Exhibit 10.16


 


SCOTSMAN HOLDINGS, INC.

EMPLOYEE STOCK OPTION PLAN


 


INCENTIVE STOCK OPTION AGREEMENT


 


THIS INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is made as of the          day
of                       ,
by and between Scotsman Holdings, Inc., a Delaware corporation (the “Company”),
and                                             
(the “Optionee”).


 


WHEREAS, the Company
and its stockholders have approved the Scotsman Holdings, Inc.                       
Employee Stock Option Plan (the “Plan”), pursuant to which the Company may,
from time to time, enter into stock option agreements with certain of its
employees eligible to participate in the Plan;


 


WHEREAS, the
Optionee is now in the employ of the Company or an Affiliate of the Company as
a Key Employee, and the Company desires to have the Optionee remain in such
employ and to afford the Optionee the opportunity to acquire, or enlarge, the
Optionee’s stock ownership in the Company so that the Optionee may have a
direct proprietary interest in the Company’s success; and


 


WHEREAS, the
Committee has, pursuant to its authority under the Plan, granted to the
Optionee an Award in the form of an Incentive Stock Option to acquire up to the
number of shares of the Company’s Common Stock set forth in Section 1 below in accordance with the provisions of
the Plan and subject to the terms and conditions of the Plan and this
Agreement.


 


NOW, THEREFORE, in
consideration of the mutual undertakings and obligations of the parties herein
and other good and valuable consideration, the parties hereby agree as follows:


 


1.                                       Grant of Option.           Subject
to the terms, conditions and provisions of this Agreement and the Plan, the
Company hereby grants to the Optionee an Option to purchase up to #                 
shares of the Company’s Common Stock, par value $.01 per share (this “Option”),
which Option is intended to be an Incentive Stock Option.  The Optionee accepts this Option subject to
all of the terms, conditions and provisions of this Agreement and the Plan, and
agrees to be bound and to abide by all requests, decisions and determinations
of the Committee made in accordance with the Plan.


 


2.                                       The Plan.                                              This Option is intended to conform in all respects
with the terms of the Plan as presently written.  Inconsistencies between this Option and the
Plan will be resolved according to the terms of the Plan, a copy of which has
been supplied to you.


 


3.                                       Option Price.                           The exercise price for the Option shall be $                 
per share.


 


4.                                       Exercise of the Option.          The
Option granted hereunder shall be exercised, in whole or in part, subject to
the time and performance based vesting requirements set forth in Exhibit A and Sections 7 and 8 hereof, at any time during the term of the Option by
delivering to the Secretary of the Company on any business day (the “Exercise
Date”), written notice specifying the number of shares as to which the Option
is being exercised (the “Exercised Shares”) pursuant to the form on Exhibit B, accompanied by: (i) cash or check
payable to the order of the Company for the aggregate Option Price of the
Exercised Shares; or (ii) in the discretion of the Committee, shares of
Common Stock of the Company (the “Stock Payment”) with a Fair Market Value
equal to or less than the aggregate Option Price of the Exercised Shares, plus
cash or check payable to the order of the Company for an amount equal to that
amount, if any, by which the aggregate Option Price for the Exercised Shares
exceeds the Fair Market Value of the Stock Payment.  If the Option granted hereunder is exercised
in part, the Optionee must purchase not less than 100 shares at any one time.


 


5.                                       Taxes.              The Company shall be entitled to require as a
condition of delivery of the certificate representing the Exercised Shares that
the Optionee remit an amount sufficient to satisfy all federal, state and other
government taxes or withholding requirements; provided,
further, that the Company shall have the right to withhold such sums
from any compensation otherwise due to the Optionee.


 


 


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6.                                       Issuance of Stock.                                              Upon payment in full of the aggregate Option Price,
the Company shall issue to the Optionee a certificate representing the
Exercised Shares, in the form of fully paid and non-assessable Common Stock of
the Company.


 


7.                                       Termination of Employment.


 


(a)                                  Upon termination of employment of a Participant with
the Company or an Affiliate, this Option shall, to the extent not previously
exercised, terminate and become null and void, provided that:


 


(1)                      if the Participant shall die while in the employ of
the Company or an Affiliate or during either the three month or one year
period, whichever is applicable, specified in clause (2) below and at a
time when such Participant was entitled to exercise any portion of this Option
as herein provided, the legal representative of such Participant, or such
person who acquired this Option by bequest or inheritance or by reason of the
death of the Participant, shall have the right to exercise this Option, to the extent
not previously exercised, in respect of any or all of such number of Shares
that such Participant is entitled to purchase pursuant to this Option at the
time of such Participant’s death, at any time up to and including one year
after the date of death; and


 


(2)                      if the employment of any Participant shall terminate
by reason of the Participant’s Retirement, Disability or dismissal other than
for Cause, and while such Participant is entitled to exercise this Option, as
herein provided, such Participant shall have the right to exercise this Option,
to the extent not theretofore exercised, in respect of any or all of such
number of shares that such Participant is entitled to purchase pursuant to this
Option at the time of such termination, at any time up to and including (i) three
months after the date of such termination of employment in the case of
termination by reason of Retirement or dismissal other than for Cause and (ii) one
year after the date of termination of employment in the case of termination by
reason of Disability.


 


(b)                                 If a Participant voluntarily terminates his
employment, or is discharge for Cause, any Option granted hereunder shall
terminate.


 


(c)                                  If this Option shall be exercised by the legal
representative of a deceased or a disabled Participant, or by a person who
acquired this Option by bequest or inheritance or by reason of death of any
Participant, written notice of such exercise shall be accompanied by a
certified copy of letters testamentary or equivalent proof of the right of such
legal representative or other person to exercise this Option.


 


8.                                       Acceleration of Vesting in Certain Circumstances.


 


(a)                                  For purposes hereof, a “change in control” shall be
deemed to occur if: (i) any “person” (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended), other than
Cypress Merchant Banking Partners L.P., Cypress Offshore Partners L.P., BT
Investment Partners, Inc., and Scotsman Partners, L.P., or any of their
affiliates or any combination there (collectively, the “Investor Group”), is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under Exchange
Act), directly or indirectly, of all of the outstanding capital stock of the
Company; or (ii) a sale of all or substantially all of the assets of the
Company other than to an entity owned or controlled by the Investor Group is
consummated; or (iii) any merger, consolidation, issuance of securities or
purchase or sale of assets, the result of which would be the occurrence of any
event described in clause (i) or (ii) above, is consummated.


 


(b)                                 Upon the occurrence of (i) a change in control
of the Company, or (ii) the effective date of the Company’s registration
statement under the Securities Act of 1933, as amended (the “Securities Act”),
registering Common Stock in connection with an initial public offering (each an
“acceleration event”): (a) unvested options subject to the time-based
vesting requirements shall immediately vest and become exercisable and (b) unvested
options subject to performance based vesting requirements shall immediately
vest and become exercisable in the event that the cumulative EBITDA target (set
forth in Exhibit A) for the most recently
completed fiscal year and for the year to date period (on a straight line
pro-rata basis) ending on the month end immediately proceeding the measurement
date have been achieved.


 


(c)                                  If, upon the occurrence of an acceleration event, at
least 90% but less than 100% of the cumulative EBITDA target for the most
recently completed fiscal year has been met, the performance based options
shall vest proportionately as set forth in Exhibit A-1.


 


 


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9.                                       Stockholders’ Agreement.     It is a condition to the effectiveness of this
Option and the obligation of the Company to issue any Shares hereunder that the
Participant shall have executed, on or prior to the date of the execution of
this Agreement, the Amended and Restated Management Stockholders’ and
Optionholders’ Agreement, dated as of                                 ,
by and among the Company, the Stockholders and Permitted Transferees (each as
defined therein) as such agreement may be amended or restated (the “Stockholders
Agreement”).  If the Participant has not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without any further notice terminate and be null and
void.


 


10.                                 Term of Option.  Subject to the terms, conditions
and provisions of this Agreement and the Plan, this Option shall terminate ten
years from the date of grant on                          .


 


11.                                 Non-Transferability of Option.                              This Option may be exercised only by the Participant
and may not be assigned or transferred except as expressly provided in the
Plan.  Immediately upon any attempt to
assign or transfer this Option, by operation of law or otherwise, in violation
of this Agreement, this Option shall terminate and be null and void.


 


12.                                 No Rights of Stockholder.      The Participant shall not be deemed a stockholder of
the Company for any purpose until the shares of the Company’s Common Stock
subject to this Option have been issued to the Participant upon the exercise of
this Option.  The Participant shall have
no obligation to exercise this Option.


 


13.                                 Common Stock Acquired for Investment.                       The Participant agrees that the Company may require
the Participant to certify (in such form as the Company may specify) prior to
each time or times the Exercised Shares are purchased that such Exercised
Shares are being purchased by the Participant for investment and not with any
intention of distributing the same.  The
stock certificates for any shares of Common Stock issued by the Company upon
exercise of this Option shall be stamped, if appropriate, with a legend restricting
transferability of the Shares in accordance with this Agreement and the Plan,
the Securities Act, and any applicable state securities laws.


 


14.                                 Notice of Disposition.                           In the event the Participant makes a disposition (as
that term is defined in Section 424(c) of the Code) of the Exercised
Shares within two years from the date hereof or within one year from the date
of acquiring such Exercised Shares, the Participant  shall notify the Company of such disposition
within thirty (30) days thereof.


 


15.                                 The Company’s Rights.                  The existence of this Option shall not affect in any
way the right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company’s capital structure, or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or rights thereof, or dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.


 


16.                                 Recapitalization.         In the event of a change in the number of issued
shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares or other capital adjustment, or the payment of a stock
dividend or other increase or decrease in such shares, the Committee may, in
its sole and absolute discretion, make such adjustments to this Option as it
deems appropriate.


 


17.                                 Miscellaneous.


 


(a)                                  The Participant acknowledges that the exercise of
this Option is subject to the Certificate of Incorporation and the Bylaws of
the Company, as both may be amended from time to time, and any applicable
federal or state laws, rules or regulations.


 


(b)                                 The Committee shall have the right, in its sole and
absolute discretion, to alter or amend this Agreement, from time to time, in
any manner for the purpose of promoting the objectives of the Plan but only if
all agreements granting options to purchase shares of the Company’s Common
Stock pursuant to the Plan which are in effect and not wholly exercised at the
time of such alteration or amendment shall also be similarly altered or amended
with substantially the same effect.  Any
such alteration or amendment of this Agreement by the Committee shall, upon
adoption thereof without requirement for consent or other action with respect
thereto by any such person.  The Company
shall give written notice to the Participant of any such alternation or
amendment of this Agreement by the Committee as promptly as practical after the
adoption thereof.  The foregoing shall
not restrict the ability of the Participant and the Company by mutual consent
to alter or amend this Agreement in any manner which is consistent with the
Plan and approved by the Committee.


 


 


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(c)                                  This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland, exclusive of its conflicts
of law provisions.


 


(d)                                 The descriptive headings of the sections and
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.


 


(e)                                  Any notice or communication required to be given pursuant
to this Agreement shall be in writing and shall be sufficiently made or given
if hand-delivered or mailed by certified mail, addressed to the Participant at
the address contained in the records of the Company or to the Company at its
principal office.


 


(f)                                    This Agreement and the documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.


 


(g)                                 This Agreement and the documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.


 


(h)                                 This Agreement may be executed simultaneously in one
or more counterparts each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.


 


(i)                                     To the extent that any capitalized term used in this
Agreement is not defined herein, it shall be given the meaning ascribed to such
term in the Plan.


 


IN WITNESS WHEREOF, the parties have executed this
Agreement on                                           ,
20          , effective, as of the
day and year first above written.


 


	
   

  	
  WITNESS:

  	
  SCOTSMAN HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Gerard E. Holthaus

  
	
   

  	
   

  	
  Chairman, President and CEO

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Participant

  
						



 


 


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EXHIBIT A


SCOTSMAN HOLDINGS, INC.

200__ EMPLOYEE STOCK OPTION


 


VESTING OF INCENTIVE STOCK OPTIONS


 


The
award of Incentive Stock Options under this Agreement vests and become
exercisable as follows:


 


Performance-based Vesting


For 50% of the shares subject to the Option, as
follows:


 


	
  Targets **

  	
   

  	
  EBITDA
  Targets *

  	
   

  	
  Cumulative

  EBITDA 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Options for Shares become exercisable on

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  December 31, 200__ if the Company’s 200__

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA target is achieved.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Options for Shares become exercisable on

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  December 31, 200__ if the Company’s 200__

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA target is achieved.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Options for Shares become exercisable on

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  December 31, 200__ if the Company’s 200__

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA target is achieved.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Options for Shares become exercisable on

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  December 31, 200__ if the Company’s 200__

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA target is achieved.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Options for Shares becomes exercisable on

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  December 31, 200__ if the Company’s 200__

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  EBITDA target is achieved.

  	
   

  	
   

  	
   

  	
   

  



 


Time Based Vesting


 


For 50% of the Shares subject to the Option, as
follows:


 


10% shares on December 31, 200___


10% shares on December 31, 200___


10% shares on December 31, 200___


10% shares on December 31, 200___


10% shares on December 31, 200___


 










*  Subject to
annual Cap-X adjustments.


 


**If
the Cumulative EBITDA Targets as of the most recently completed fiscal year and
for the year to date period (on a straight line pro-rata basis) ending on the
month end immediately preceding the measurement date have been achieved, all
unvested performance based Options shall immediately vest and become
exercisable.  For purposes hereof, the
measurement date will be the earlier of the date on which audited financial
statements for the year ended December 31, 200___ become available or upon
the occurrence of a change in control or an initial public offering as defined
in the Agreement.


 


 


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EXHIBIT A-1


SCOTSMAN HOLDINGS, INC.

200__ EMPLOYEE STOCK OPTION PLAN


 


PARTIAL VESTING OF
INCENTIVE STOCK OPTIONS


 


If over 90% but less than 100% of the Cumulative EBITDA Targets as of the
most recently completed fiscal and for the year to date period (on a straight
line pro-rata basis) ending on the month end immediately preceding the
measurement date have been achieved, unvested performance based Options shall
vest and become exercisable as set forth below.


 


	
  Percentage
  of Cumulative

  EBITDA Targets Achieved

  	
   

  	
  Percent of Unvested Performance
  Based Options

  Vested & Exercisable

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  at
  least 90

  	
   

  	
  50

  	
   

  
	
  90.1 to
  91

  	
   

  	
  55

  	
   

  
	
  91.1 to
  92

  	
   

  	
  60

  	
   

  
	
  92.1 to
  93

  	
   

  	
  65

  	
   

  
	
  93.1 to
  94

  	
   

  	
  70

  	
   

  
	
  94.1 to
  95

  	
   

  	
  75

  	
   

  
	
  95.1 to
  96

  	
   

  	
  80

  	
   

  
	
  96.1 to
  97

  	
   

  	
  85

  	
   

  
	
  97.1 to
  98

  	
   

  	
  90

  	
   

  
	
  98.1 to
  99

  	
   

  	
  95

  	
   

  
	
  at
  least 99.1

  	
   

  	
  100

  	
   

  



 


 


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