacation) in effect as of the date hereof (or, to the extent
determined by the Board, in effect hereafter) which are applicable to the senior
officers of the Company, subject to and on a basis consistent with the terms,
conditions and overall administration generally thereof. Furthermore, during the
first 12 months of the Term following the Effective Date, the benefits provided
under such employee benefit plans, programs and arrangements (other than any
stock option, restricted stock or other equity based plan) shall, in the
aggregate, be substantially equivalent to the benefits provided by the Company
as of the Effective Date (other than any stock option, restricted stock or other
equity based plan).
(e) EXPENSES. The Company shall reimburse the Executive for all
reasonable travel and other business expenses properly incurred by him in the
performance of his duties to the Company, in accordance with the Company's
documentation and other policies with respect thereto.
5. TERMINATION.
The Executive's employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:
(a) CIRCUMSTANCES.
(i) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(ii) DISABILITY. If the Company determines in good faith that the
Executive has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of his
duties. The Executive shall continue to receive his Annual Base Salary
until the Date of Termination.
(iii) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time.
(iv) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without Cause at any time.
(v) RESIGNATION. The Executive may resign his employment upon 30
days written notice to the Company.
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(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive under this SECTION 5 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a written
notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and specifying a Date of
Termination (a "Notice of Termination"). For purposes of this Agreement, the
"Date of Termination" shall be (i) with respect to any termination by reason of
Executive's Disability, 30 days following the receipt of the notice described in
SECTION 5(a)(ii), (ii) with respect to Executive's termination for Cause, the
date of the Notice of Termination, and (iii) with respect to the Executive's
termination for any other reason, at least 30 days following the date of the
Notice of Termination.
6. SEVERANCE PAYMENTS.
(a) TERMINATION FOR ANY REASON. In the event the Executive's employment
with the Company is terminated for any reason, the Company shall pay the
Executive (or his beneficiary in the event of his death) any unpaid Annual Base
Salary that has accrued as of the Date of Termination, any unreimbursed expenses
due to the Executive and an amount for accrued but unused sick days and vacation
days. The Executive shall also be entitled to accrued, vested benefits under the
Company's applicable employee benefit plans, programs and arrangements as
provided therein. The Executive shall be entitled to the additional payments and
benefits described below only as set forth herein.
(b) TERMINATION WITHOUT CAUSE. If the Executive's employment shall
terminate without Cause (pursuant to SECTION 5(a)(iv)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive, for the twenty-four month period following the
Date of Termination, in accordance with its regular payroll practice,
his Annual Base Salary as in effect on the Date of Termination; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time; and
(iii) continue for one year the Executive's coverage under the
Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or terminates any such
plan or program following such Date of Termination, the Company medical
and dental plans provided to employees similarly situated to
Executive), as if the Executive were an active employee during such
time, subject to standard employee contributions by the Executive as
are required under such plans, and further subject to the Executive's
election of "COBRA" continuation coverage during such period. All
post-employment coverage under such plans shall be co-extensive with
COBRA continuation coverage required by federal (and where applicable
by state) law, and shall cease if the Executive becomes eligible for
coverage under another employer's plans.
5
<PAGE> 6
(c) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment shall terminate by reason of his death or Disability (pursuant to
SECTION 5(a)(i) or (ii)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive (or to his estate or beneficiaries in the event of
his death), for the twenty-four month period following the Date of
Termination, in accordance with its regular payroll practice, the
excess of his Annual Base Salary as in effect on the Date of
Termination over the aggregate amount of any payments made to or on
behalf of the Executive during such 24-month period under any life
insurance, disability insurance or death benefit program maintained by
the Company; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time.
7. SURVIVAL. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto which shall have accrued hereunder
prior to such expiration.
8. Intentionally Left Blank
9. COMPETITION.
(a) The Executive shall not engage in any Prohibited Competition (as
defined below in SECTION 9(b)) at any time during the Term and for a period of
two years thereafter.
(b) For purposes of this Agreement, the Executive shall be considered
to engage in prohibited competition ("Prohibited Competition") if the Executive
shall: directly or indirectly, engage in or own, manage, join, operate or
control, or participate in the ownership, management, operation or control of,
or be connected as a director, officer, employee, partner, consultant or
otherwise with, or permit his name to be used by or in connection with, any
business or organization which produces, designs, conducts research on,
provides, sells, leases, distributes or markets accessories, chemicals, forming
and related products used in concrete and masonry construction (the "Business")
which, directly or indirectly, competes with the Business conducted by Company
and its subsidiaries in North America, South America and Europe, it being
understood that the foregoing shall not limit the Executive from making passive
investments of less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system.
(c) In the event any the terms of this SECTION 9 shall be determined by
any court of competent jurisdiction to be unenforceable by reason of extending
for too great a period of time or over too great a geographical area or by
reason of being too extensive in any other respect, it will be interpreted to
extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
6
<PAGE> 7
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of the Executive's
duties hereunder or pursuant to subsection (c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets, and any other information that would
be protected under the Uniform Trade Secrets Act in Ohio, of or relating to the
Company, including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business practices,
business strategy, business development, finances, principals, vendors,
distributors, suppliers, customers, potential customers, manufacturing methods,
sales methods, marketing methods, costs, prices, contractual relationships,
information systems, regulatory status, compensation paid to employees or other
terms of employment, or deliver to any person, firm, corporation or other entity
any document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). The parties hereto agree that
"confidential or proprietary information" shall not include information that (i)
is a matter of public knowledge (other than by act of the Executive in violation
hereof); (ii) was provided to the Executive (without breach of any obligation of
confidence owed to the Company) by a third party which is not an affiliate of
the Company or (iii) is required to be disclosed by law or judicial or
administrative process.
(b) Upon termination of the Executive's employment with Company for any
reason and upon the Company's request, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning, without limitation, the Company's operations, processes, products,
inventions, business practices, business strategy, business development,
finances, principals, vendors, distributors, suppliers, customers, potential
customers, manufacturing methods, sales methods, marketing methods, costs,
prices, contractual relationships, information systems, regulatory status,
compensation paid to employees or other terms of employment and/or which contain
proprietary information or trade secrets.
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice thereof,
shall, as much in advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to such process.
11. INJUNCTIVE RELIEF. It is recognized and acknowledged by the Executive that a
breach of the covenants contained in SECTIONS 9 AND 10 will cause irreparable
damage to Company and its goodwill, the exact amount of which will be difficult
or impossible to ascertain, and that the remedies at law for any such breach
will be inadequate. Accordingly, the Executive agrees that in the event of a
breach of any of the covenants contained in SECTIONS 9 AND 10, in addition to
any
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<PAGE> 8
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.
12. BINDING ON SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company, the Executive and their respective successors,
assigns, personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
13. GOVERNING LAW. This Agreement shall be governed, construed, interpreted
and enforced in accordance with the substantive laws of the State of Ohio.
14. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Dayton Superior Corporation
7777 Washington Village Dr., Suite 130
Dayton, OH 45459
Attn: General Counsel
Phone: (937) 428-6360
Fax: (937) 428-9115
With copies to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attn: William Hopkins
Phone: (212) 351-7900
Fax: (212) 351-7925
and
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attn: Maureen A. Riley
Phone: (212) 906-1200
8
<PAGE> 9
Fax: (212) 751-4864
(b) If to the Executive, to him at the address set forth below under
his signature;
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44144-1304
Attn: Mary Ann Jorgenson
Phone: (216) 479-8654
Fax: (216) 479-8776
or at any other address as any party shall have specified by notice in writing
to the other parties.
16. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
17. ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
18. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and the
Chairman of the Board. By an instrument in writing similarly executed, the
Executive or the Company may waive compliance by the other party or parties with
any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder preclude any other or further exercise of any other right, remedy, or
power provided herein or by law or in equity.
19. NO INCONSISTENT ACTIONS. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
20. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in Cleveland, Ohio in accordance with the
rules of the American Arbitration
9
<PAGE> 10
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of the provisions of
SECTIONS 9 OR 10 of this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the necessity of the
Company's posting any bond. Each of the parties hereto shall bear its share of
the fees and expenses of any arbitration hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
THE COMPANY
-----------
DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
----------------------
Name: John A. Ciccarelli
Title: President and Chief Executive Officer
THE EXECUTIVE
-------------
/s/ Raymond E. Bartholomae
--------------------------
Raymond E. Bartholomae
Address: 28223 Graybarn Ln.
Lake Barrington, IL 60010
10
<PAGE> 1
Exhibit 10.13
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of January 19, 2000 and effective as
of the Effective Date (as defined below), is made by and between Dayton Superior
Corporation, an Ohio corporation (together with any successor thereto, the
"Company"), and Michael C. Deis, Sr. (the "Executive").
RECITALS
--------
WHEREAS, the Executive has prior to the date hereof been employed by
the Company (or one of its subsidiaries) as Vice President and General Manager,
Dayton/Richmond; and
WHEREAS, it is the desire of the Company to assure itself of the
continuity of the management services of the Executive following the
consummation of the merger contemplated by the Agreement and Plan of Merger by
and between the Company and Stone Acquisition Corp. dated as of January 19, 2000
(the "Merger Agreement"); and
WHEREAS, it is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such services
under the terms hereof, and the Executive desires to commit himself to serve the
Company on the terms herein provided; and
WHEREAS, the Company and the Executive intend this Agreement to be
effective as of the consummation of the merger contemplated in the Merger
Agreement (the "Effective Date"); and
WHEREAS, the Company and the Executive intend that if the merger
contemplated in the Merger Agreement is not consummated, this Employment
Agreement shall be of no force or effect.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Annual Base Salary" shall have the meaning set forth in SECTION 4.
(b) "Board" shall mean the Board of Directors of the Company.
(c) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
<PAGE> 2
(i) willful or gross misconduct or material failure in the
performance of his duties and responsibilities hereunder, other than
any such failure resulting from the Executive's Disability, which
misconduct or failure continues beyond 14 days after the Company
notifies the Executive, 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.
(d) "Common Stock" shall mean the common stock of the Company, $0.01
par value per share.
(e) "Company" shall have the meaning set forth in the preamble hereto.
(f) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, or, (ii) if the Executive's
employment is terminated pursuant to SECTION 5(a)(ii) - (v), the date specified
in the Notice of Termination.
(g) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a total of 180 days
during any twelve month period as a result of physical, mental or emotional
incapacity due to illness, injury or disease.
(h) "Effective Date" shall have the meaning set forth in the recitals
hereto.
(i) "Executive" shall have the meaning set forth in the preamble
hereto.
(j) "Management Stockholders' Agreement" shall mean that certain
Management Stockholders' Agreement to be entered into by and among the Company,
Odyssey Investment Partners Fund, LP, the Executive and the other stockholders
party thereto effective as of the Effective Date, the terms of which have
previously been accepted by Executive pursuant to that certain letter agreement
and Management Compensation and Equity Term Sheet dated as of the date hereof
and attached hereto.
(k) "Merger Agreement" shall have the meaning set forth in the recitals
hereto.
(l) "Notice of Termination" shall have the meaning set forth in SECTION
5(b).
(m) "Option Agreements" shall mean the written agreements between the
Company and the Executive pursuant to which the Executive holds or is granted
options to purchase Common Stock, including, without limitation, agreements
evidencing options granted under the Option Plan and agreements governing the
terms of "Roll-Over Options" (as defined in the Management Stockholders'
Agreement).
(n) "Option Plan" shall mean the 2000 Stock Option Plan of Dayton
Superior Corporation, as amended from time to time.
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<PAGE> 3
(o) "Options" as of any date of determination shall mean options held
by the Executive as of such date to purchase Common Stock of the Company.
(p) "Stock Option Agreement" shall have the meaning set forth in
SECTION 4(c).
(q) "Prohibited Competition" shall have the meaning set forth in
SECTION 9(b).
(r) "Term" shall have the meaning set forth in SECTION 2(b).
2. EMPLOYMENT.
(a) The Company shall employ the Executive, and the Executive shall
continue in the employ of the Company, for the period set forth in this SECTION
2, in the positions set forth in SECTION 3 and upon the other terms and
conditions herein provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period of 3 years beginning on the
Effective Date, unless earlier terminated as provided in SECTION 5.
(b) The employment term hereunder shall automatically be extended for
successive one (1) year periods ("Extension Terms" and, collectively with the
Initial Term, the "Term") unless either party gives notice of non-extension to
the other no later than 90 days prior to the expiration of the then-applicable
Term.
3. POSITION AND DUTIES. The Executive shall serve as Vice President and
General Manager, Dayton/Richmond with such responsibilities, duties and
authority as are customary for someone serving in such position at companies
similar in size to the Company, together with such other duties and
responsibilities as may from time to time be assigned to the Executive by the
Board and the Chief Executive Officer of the Company, consistent with his
position. The Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company; provided that it shall not
be considered a violation of the foregoing for the Executive to (i) with the
prior consent of the Board (which consent shall not unreasonably be withheld),
serve on corporate, industry, civic or charitable boards or committees, and (ii)
manage his personal investments, so long as none of such activities
significantly interferes with the Executive's duties hereunder.
4. Compensation and Related Matters.
(a) ANNUAL BASE SALARY. During the Term, the Executive shall receive a
base salary at a rate of $190,000 per annum ("Annual Base Salary"), payable in
accordance with the Company's standard payroll procedures. The rate of Annual
Base Salary shall be subject to increase as determined by the Board in its
discretion.
(b) BONUS. During the Term, the Executive shall be eligible to
participate in the Company's executive annual bonus plan as in effect from time
to time.
(c) STOCK OPTIONS. Effective as of the Effective Date, the Executive
shall be awarded options to purchase shares of Common Stock pursuant to the
Option Plan and one or more
3
<PAGE> 4
written Stock Option Agreements to be entered into by and between the Company
and the Executive.
(d) BENEFITS. During the Term, the Executive shall be entitled to
participate in the employee benefit plans, programs and arrangements of the
Company (including vacation) in effect as of the date hereof (or, to the extent
determined by the Board, in effect hereafter) which are applicable to the senior
officers of the Company, subject to and on a basis consistent with the terms,
conditions and overall administration generally thereof. Furthermore, during the
first 12 months of the Term following the Effective Date, the benefits provided
under such employee benefit plans, programs and arrangements (other than any
stock option, restricted stock or other equity based plan) shall, in the
aggregate, be substantially equivalent to the benefits provided by the Company
as of the Effective Date (other than any stock option, restricted stock or other
equity based plan).
(e) EXPENSES. The Company shall reimburse the Executive for all
reasonable travel and other business expenses properly incurred by him in the
performance of his duties to the Company, in accordance with the Company's
documentation and other policies with respect thereto.
5. TERMINATION.
The Executive's employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:
(a) CIRCUMSTANCES.
(i) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(ii) DISABILITY. If the Company determines in good faith that the
Executive has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of his
duties. The Executive shall continue to receive his Annual Base Salary
until the Date of Termination.
(iii) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time.
(iv) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without Cause at any time.
(v) RESIGNATION. The Executive may resign his employment upon 30
days written notice to the Company.
4
<PAGE> 5
(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive under this SECTION 5 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a written
notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and specifying a Date of
Termination (a "Notice of Termination"). For purposes of this Agreement, the
"Date of Termination" shall be (i) with respect to any termination by reason of
Executive's Disability, 30 days following the receipt of the notice described in
SECTION 5(a)(ii), (ii) with respect to Executive's termination for Cause, the
date of the Notice of Termination, and (iii) with respect to the Executive's
termination for any other reason, at least 30 days following the date of the
Notice of Termination.
6. SEVERANCE PAYMENTS.
(a) TERMINATION FOR ANY REASON. In the event the Executive's employment
with the Company is terminated for any reason, the Company shall pay the
Executive (or his beneficiary in the event of his death) any unpaid Annual Base
Salary that has accrued as of the Date of Termination, any unreimbursed expenses
due to the Executive and an amount for accrued but unused sick days and vacation
days. The Executive shall also be entitled to accrued, vested benefits under the
Company's applicable employee benefit plans, programs and arrangements as
provided therein. The Executive shall be entitled to the additional payments and
benefits described below only as set forth herein.
(b) TERMINATION WITHOUT CAUSE. If the Executive's employment shall
terminate without Cause (pursuant to SECTION 5(a)(iv)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive, for the twenty-four month period following the
Date of Termination, in accordance with its regular payroll practice,
his Annual Base Salary as in effect on the Date of Termination; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time; and
(iii) continue for one year the Executive's coverage under the
Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or terminates any such
plan or program following such Date of Termination, the Company medical
and dental plans provided to employees similarly situated to
Executive), as if the Executive were an active employee during such
time, subject to standard employee contributions by the Executive as
are required under such plans, and further subject to the Executive's
election of "COBRA" continuation coverage during such period. All
post-employment coverage under such plans shall be co-extensive with
COBRA continuation coverage required by federal (and where applicable
by state) law, and shall cease if the Executive becomes eligible for
coverage under another employer's plans.
5
<PAGE> 6
(c) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment shall terminate by reason of his death or Disability (pursuant to
SECTION 5(a)(i) or (ii)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive (or to his estate or beneficiaries in the event of
his death), for the twenty-four month period following the Date of
Termination, in accordance with its regular payroll practice, the
excess of his Annual Base Salary as in effect on the Date of
Termination over the aggregate amount of any payments made to or on
behalf of the Executive during such 24-month period under any life
insurance, disability insurance or death benefit program maintained by
the Company; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time.
7. SURVIVAL. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto which shall have accrued hereunder
prior to such expiration.
8. Intentionally Left Blank
9. COMPETITION.
(a) The Executive shall not engage in any Prohibited Competition (as
defined below in SECTION 9(b)) at any time during the Term and for a period of
two years thereafter.
(b) For purposes of this Agreement, the Executive shall be considered
to engage in prohibited competition ("Prohibited Competition") if the Executive
shall: directly or indirectly, engage in or own, manage, join, operate or
control, or participate in the ownership, management, operation or control of,
or be connected as a director, officer, employee, partner, consultant or
otherwise with, or permit his name to be used by or in connection with, any
business or organization which produces, designs, conducts research on,
provides, sells, leases, distributes or markets accessories, chemicals, forming
and related products used in concrete and masonry construction (the "Business")
which, directly or indirectly, competes with the Business conducted by Company
and its subsidiaries in North America, South America and Europe, it being
understood that the foregoing shall not limit the Executive from making passive
investments of less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system.
(c) In the event any the terms of this SECTION 9 shall be determined by
any court of competent jurisdiction to be unenforceable by reason of extending
for too great a period of time or over too great a geographical area or by
reason of being too extensive in any other respect, it will be interpreted to
extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
6
<PAGE> 7
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of the Executive's
duties hereunder or pursuant to subsection (c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets, and any other information that would
be protected under the Uniform Trade Secrets Act in Ohio, of or relating to the
Company, including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business practices,
business strategy, business development, finances, principals, vendors,
distributors, suppliers, customers, potential customers, manufacturing methods,
sales methods, marketing methods, costs, prices, contractual relationships,
information systems, regulatory status, compensation paid to employees or other
terms of employment, or deliver to any person, firm, corporation or other entity
any document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). The parties hereto agree that
"confidential or proprietary information" shall not include information that (i)
is a matter of public knowledge (other than by act of the Executive in violation
hereof); (ii) was provided to the Executive (without breach of any obligation of
confidence owed to the Company) by a third party which is not an affiliate of
the Company or (iii) is required to be disclosed by law or judicial or
administrative process.
(b) Upon termination of the Executive's employment with Company for any
reason and upon the Company's request, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning, without limitation, the Company's operations, processes, products,
inventions, business practices, business strategy, business development,
finances, principals, vendors, distributors, suppliers, customers, potential
customers, manufacturing methods, sales methods, marketing methods, costs,
prices, contractual relationships, information systems, regulatory status,
compensation paid to employees or other terms of employment and/or which contain
proprietary information or trade secrets.
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice thereof,
shall, as much in advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to such process.
11. INJUNCTIVE RELIEF. It is recognized and acknowledged by the Executive
that a breach of the covenants contained in SECTIONS 9 AND 10 will cause
irreparable damage to Company and its goodwill, the exact amount of which will
be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate. Accordingly, the Executive agrees that in the
event of a breach of any of the covenants contained in SECTIONS 9 AND 10, in
addition to any
7
<PAGE> 8
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.
12. BINDING ON SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company, the Executive and their respective successors,
assigns, personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
13. GOVERNING LAW. This Agreement shall be governed, construed, interpreted
and enforced in accordance with the substantive laws of the State of Ohio.
14. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Dayton Superior Corporation
7777 Washington Village Dr., Suite 130
Dayton, OH 45459
Attn: General Counsel
Phone: (937) 428-6360
Fax: (937) 428-9115
With copies to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attn: William Hopkins
Phone: (212) 351-7900
Fax: (212) 351-7925
and
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attn: Maureen A. Riley
Phone: (212) 906-1200
8
<PAGE> 9
Fax: (212) 751-4864
(b) If to the Executive, to him at the address set forth below under
his signature;
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44144-1304
Attn: Mary Ann Jorgenson
Phone: (216) 479-8654
Fax: (216) 479-8776
or at any other address as any party shall have specified by notice in writing
to the other parties.
16. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
17. ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
18. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and the
Chairman of the Board. By an instrument in writing similarly executed, the
Executive or the Company may waive compliance by the other party or parties with
any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder preclude any other or further exercise of any other right, remedy, or
power provided herein or by law or in equity.
19. NO INCONSISTENT ACTIONS. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
20. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in Cleveland, Ohio in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction;
9
<PAGE> 10
provided, however, that the Company shall be entitled to seek a restraining
order or injunction in any court of competent jurisdiction to prevent any
continuation of any violation of the provisions of SECTIONS 9 OR 10 of this
Agreement and the Executive hereby consents that such restraining order or
injunction may be granted without the necessity of the Company's posting any
bond. Each of the parties hereto shall bear its share of the fees and expenses
of any arbitration hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
THE COMPANY
-----------
DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
----------------------
Name: John A. Ciccarelli
Title: President and Chief Executive Officer
THE EXECUTIVE
-------------
/s/ Michael C. Deis, SR.
------------------------
Michael C. Deis, Sr.
Address:
Home: 1253 Oakleaf Dr.
Beavercreek, Ohio 45434
Office: 721 Richard St.
Miamisburg, Ohio 45342
<PAGE> 1
Exhibit 10.14
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement dated as of January 19, 2000 and effective as
of the Effective Date (as defined below), is made by and between Dayton Superior
Corporation, an Ohio corporation (together with any successor thereto, the
"Company"), and James C. Stewart (the "Executive").
RECITALS
--------
WHEREAS, the Executive has prior to the date hereof been employed by
the Company (or one of its subsidiaries) as Vice President, Corporate
Development; and
WHEREAS, it is the desire of the Company to assure itself of the
continuity of the management services of the Executive following the
consummation of the merger contemplated by the Agreement and Plan of Merger by
and between the Company and Stone Acquisition Corp. dated as of January 19, 2000
(the "Merger Agreement"); and
WHEREAS, it is the desire of the Company to assure itself of the
services of the Executive by engaging the Executive to perform such services
under the terms hereof, and the Executive desires to commit himself to serve the
Company on the terms herein provided; and
WHEREAS, the Company and the Executive intend this Agreement to be
effective as of the consummation of the merger contemplated in the Merger
Agreement (the "Effective Date"); and
WHEREAS, the Company and the Executive intend that if the merger
contemplated in the Merger Agreement is not consummated, this Employment
Agreement shall be of no force or effect.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) "Annual Base Salary" shall have the meaning set forth in SECTION 4.
(b) "Board" shall mean the Board of Directors of the Company.
(c) The Company shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:
<PAGE> 2
(i) willful or gross misconduct or material failure in the
performance of his duties and responsibilities hereunder, other than
any such failure resulting from the Executive's Disability, which
misconduct or failure continues beyond 14 days after the Company
notifies the Executive, 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.
(d) "Common Stock" shall mean the common stock of the Company, $0.01
par value per share.
(e) "Company" shall have the meaning set forth in the preamble hereto.
(f) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by his death, the date of his death, or, (ii) if the Executive's
employment is terminated pursuant to SECTION 5(a)(ii) - (v), the date specified
in the Notice of Termination.
(g) "Disability" shall mean the absence of the Executive from the
Executive's duties to the Company on a full-time basis for a total of 180 days
during any twelve month period as a result of physical, mental or emotional
incapacity due to illness, injury or disease.
(h) "Effective Date" shall have the meaning set forth in the recitals
hereto.
(i) "Executive" shall have the meaning set forth in the preamble
hereto.
(j) "Management Stockholders' Agreement" shall mean that certain
Management Stockholders' Agreement to be entered into by and among the Company,
Odyssey Investment Partners Fund, LP, the Executive and the other stockholders
party thereto effective as of the Effective Date, the terms of which have
previously been accepted by Executive pursuant to that certain letter agreement
and Management Compensation and Equity Term Sheet dated as of the date hereof
and attached hereto.
(k) "Merger Agreement" shall have the meaning set forth in the recitals
hereto.
(l) "Notice of Termination" shall have the meaning set forth in SECTION
5(b).
(m) "Option Agreements" shall mean the written agreements between the
Company and the Executive pursuant to which the Executive holds or is granted
options to purchase Common Stock, including, without limitation, agreements
evidencing options granted under the Option Plan and agreements governing the
terms of "Roll-Over Options" (as defined in the Management Stockholders'
Agreement).
(n) "Option Plan" shall mean the 2000 Stock Option Plan of Dayton
Superior Corporation, as amended from time to time.
2
<PAGE> 3
(o) "Options" as of any date of determination shall mean options held
by the Executive as of such date to purchase Common Stock of the Company.
(p) "Stock Option Agreement" shall have the meaning set forth in
SECTION 4(c).
(q) "Prohibited Competition" shall have the meaning set forth in
SECTION 9(b).
(r) "Term" shall have the meaning set forth in SECTION 2(b).
2. EMPLOYMENT.
(a) The Company shall employ the Executive, and the Executive shall
continue in the employ of the Company, for the period set forth in this SECTION
2, in the positions set forth in SECTION 3 and upon the other terms and
conditions herein provided. The initial term of employment under this Agreement
(the "Initial Term") shall be for the period of 3 years beginning on the
Effective Date, unless earlier terminated as provided in SECTION 5.
(b) The employment term hereunder shall automatically be extended for
successive one (1) year periods ("Extension Terms" and, collectively with the
Initial Term, the "Term") unless either party gives notice of non-extension to
the other no later than 90 days prior to the expiration of the then-applicable
Term.
3. POSITION AND DUTIES. The Executive shall serve as Vice President,
Corporate Development of the Company with such responsibilities, duties and
authority as are customary for someone serving in such position at companies
similar in size to the Company, together with such other duties and
responsibilities as may from time to time be assigned to the Executive by the
Board and the Chief Executive Officer of the Company, consistent with his
position. The Executive shall devote substantially all his working time and
efforts to the business and affairs of the Company; provided that it shall not
be considered a violation of the foregoing for the Executive to (i) with the
prior consent of the Board (which consent shall not unreasonably be withheld),
serve on corporate, industry, civic or charitable boards or committees, and (ii)
manage his personal investments, so long as none of such activities
significantly interferes with the Executive's duties hereunder.
4. COMPENSATION AND RELATED MATTERS.
(a) ANNUAL BASE SALARY. During the Term, the Executive shall receive a
base salary at a rate of $175,000 per annum ("Annual Base Salary"), payable in
accordance with the Company's standard payroll procedures. The rate of Annual
Base Salary shall be subject to increase as determined by the Board in its
discretion.
(b) BONUS. During the Term, the Executive shall be eligible to
participate in the Company's executive annual bonus plan as in effect from time
to time.
(c) STOCK OPTIONS. Effective as of the Effective Date, the Executive
shall be awarded options to purchase shares of Common Stock pursuant to the
Option Plan and one or more
3
<PAGE> 4
written Stock Option Agreements to be entered into by and between the Company
and the Executive.
(d) BENEFITS. During the Term, the Executive shall be entitled to
participate in the employee benefit plans, programs and arrangements of the
Company (including vacation) in effect as of the date hereof (or, to the extent
determined by the Board, in effect hereafter) which are applicable to the senior
officers of the Company, subject to and on a basis consistent with the terms,
conditions and overall administration generally thereof. Furthermore, during the
first 12 months of the Term following the Effective Date, the benefits provided
under such employee benefit plans, programs and arrangements (other than any
stock option, restricted stock or other equity based plan) shall, in the
aggregate, be substantially equivalent to the benefits provided by the Company
as of the Effective Date (other than any stock option, restricted stock or other
equity based plan).
(e) EXPENSES. The Company shall reimburse the Executive for all
reasonable travel and other business expenses properly incurred by him in the
performance of his duties to the Company, in accordance with the Company's
documentation and other policies with respect thereto.
5. TERMINATION.
The Executive's employment hereunder may be terminated by the Company
or the Executive, as applicable, without any breach of this Agreement only under
the following circumstances:
(a) CIRCUMSTANCES.
(i) DEATH. The Executive's employment hereunder shall terminate
upon his death.
(ii) DISABILITY. If the Company determines in good faith that the
Executive has incurred a Disability, the Company may give the Executive
written notice of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company
shall terminate effective on the 30th day after receipt of such notice
by the Executive, provided that within the 30 days after such receipt,
the Executive shall not have returned to full-time performance of his
duties. The Executive shall continue to receive his Annual Base Salary
until the Date of Termination.
(iii) TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment hereunder for Cause at any time.
(iv) TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder without Cause at any time.
(v) RESIGNATION. The Executive may resign his employment upon 30
days written notice to the Company.
4
<PAGE> 5
(b) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive under this SECTION 5 (other than
termination pursuant to paragraph (a)(i)) shall be communicated by a written
notice to the other party hereto indicating the specific termination provision
in this Agreement relied upon, setting forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and specifying a Date of
Termination (a "Notice of Termination"). For purposes of this Agreement, the
"Date of Termination" shall be (i) with respect to any termination by reason of
Executive's Disability, 30 days following the receipt of the notice described in
SECTION 5(a)(II), (ii) with respect to Executive's termination for Cause, the
date of the Notice of Termination, and (iii) with respect to the Executive's
termination for any other reason, at least 30 days following the date of the
Notice of Termination.
6. SEVERANCE PAYMENTS.
(a) TERMINATION FOR ANY REASON. In the event the Executive's employment
with the Company is terminated for any reason, the Company shall pay the
Executive (or his beneficiary in the event of his death) any unpaid Annual Base
Salary that has accrued as of the Date of Termination, any unreimbursed expenses
due to the Executive and an amount for accrued but unused sick days and vacation
days. The Executive shall also be entitled to accrued, vested benefits under the
Company's applicable employee benefit plans, programs and arrangements as
provided therein. The Executive shall be entitled to the additional payments and
benefits described below only as set forth herein.
(b) TERMINATION WITHOUT CAUSE. If the Executive's employment shall
terminate without Cause (pursuant to SECTION 5(a)(iv)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive, for the twenty-four month period following the
Date of Termination, in accordance with its regular payroll practice,
his Annual Base Salary as in effect on the Date of Termination; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time; and
(iii) continue for one year the Executive's coverage under the
Company medical and dental plans and programs in which the Executive
was entitled to participate immediately prior to the Date of
Termination (or, if the Company amends, replaces or terminates any such
plan or program following such Date of Termination, the Company medical
and dental plans provided to employees similarly situated to
Executive), as if the Executive were an active employee during such
time, subject to standard employee contributions by the Executive as
are required under such plans, and further subject to the Executive's
election of "COBRA" continuation coverage during such period. All
post-employment coverage under such plans shall be co-extensive with
COBRA continuation coverage required by federal (and where applicable
by state) law, and shall cease if the Executive becomes eligible for
coverage under another employer's plans.
5
<PAGE> 6
(c) TERMINATION BY REASON OF DEATH OR DISABILITY. If the Executive's
employment shall terminate by reason of his death or Disability (pursuant to
SECTION 5(a)(i) or (ii)), the Company shall:
(i) subject to the Executive's compliance with SECTIONS 9 AND 10,
pay to the Executive (or to his estate or beneficiaries in the event of
his death), for the twenty-four month period following the Date of
Termination, in accordance with its regular payroll practice, the
excess of his Annual Base Salary as in effect on the Date of
Termination over the aggregate amount of any payments made to or on
behalf of the Executive during such 24-month period under any life
insurance, disability insurance or death benefit program maintained by
the Company; and
(ii) for the year in which the termination occurs, pay to the
Executive a pro-rated amount of bonus based on the Company's executive
annual bonus plan as in effect at that time.
7. SURVIVAL. The expiration or termination of the Term shall not impair
the rights or obligations of any party hereto which shall have accrued hereunder
prior to such expiration.
8. Intentionally Left Blank
9. COMPETITION.
(a) The Executive shall not engage in any Prohibited Competition (as
defined below in SECTION 9(b)) at any time during the Term and for a period of
two years thereafter.
(b) For purposes of this Agreement, the Executive shall be considered
to engage in prohibited competition ("Prohibited Competition") if the Executive
shall: directly or indirectly, engage in or own, manage, join, operate or
control, or participate in the ownership, management, operation or control of,
or be connected as a director, officer, employee, partner, consultant or
otherwise with, or permit his name to be used by or in connection with, any
business or organization which produces, designs, conducts research on,
provides, sells, leases, distributes or markets accessories, chemicals, forming
and related products used in concrete and masonry construction (the "Business")
which, directly or indirectly, competes with the Business conducted by Company
and its subsidiaries in North America, South America and Europe, it being
understood that the foregoing shall not limit the Executive from making passive
investments of less than 5% of the outstanding equity securities in any entity
listed for trading on a national stock exchange or quoted on any recognized
automatic quotation system.
(c) In the event any the terms of this SECTION 9 shall be determined
by any court of competent jurisdiction to be unenforceable by reason of
extending for too great a period of time or over too great a geographical area
or by reason of being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, and/or over the maximum geographical area as to which it may be
enforceable and/or to the maximum extent in all other respects as to which it
may be enforceable, all as determined by such court in such action.
6
<PAGE> 7
10. NONDISCLOSURE OF PROPRIETARY INFORMATION.
(a) Except as required in the faithful performance of the Executive's
duties hereunder or pursuant to subsection (c), the Executive shall, in
perpetuity, maintain in confidence and shall not directly, indirectly or
otherwise, use, disseminate, disclose or publish, or use for his benefit or the
benefit of any person, firm, corporation or other entity any confidential or
proprietary information or trade secrets, and any other information that would
be protected under the Uniform Trade Secrets Act in Ohio, of or relating to the
Company, including, without limitation, information with respect to the
Company's operations, processes, products, inventions, business practices,
business strategy, business development, finances, principals, vendors,
distributors, suppliers, customers, potential customers, manufacturing methods,
sales methods, marketing methods, costs, prices, contractual relationships,
information systems, regulatory status, compensation paid to employees or other
terms of employment, or deliver to any person, firm, corporation or other entity
any document, record, notebook, computer program or similar repository of or
containing any such confidential or proprietary information or trade secrets.
The parties hereby stipulate and agree that as between them the foregoing
matters are important, material and confidential proprietary information and
trade secrets and affect the successful conduct of the businesses of the Company
(and any successor or assignee of the Company). The parties hereto agree that
"confidential or proprietary information" shall not include information that (i)
is a matter of public knowledge (other than by act of the Executive in violation
hereof); (ii) was provided to the Executive (without breach of any obligation of
confidence owed to the Company) by a third party which is not an affiliate of
the Company or (iii) is required to be disclosed by law or judicial or
administrative process.
(b) Upon termination of the Executive's employment with Company for any
reason and upon the Company's request, the Executive will promptly deliver to
the Company all correspondence, drawings, manuals, letters, notes, notebooks,
reports, programs, plans, proposals, financial documents, or any other documents
concerning, without limitation, the Company's operations, processes, products,
inventions, business practices, business strategy, business development,
finances, principals, vendors, distributors, suppliers, customers, potential
customers, manufacturing methods, sales methods, marketing methods, costs,
prices, contractual relationships, information systems, regulatory status,
compensation paid to employees or other terms of employment and/or which contain
proprietary information or trade secrets.
(c) The Executive may respond to a lawful and valid subpoena or other
legal process but shall give the Company the earliest possible notice thereof,
shall, as much in advance of the return date as possible, make available to the
Company and its counsel the documents and other information sought and shall
assist such counsel in resisting or otherwise responding to such process.
11. INJUNCTIVE RELIEF. It is recognized and acknowledged by the Executive
that a breach of the covenants contained in SECTIONS 9 AND 10 will cause
irreparable damage to Company and its goodwill, the exact amount of which will
be difficult or impossible to ascertain, and that the remedies at law for any
such breach will be inadequate. Accordingly, the Executive agrees that in the
event of a breach of any of the covenants contained in SECTIONS 9 AND 10, in
addition to any
7
<PAGE> 8
other remedy which may be available at law or in equity, the Company will be
entitled to specific performance and injunctive relief.
12. BINDING ON SUCCESSORS. This Agreement shall be binding upon and inure
to the benefit of the Company, the Executive and their respective successors,
assigns, personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
13. GOVERNING LAW. This Agreement shall be governed, construed, interpreted
and enforced in accordance with the substantive laws of the State of Ohio.
14. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. NOTICES. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or refusal
of receipt) and shall be in writing and delivered personally or sent by telex,
telecopy, or certified or registered mail, postage prepaid, as follows:
(a) If to the Company:
Dayton Superior Corporation
7777 Washington Village Dr., Suite 130
Dayton, OH 45459
Attn: General Counsel
Phone: (937) 428-6360
Fax: (937) 428-9115
With copies to:
Odyssey Investment Partners Fund, LP
280 Park Avenue
West Tower, 38th Floor
New York, New York 10017
Attn: William Hopkins
Phone: (212) 351-7900
Fax: (212) 351-7925
and
Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022
Attn: Maureen A. Riley
Phone: (212) 906-1200
8
<PAGE> 9
Fax: (212) 751-4864
(b) If to the Executive, to him at the address set forth below
under his signature;
with a copy to:
Squire, Sanders & Dempsey L.L.P.
4900 Key Tower
127 Public Square
Cleveland, OH 44144-1304
Attn: Mary Ann Jorgenson
Phone: (216) 479-8654
Fax: (216) 479-8776
or at any other address as any party shall have specified by notice in writing
to the other parties.
16. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
17. ENTIRE AGREEMENT. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
18. AMENDMENTS; WAIVERS. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and the
Chairman of the Board. By an instrument in writing similarly executed, the
Executive or the Company may waive compliance by the other party or parties with
any provision of this Agreement that such other party was or is obligated to
comply with or perform, provided, however, that such waiver shall not operate as
a waiver of, or estoppel with respect to, any other or subsequent failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder preclude any other or further exercise of any other right, remedy, or
power provided herein or by law or in equity.
19. NO INCONSISTENT ACTIONS. The parties hereto shall not voluntarily
undertake or fail to undertake any action or course of action inconsistent with
the provisions or essential intent of this Agreement. Furthermore, it is the
intent of the parties hereto to act in a fair and reasonable manner with respect
to the interpretation and application of the provisions of this Agreement.
20. ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three arbitrators in Cleveland, Ohio in accordance with the
rules of the American Arbitration
9
<PAGE> 10
Association then in effect. Judgment may be entered on the arbitrator's award in
any court having jurisdiction; provided, however, that the Company shall be
entitled to seek a restraining order or injunction in any court of competent
jurisdiction to prevent any continuation of any violation of the provisions of
SECTIONS 9 OR 10 of this Agreement and the Executive hereby consents that such
restraining order or injunction may be granted without the necessity of the
Company's posting any bond. Each of the parties hereto shall bear its share of
the fees and expenses of any arbitration hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
THE COMPANY
-----------
DAYTON SUPERIOR CORPORATION
By: /s/ John A. Ciccarelli
----------------------
Name: John A. Ciccarelli
Title: President and Chief Executive Officer
THE EXECUTIVE
-------------
/s/ James C. Stewart
--------------------
James C. Stewart
Address: 1183 Walnut Valley Lane
Centerville, OH 45458
10
<PAGE> 1
Exhibit 10.15
FORM OF
-------
OPTION EXERCISE, CANCELLATION AND EQUITY ROLLOVER AGREEMENT
-----------------------------------------------------------
AGREEMENT, dated as of January 19, 2000, by and among Stone Acquisition
Corp., an Ohio Corporation ("Sub"), Dayton Superior Corporation, an Ohio
Corporation (the "Company"), and the person identified on the signature page
hereto (the "Employee").
Whereas, Sub and the Company have entered into that certain Agreement
and Plan of Merger dated as of January 19, 2000, (as such agreement may be
amended from time to time, the "Merger Agreement"; capitalized terms used but
not defined herein shall have the meanings set forth in the Merger Agreement)
pursuant to which (and subject to the terms and conditions specified therein)
Sub will be merged with and into the Company (the "Merger").
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 as follows:
The Employee hereby affirms and represents and warrants that as of the
date hereof he or she (i) is the record and beneficial owner of that number of
shares of Class A common shares of the Company, without par value (the "Common
Stock"), as specified on Exhibit A attached hereto under the heading "Cash
Buyout," (the "Buyout Shares"), and that number of shares specified under the
heading "Equity Rollover" on Exhibit A (the "Rollover Shares" and collectively
with the Buyout Shares, the "Prior Shares"), and he or she is the holder of the
options to purchase shares of Common Stock (the "Options") of the type (ISO or
NQSO), and for the number of shares and exercise price as specified on Exhibit
A, (ii) owns or holds no other Equity Securities of the Company or any of its
Subsidiaries and (iii) has sole power of disposition with respect to the Prior
Shares and the Options and will have sole power of disposition with respect to
the shares of Common Stock acquired upon the exercise of the Exercised Options
(as hereinafter defined) (the "Acquired Shares") and the Series A Shares.
The Employee hereby consents, covenants and agrees that (i) prior to
the Effective Time, he or she will exercise those Options, if any, identified on
Exhibit A under the heading "Required Option Exercise" and will exercise such
additional Options as may after the date hereof be identified by Sub
(collectively, the "Exercised Options"); (ii) he or she will vote all Prior
Shares, all Acquired Shares, all shares of Common Stock hereafter acquired by
any means (including, without limitation, by exercise of Options) (the
"Additional Acquired Shares") and all Series A Shares (to the extent the vote of
the Series A Shares is necessary to approve the Merger and the adoption of the
Merger Agreement) in favor of, and raise no objections to, the Merger and the
adoption of the Merger Agreement and the other transactions contemplated by the
Merger Agreement and waive any rights of appraisal; (iii) prior to the Effective
Time, all Prior Shares (other than those, if any, specified under the heading
"Cash Buyout" on Exhibit A) and all Acquired Shares will be exchanged for a like
number of shares of Series A Shares as contemplated by Section 6.12 of the
Merger Agreement and at the Effective Time, by virtue of the Merger and without
any action on the part of the Employee, each Series A Share outstanding
<PAGE> 2
immediately prior to the Effective Time shall automatically be converted into
the right to receive one Surviving Corporation Common Share.
The Employee further consents, covenants and agrees that (i) certain
Options (other than Exercised Options) that remain outstanding as of the
Effective Time (the "Non-Exercised Options") may be eligible to be cancelled on
the Effective Time in exchange for payment as described in the Merger Agreement;
[(ii) the Employee and Sub will mutually identify prior to the Effective Time
those Non-Exercised Options that will not be cancelled (the "Retained Options");
provided, however, that unless otherwise approved in writing by Sub prior to the
Effective Time, the aggregate "Net Value" (as hereinafter defined) of the
Retained Options PLUS the Net Value of the Rollover Shares and the Net Value of
the Acquired Shares will not be less than the amount set forth on Exhibit A as
the aggregate "Net Value Rolled" (for purposes of this Agreement, "Net Value"
with respect to an Option means the excess of (x) the product of $27.00 and the
number of shares of Common Stock covered by such Option over (y) the aggregate
exercise price of such Option; with respect to a Rollover Share means $27; and
with respect to an Acquired Share means $27 MINUS the exercise price thereof)
[(it being understood that the retention of the Retained Options is a condition
to the Employee's receipt of any amount pursuant to Section 3.3 of the Merger
Agreement)]; (iii) Retained Options will either remain outstanding following the
Effective Time or be replaced with options to purchase shares of Surviving
Corporation Common Shares intended to provide the Employee with benefits and
economic value comparable to the Retained Options] and (iv) he or she will
execute such other documents and take such actions as may be requested by Sub in
order to carry out the terms of this Agreement and will not take any actions or
authorize any Person to take any actions which would be inconsistent with the
terms of this Agreement.
Notwithstanding anything to the contrary herein, the Employee further
consents, covenants and agrees that all Prior Shares (other than those exchanged
for Cash Merger Consideration in accordance with this Agreement and Section 3.4
of the Merger Agreement), all Acquired Shares, and all Retained Options (and the
shares of Common Stock or Surviving Corporation Common Shares subject to
purchase upon exercise thereof) will be subject to the [Management] Stockholders
Agreement, which will contain provisions regarding transfer restrictions,
tag-along all drag-along rights, and put and call features applicable to shares,
as well as other customary terms and provisions.
The Employee understands and agrees that this agreement shall be
binding upon the Employee, his or her successors, assigns, heirs, administrators
and executors without regard to whether the Employee is employed by the Company
(or any of its Subsidiaries) as of the Effective Time. This agreement shall
become void if the Merger Agreement is terminated.
The Employee further agrees that a breach by him or her of his
covenants hereunder will cause irreparable injury to the Sub, that the Sub has
no adequate remedy at law with respect to such breach and, as a consequence, the
Employee agrees that each such covenant shall be specifically enforceable
against the Employee, and the Employee hereby waives and agrees not to assert
any defenses against an action for specific performance.
The Company hereby consents and agrees (i) if requested by the
Employee, concurrently with the exercise of the Exercised Options the Company
will lend to the Employee in the form of
2
<PAGE> 3
a [non-interest bearing], recourse promissory note payable by the Employee to
the Company and secured by a pledge to the Company of the Acquired Shares the
principal amount requested by the Employee which shall not be greater than [the
sum of] the aggregate exercise price of the Exercised Options [and the aggregate
estimated federal and state income tax liabilities payable by the Employee upon
such exercise as set forth on Exhibit A]; and (ii) to take such actions as are
necessary to carry out the terms of this Agreement.
[signature page follows]
3
<PAGE> 4
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
Stone Acquisition Corp.
By:
---------------------------
Name:
Title:
Dayton Superior Corporation
By:
---------------------------
Name:
Title:
Employee
Name:
-------------------------
Signature:
--------------------
Title:
------------------------
Address:
----------------------
[EXHIBIT A omitted]
4
<PAGE> 1
Exhibit 21.1
Subsidiaries of Dayton Superior Corporation
-------------------------------------------
Jurisdiction of Incorporation
-----------------------------
Name or Organization
---- -----------------------------
Symons Concrete Forms, Inc. North Carolina
Dayton Superior Canada Ltd. Ontario
Dur-O-Wal, Inc. Delaware
Symons Corporation Delaware
Dayton Superior Capital Trust Delaware
Dayton Superior FSC Corp. Barbados
67
<PAGE> 1
Exhibit 23.1
Consent of Independent Public Accountants
-----------------------------------------
As independent public accountants, we hereby consent to the incorporation of our
report, included in this Form 10-K, into the Company's previously filed
Registration Statement File No. 333-25155, File No. 333-28057, File No.
333-28059 and File No. 333-28061.
ARTHUR ANDERSEN LLP
Dayton, Ohio
March 30, 2000
68
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<ARTICLE> 5
<CIK> 0000854709
<NAME> DAYTON SUPERIOR CORPORATION
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<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
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<DEPRECIATION> (29,741)
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<CURRENT-LIABILITIES> 49,096
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19,556
0
<COMMON> 47,030
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<INCOME-PRETAX> 26,646
<INCOME-TAX> 11,991
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<EXTRAORDINARY> 0
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