STOCK OPTION AGREEMENT OF BMC WEST CORPORATION
EXHIBIT
4.0
OF
BMC
WEST
CORPORATION
This
Stock Option
Agreement (this "Agreement") is made and entered into as of February 6,
1997
(the “Date of Grant”) by and between BMC West Corporation, a Delaware
corporation (the "Company"), and Xxxxxx X. Xxxxxx, as Optionee.
RECITALS
WHEREAS,
Optionee
is currently a director of the Company and has agreed to serve as the President
and Chief Executive Officer and as a director of the Company’s parent
(“Holdings”) after the Company’s corporate reorganization occurs, pursuant to
which the Company will merge with and into a subsidiary of Holdings and,
as a
result, the Company will become a wholly-owned subsidiary of Holdings;
and
WHEREAS,
the Board
of Directors of the Company (the “Board”) has approved the grant to Optionee of
an option to purchase shares of the common stock of the Company (the "Common
Stock"), on the terms and conditions set forth herein.
AGREEMENT
NOW,
THEREFORE, in
consideration of the foregoing recitals and the covenants set forth herein,
the
parties hereto hereby agree as follows:
1. Grant
of Option;
Certain Terms and Conditions. The Company hereby grants to Optionee, and
Optionee hereby accepts, as of the Date of Grant, an option to purchase
50,000
shares of Common Stock (the "Option Shares") at an exercise price of $12.50
per
share (the “Exercise Price”), which option shall expire at 5:00 o'clock
p.m., Boise, Idaho time on February 5, 2007 (the “Expiration Date”) and shall be
subject to all of the terms and conditions set forth in this Agreement
(the
"Option"). This Option shall vest and become exercisable with respect to
a
certain number of Option Shares when the Fair Market Value (as defined
in
Section 4(a) below) of the Common Stock reaches certain values, all in
accordance with the schedule below. In order for the vesting thresholds
set
forth below to be triggered, the Fair Market Value of the Common Stock
must be
greater than or equal to the amount designated below for ten (10) consecutive
trading days or for twenty (20) trading days in any thirty (30) trading
day
period. Once a threshold is triggered, this Option shall remain exercisable
as
to the installment associated with such threshold notwithstanding a subsequent
decrease in stock price.
|
Number
of
Options Shares
|
||
|
Fair
Market
Value
|
Vesting
when
Common Stock
|
|
|
to
be
Reached*
|
Reaches
Fair
Market Value
|
|
|
$15.00
|
25,000
shares
|
|
|
$18.00
|
12,500
shares
|
|
|
$21.00
|
12,500
shares
|
|
| * |
Fair
Market
Value will be adjusted for stock splits, reverse stock splits,
stock
dividends, recapitalizations and similar
events.
|
All
option shares
shall vest, if not earlier vested pursuant to the terms of this Section
1, on
February 6, 2002, regardless of the Fair Market Value of the Common stock
prior
to or as of such date.
This
Option is
not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code.
2. Acceleration
and
Termination of Option.
(a) Termination
of
Employment
(i) Death
or
Permanent Disability. If Optionee shall cease to be an employee, director
and officer (collectively, “Employment”) of the Company and/or any of its
parents or subsidiaries (a “Termination”) by reason of the death or permanent
disability of Optionee, then (A) the portion of this Option that has not
vested on or prior to the date of such Termination of Employment shall
terminate
on such date and (B) the remaining vested portion of this Option shall
terminate upon the earlier of the Expiration Date or the date which is
twelve (12) months after the date of such Termination of Employment.
Optionee shall not be deemed to have a permanent disability until proof
of the
existence thereof shall have been furnished to the Compensation Committee
of the
Board (the “Committee”) or to the Board in such form and manner, and at such
times, as the Committee or Board may require. Any determination by the
Committee
or Board that Optionee does or does not have a permanent disability shall
be
final and binding upon the Company and the Optionee.
(ii) Retirement
After
Age 65. If Optionee's Employment is Terminated by reason of Optionee's
retirement in accordance with the Company's then-current retirement policy
(or
the then-current retirement policy of any of the Company's parents or
subsidiaries, if applicable) after age 65 ("Retirement"), then (A) the
portion of the Option that has not vested on or prior to the date of such
Retirement shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate upon the earlier of the Expiration
Date or
the date which is thirty-six (36) months after the date of such Retirement.
(iii) Termination
for
Cause. If Optionee's Employment is Terminated for Cause (as defined below),
then this Option shall terminate upon the date of such Termination of Employment
and shall cease to be exercisable. Employment shall be deemed to have been
terminated for “Cause” if Optionee is determined by the Board to have willfully
breached his duty in the course of Employment or to have committed an act
of
embezzlement, fraud, dishonesty or deliberate disregard of the rules of
the
Company and/or any of its parents or subsidiaries or engaged in any conduct
which constitutes unfair competition with the Company and/or any of its
parents
or subsidiaries (as determined by the Board acting in its sole
discretion).
(iv) Other
Termination. If Optionee's Employment is Terminated for no reason, or for
any reason other than Retirement, death or permanent disability, or for
Cause,
then (A) the portion of this Option that has not vested on or prior to the
date of such Termination of Employment shall terminate on such date and
(B) the remaining vested portion of this Option shall terminate upon the
earlier of the Expiration Date or the date which is twelve (12) months
after the date of such Termination of Employment.
(b) Events
Causing
Acceleration of Option. The Committee or Board, in its sole discretion, may
accelerate the exercisability of this Option at any time and for any reason.
In
the event of a Change in Control of the Company (as defined below), this
Option
shall become immediately exercisable in full. A “Change in Control” of the
Company shall be deemed to have occurred if (i) there shall be consummated
(x)
any consolidation or merger of the Company in which the Company is not
the
continuing or surviving corporation or pursuant to which shares of the
Company’s
Common Stock would be converted into cash, securities or other property,
other
than a merger of the Company in which the holders of the Company’s Common Stock
immediately prior to the merger have the same proportionate ownership of
the
commons tock of the surviving corporation immediately after the merger,
or (y)
any sale, lease, exchange or other transfer (in one transaction or a series
of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company approve a plan or proposal
for
the liquidation or dissolution of the Company, or (iii) any “person” (as defined
in Sections 13(d) and 14(d) of the Exchange Act), shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty (50%) percent or more of the Company’s outstanding Common
Stock, or (iv) during any period of two consecutive years, individuals
who at
the beginning of such period constitute the entire Board shall cease for
any
reason to constitute a majority thereof unless the election, or the nomination
for election by the Company’s stockholders, of each new director was approved by
a vote of at least two-thirds of the
directors
then
still in office who were directors at the beginning of the period.
Notwithstanding the above, a Change of Control shall not be deemed to have
occurred in connection with a transaction resulting in a merger, consolidation,
sale of assets or sale of securities if such transaction has been initiated
(in
contrast to an action in response to or resulting from receipt of an offer
or
its equivalent from a third party) at the direction of the Board acting
with the
approval of a majority of the independent directors.
(c) Other
Events
Causing Acceleration and Termination of Option. In the event of (a) a
dissolution or liquidation of the Company, or (b) a merger or consolidation
in which the Company is not the surviving corporation, the Company shall
give to
the Optionee, at the time of adoption of the plan for liquidation, dissolution,
merger or consolidation, either: a reasonable time thereafter within which
to
exercise this Option in full, prior to the effectiveness of such liquidation,
dissolution, merger or consolidation, at the end of which time this Option
shall
terminate; or the right to exercise this Option as to an equivalent number
of
shares of stock of the corporation succeeding the Company or acquiring
its
business by reason of such liquidation, dissolution, merger or
consolidation.
3. Adjustments.
In the event that the outstanding securities of the class then subject
to this
Option are increased, decreased or exchanged for or converted into cash,
property and/or a different number of kind of securities, or cash, property
and/or securities are distributed in respect of such outstanding securities,
in
either case as a result of a reorganization, merger, consolidation,
recapitalization, reclassification, dividend (other than a regular, quarterly
cash dividend) or other distribution, stock split, reverse stock split
or the
like, or in the event that substantially all of the property and assets
of the
Company are sold, then, unless such event shall cause this Option to terminate
pursuant to Section 2(c) hereof, the Committee or Board shall make
appropriate and proportionate adjustments in the number and type of shares
or
other securities or cash or other property that may thereafter be acquired
upon
the exercise of this Option; provided, however, that any such adjustments
in
this Option shall be made without changing the aggregate Exercise Price
of the
then unexercised portion of this Option. In the event any fractional shares
of
stock would result on account of any such adjustment, then the number of
shares
shall be rounded upward to the nearest whole share.
4. Manner
of
Exercise. This Option shall be exercisable during Optionee's lifetime only
by Optionee or his Permitted Transferee (as defined in Section 7(b) herein),
and
after Optionee's death only by the Permitted Transferee or the person or
entity
entitled to do so under Optionee's or Permitted Transferee’s last will and
testament, whichever is applicable, or applicable intestate law. This Option
may
be exercised with respect to all or any part of the Option Shares then
subject
to such exercise as follows:
(a) By
giving the
Company written notice of such exercise specifying the number of the Option
Shares as to which the Option is so exercised and accompanied by an amount
equal
to the aggregate Exercise Price of such shares, in the form of any one
or
combination of (i) cash, a certified check or postal or express money order
payable to the order of the Company in lawful money of the United States,
(ii) shares of Common Stock previously acquired by Optionee, in
satisfaction of all or a portion of such aggregate Exercise Price, and
any
Common Stock so delivered shall be valued at its Fair Market Value on the
date
of exercise; provided, however, that any Options may not be exercised by
the
deliver of Common Stock more frequently than at six-month intervals, or
(iii) delivery of a properly executed exercise notice together with such
other documentation as the Committee or Board and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company
of
the sale proceeds required to pay the aggregate Exercise Price.
“Fair
Market Value”
as used in this Agreement shall mean (i) if the Common Stock is listed
on the
New York Stock Exchange or any other established stock exchange or on the
Nasdaq
National Market, the closing sales price of the Common Stock on the relevant
date as reported in the Wall Street Journal, (ii) if the Common Stock is
not then listed on an exchange or traded on the Nasdaq National Market,
the
average of the closing bid and asked prices per share for the Common Stock
in
the over-the-counter market as quoted on Nasdaq on such date, or (iii)
if the
Common Stock is not then listed on an exchange or quoted on Nasdaq, an
amount
determined in good faith by the Board or the Committee.
(b) If
required by the
Company, by giving satisfactory assurance in writing, signed by Optionee
or his
or her legal representative, that such shares are not being purchased with
a
view to the distribution thereof; provided, however, that such assurance
shall
be deemed inapplicable to (1) any sale of such
shares
by the
Optionee subject to a registration statement covering such sale, which
has
heretofore been (or may hereafter be) filed and become effective under
the
Securities Act of 1933, as amended (the "1933 Act"), and with respect to
which
the registration statement is current and no stop order suspending the
effectiveness thereof has been issued, and (2) any other sale of such
shares with respect to which, in the opinion of counsel for the Company,
such
assurance is not required to be given in order to comply with the provisions
of
the 1933 Act.
As
soon as
practicable after receipt of such written notice(s) required by this Section4
from Optionee, the Company shall, without transfer or issue tax or other
incidental expenses to Optionee, deliver to Optionee at the office of the
Company, or such other place as may be mutually acceptable to the Company
and
Optionee, a certificate or certificates for such shares, which certificate
or
certificates may bear such legend or legends with respect to restrictions
on
transfer as counsel for the Company deems to be required by applicable
provisions of law and this Agreement; provided, however, that nothing herein
shall be deemed to impose upon the Company any obligation to deliver any
shares
of Common Stock to the Optionee if, in the opinion of counsel, for the
Company,
doing so would violate any provision of: (i) the 1933 Act; (ii) the
Securities Exchange Act; (iii) any applicable listing requirements of any
national securities exchange; (iv) any state securities regulation or "Blue
Sky" laws; or (v) requirements under any other law or regulation applicable
to the issuance or transfer of such shares. In no event shall the Company
be
required to take any affirmative action to comply with any of such laws,
regulations or requirements, nor shall the Company be liable for any failure
to
deliver shares of Common Stock because such shares have not been registered
or
because a registration statement with respect thereto is not current or
because
such delivery would otherwise be in violation of any applicable law or
regulation.
5. Payment
of
Withholding Taxes. By accepting this Option, the Optionee, both personally
and on behalf of any person to whom Optionee's rights under this Option
shall
pass by will or the laws of descent and distribution, agrees that, if the
Company so requires, whenever Option Shares are to be issued by reason
of the
exercise of this Option, the Optionee or such other person who is to receive
such stock will remit to the Company, prior to the delivery of any certificate
or certificates for such shares, all or any part of an amount determined
by the
Company in its discretion to be sufficient to satisfy federal, state and
local
withholding tax requirements which the Company, or its counsel, determine
may be
payable with respect to such exercise. Such withholding may be paid in
cash, by
check payable to the Company, or by delivery of shares of the Company's
Common
Stock, valued at the Fair Market Value of such Common Stock on the date
of
delivery or by surrender of a portion of this Option.
6. Notices.
All
notices and other communications required or permitted to be given pursuant
to
this Agreement shall be in writing and shall be deemed given if delivered
personally or five (5) days after mailing by certified or registered mail,
postage prepaid, return receipt requested, to the Company at 0000 Xxxxxx
Xxxx,
Xxxxx, Xxxxx 00000, Attention: Treasurer, or to Optionee at the address
set
forth beneath his or her signature on the signature page hereto, or at
such
other addresses as they may designate by written notice in the aforesaid
manner.
7. Transferability.
(a) Subject
to the
provisions of Section 7(b), neither this Option nor any interest therein
may be
sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred
in any manner other than by will or the laws of descent and distribution.
The
transfer by Optionee to a trust created by Optionee for the benefit of
Optionee
or Optionee’s family which is revocable at any and all times during Optionee’s
lifetime by Optionee and as to which Optionee is the sole trustee during
his or
her lifetime, will not be deemed to be a transfer for purposes of this
Agreement. Under such rules and regulations as Committee or Board may establish,
a beneficiary may be designated with respect to an Option grant in the
event of
the death of Optionee. If the estate of Optionee is the beneficiary with
respect
to the grant, any rights with respect to such grant may be transferred
to the
person or entity (including a trust) entitled thereto under the will of
Optionee
or pursuant to the laws of descent and distribution. In the event of any
attempt
by Optionee to alienate, assign, pledge, hypothecate, or otherwise dispose
of
the Option or of any right hereunder, except as provided for herein, or
in the
event of the levy of any attachment, execution, or similar process upon
the
rights or interest hereby conferred, the Option shall thereupon become
null and
void and of no effect.
(b)
Notwithstanding
the provisions of Section 7(a), the Committee or Board may, in its discretion,
authorize and permit all or a portion of the Option to be transferred by
such
Optionee to (i) the spouse,
children
or
grandchildren of the Optionee (collectively, “Immediate Family Members”), (ii) a
trust or trusts for the exclusive benefit of such Immediate Family Members,
(iii) a partnership in which such Immediate Family Members are the only
partners, or (iv) any other person or entity that the Committee or Board,
in its
discretion, may permit (collectively, when so approved by the Committee
or
Board, a “Permitted Transferee”); provided that subsequent transfers of
transferred Options shall be prohibited except those in accordance with
Section
7(a). Following transfer, any such Options shall continue to be subject
to the
same terms and conditions as were applicable immediately prior to transfer,
provided that for purposes of Sections 2(c), 4(a), 5,6, 7(a), 9, 11, and
12
hereof the term “Optionee” shall be deemed to refer to the Permitted Transferee.
The events of termination of employment of Section 2(a) hereof shall continue
to
be applied with respect to the original Optionee, following which the Options
shall be exercisable by the Permitted Transferee only to the extent, and
for the
periods specified in Section 2(a). The Company shall have no obligation
to
notify the Permitted Transferee as to events that my affect the exercisability
or expiration of the Option including, without limitation, the original
Optionee’s termination of Employment. Before any transfer becomes effective, the
intended transferee (or his/her parents or legal guardians) must execute
an
assumption agreement describing the rights and obligations of the intended
transferee including, without limitation, who has the power to exercise
the
Option (if the intended transferee is a minor, partnership, trust or corporation
or otherwise it is not readily apparent who has the authority to exercise
such
Option), who is responsible for taxes and to whom notices are to be
delivered.
8. Stockholder
Rights. No person or entity shall be entitled to vote, receive dividends
or
be deemed for any purpose the holder of any Option Shares until this Option
shall have been duly exercised to purchase such Option Shares in accordance
with
the provisions of this Agreement.
9. Regrants.
The Committee or the Board may, with the consent of Optionee, amend this
Agreement or adopt a new agreement in lieu of this Agreement to take into
account a decrease in the Fair Market Value of the Common Stock, or for
any
other reason the Committee or the Board shall deem appropriate provided
that,
any new or amended Agreement granted hereunder shall have an exercise price
not
less than one hundred percent (100%) of the Fair Market Value at the date
of
regrant or amendment.
10. Employment
Rights; Other Plans. No provision of this Agreement or of this Option
granted hereunder shall (a) confer upon Optionee any right to continue in
the employ of or to associate with the Company or any of its parents or
subsidiaries, (b) affect the right of the Company and each of its parents
and subsidiaries to terminate the Employment of Optionee, with or without
cause,
or (c) confer upon Optionee any right to participate in any employee
welfare or benefit plan or other program of the Company or any of its parents
or
subsidiaries other than this Agreement. Nothing in this Agreement is intended
to
be a substitute for, or shall preclude or limit the establishment or
continuation of, any other plan, practice or arrangement for the payment
of
compensation or benefits to Optionee, which the Company or its parents
or
subsidiaries now has or may hereafter lawfully put into effect, including,
without limitation, any retirement, pension, insurance, stock purchase,
incentive compensation or bonus plan. Optionee hereby acknowledges and
agrees
that the Company and each of its parents and subsidiaries may terminate
the
Employment of Optionee at any time and for any reason, or for no reason,
unless
Optionee and the Company or such parent or subsidiary are parties to a
written
employment or other agreement that expressly provides otherwise.
11. Binding
Effect
of Agreement. This Agreement shall be binding upon and inure to the benefit
of any successors and assigns of the Company or its parents or subsidiaries,
and
upon Optionee and Optionee's heirs, executors, administrators, personal
representatives, permitted assignees and successors in interest.
12. Interpretation.
The interpretation and construction of this Agreement by the Committee
or Board,
where specifically reserved to the Committee or Board pursuant to this
Agreement, shall be final and binding upon Optionee. Questions of interpretation
of any of the provisions of this Agreement not specifically reserved for
interpretation by the Committee or the Board shall be resolved by legal
counsel
for the Company selected by the Board.
13. Governing
Law. This Agreement and the Option granted hereunder shall be governed
by
and construed and enforced in accordance with the laws of the State of
Delaware,
excluding the choice of law provisions thereof.
IN
WITNESS WHEREOF,
the Company and Xxxxxx X. Xxxxxx, as Optionee, have duly executed this
Agreement
as of the Date of Grant.
BMC
WEST
CORPORATION
/s/
Xxxxxx X.
XxXxxx
By:
Xxxxxx X.
XxXxxx
Title:
Chairman
OPTIONEE
By:
/s/
Xxxxxx
X. Xxxxxx
Xxxxxx
X.
Xxxxxx
