Exhibit 10(w)
LESCO, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualified Stock Option Agreement (the "Agreement") is made by LESCO,
Inc., an Ohio Corporation (the "Company"), and _______________ (the "Optionee"),
this ______ day of ________________, _______.
RECITALS
1. The Company believes it is desirable to grant to certain employees options to
purchase the Company's common shares, without par value (individually a "Share"
and collectively the "Shares"), in accordance with the terms and conditions of
this Agreement.
2. On ____________, _________ (the "Grant Date"), the Committee (as hereafter
defined) determined that it is advantageous and in the interests of the Company
to grant the option provided for herein to the Optionee as an inducement to him
or her to become employed by the Company or a subsidiary of the Company as a
part of his agreement to become employed by the Company, and to promote the best
interests of the Company, its subsidiaries and stockholders.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. Subject to the terms and conditions hereinafter set forth,
the Company, with the approval and at the direction of the Committee, hereby
grants to the Optionee the option to purchase __________ Shares (the "Option")
at a price of ___________________ ($_________) per share (the "Option Price").
The Option is subject to all the terms, conditions, and limitations as provided
by the Committee and set forth in this Agreement.
2. Term of Option. The Option and any part thereof must be exercised within ten
(10) years of the date hereof (the "Term"), unless terminated prior to that date
by the provisions of this Agreement.
3. The Committee. The Committee means the Compensation, Governance and
Nominating Committee of the Board of Directors of the Company (the "Board") (or
any successor committee with responsibility for executive compensation). The
Committee has conclusive authority to interpret and construe, as well as
prescribe, all provisions of this Agreement, and make all other determinations
deemed necessary or advisable for the administration of this Agreement, and has
such other authority as the Board may from time to time deem necessary or
desirable.
Page 1 of 8
Exhibit 10(w)
4. Exercise of Option.
A. Schedule of Right to Exercise Option. The Optionee may not exercise
the Option in whole or in part prior to _______________, except in the
case of a Change in Control of the Company (as hereafter defined) in
which case the Option shall become exercisable in its entirety upon the
occurrence of such Change in Control. The Option shall vest on
_________, _________. The Optionee may exercise the Option granted
hereby, to the extent vested, in whole or in part, in accordance with
the terms and conditions of this Agreement at any time for a period of
ten (10) years from the date hereof as to all Shares subject to the
Option.
B. Method of Exercise. The option may be exercised, in whole or in
part, by the Optionee delivering a written notice in person or by
certified mail to the Company at 0000 Xxxx 0xx Xxxxxx, Xxxxx 0000,
Xxxxxxxxx, XX 00000-0000, Attention: _________________, Secretary. Such
notice shall:
(i) State (a) the election to exercise all or part of the
Option granted hereunder; (b) the number of Shares with
respect to which such Option is being exercised; (c) the
Optionee's address and Social Security Number;
(ii) Contain such representations and agreements as to the
holder's investment intent with respect to such Shares of
stock as may be satisfactory to the Committee and its counsel;
(iii) Be signed by the person or persons entitled to exercise
the Option. If the Option is being exercised by any person or
persons other than the Optionee, the notice shall be
accomplished by proof, satisfactory to the Committee and its
counsel, of the right of such person or persons to exercise
the Option; and
(iv) Comply with such other reasonable requirements as the
Committee may establish.
C. Payment. Full payment of the aggregate Option Price for the Shares
to be acquired upon exercise of the Option shall accompany the notice
of exercise. Payment shall be (i) in cash in an amount equal to the
aggregate Option Price, (ii) that amount of Shares of the Company so
that the fair market value of the Shares equals the aggregate Option
Price, or (iii) a combination of cash and Shares such that Shares and
the amount of cash equals the aggregate Option Price. All payments of
cash shall be by certified or bank check. After receipt of full payment
of the aggregate Option Price with respect to that portion of the
Option being exercised, a certificate representing the Shares acquired
upon such exercise shall be registered in the name of the person or
persons exercising the Option and shall be delivered by the Company as
soon as practicable; provided, however, that the Company may, if it
deems advisable, postpone delivery of such certificate in order to
comply with the prospectus delivery requirements or other requirements
of the Securities Act of 1933 or any state securities law. A
Page 2 of 8
Exhibit 10(w)
partial exercise of the Option granted hereunder does not waive an
Optionee's right to a later exercise of such Option as to remaining
Shares pursuant to the terms hereof.
D. Limitations. Notwithstanding anything to the contrary in this
Agreement:
(i) Continuous Employment or Service. The Optionee, if an
employee of the Company or a subsidiary or a director of the
Company at the date hereof, may exercise the Option only if,
at all times during the period beginning on the date hereof
and ending on the day three months prior to the date of
exercise of the Option, he is or was an employee of the
Company or any of its subsidiaries; provided, however, if the
termination of the Optionee's employment by the Company or the
Optionee's status as a director of the Company is caused by
the Optionee's death or disability, then the Optionee or his
legal representative may exercise the Option as provided
herein. In the case of disability of the Optionee (within the
meaning of Section 150(d)(4) of the Code) the three-month
period set forth in the preceding sentence will be extended to
one year. If Optionee were to die, and at the time of death
Optionee was entitled to exercise the Option, such Option may
be exercised within twelve months after the death of Optionee
(but not later than the end of the Term of the Option) by
Optionee's estate or by a person who acquired the right to
exercise such Option by bequest or inheritance. In any event,
the Option may be exercised only as to the number of Shares
for which it could have been exercised on the date the
employee or former employee ceased employment. The Committee
may, in its sole discretion, accelerate the time in which the
Option may be exercised as set forth in Section 4A hereof.
(ii) Purchase of Option Following Death. Following the death
of Optionee, who at the time of death was entitled to exercise
the Option, the Company may, at its election, upon the request
of the holder of the Option (the estate or legal
representative or heir of the deceased Optionee, as the case
may be), at any time prior to its exercise or termination,
purchase the Option at an aggregate price equal to the excess
of the Fair Market Value on the date of such request, over the
Option Price, multiplied by the number of Shares as to which
the Option was then subject to exercise.
(iii) Compliance with Securities Laws. The Option shall not be
exercisable unless the Shares subject to the Option are exempt
from registration or are the subject of a currently effective
registration statement under all applicable Federal and State
securities laws and are not subject to any effective stop
order. At the discretion of the Committee, the Option shall
not be exercisable by the Optionee unless the Company shall
have received a reasonable opinion from its counsel to the
effect that the issuance of Shares upon such exercise would
not violate Federal
Page 3 of 8
Exhibit 10(w)
or State securities laws. As a condition to his exercise of
the Option, the Optionee may be required by the Company to
make representations and warranties to the Company as may be
required by any applicable securities law or regulation as to
his investment intention and the transfer of the Shares. If,
notwithstanding any other provisions of this Agreement, in the
reasonable opinion of counsel for the Company issuance of
Stock upon exercise of the Option would subject the Company or
any director or officer of the Company to civil or criminal
liability under Federal or State securities laws or under any
other applicable rules or regulations, including, without
limitation, rules and regulations of the Securities and
Exchange Commission or any state securities regulatory or
administrative body or subject the Company to delisting or any
other sanction under any applicable listing agreement, rule or
regulation of any securities exchange, the Company shall not
be required to issue or deliver any certificate or
certificates for the Shares hereunder until (a) the Company
has taken all steps as may, in the reasonable opinion of
counsel for the Company, be required by all applicable Federal
and State laws, rules and regulations and listing requirements
of any exchange in connection with the issuance or sale of the
Shares and listing of such Shares on each securities exchange,
if any, on which outstanding Shares of the same class may then
be listed; and (b) such Shares have been listed (or authorized
for listing upon official notice of issuance) on each
securities exchange, if any, on which outstanding Shares of
the same class may then be listed. The Company shall use its
best efforts to take such steps.
(iv) Evidence of Ownership. In the case of the exercise of the
Option, the Committee may require reasonable evidence as to
the ownership of the Option and may require such consents and
releases of taxing authorities as the Committee may deem
advisable.
(v) Withholdings. The Company is authorized to withhold from
any payments under this Agreement all withholding taxes due in
respect of such payment hereunder and to take such other
action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes.
E. Change in Control. The Option will become exercisable with respect
to 100% of the Shares upon the occurrence of any Change in Control of
the Company. For all purposes of the Agreement, a "Change in Control"
will have occurred if any of the following events occurs:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and
immediately after such merger, consolidation or reorganization
less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of the then-outstanding securities of the
Company entitled to vote generally in the election of
directors of the
Page 4 of 8
Exhibit 10(w)
Company (the "Voting Stock") of the Company immediately prior
to such transaction;
(ii) The Company sells all or substantially all of its assets
to any other corporation or other legal person, and less than
a majority of the combined voting power of the
then-outstanding securities of such corporation or person
immediately after such sale are held in the aggregate by the
holders of Voting Stock of the Company immediately prior to
such sale;
(iii) There is a report filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), disclosing that any person
(as the term "person" is used in Section 13(d)(3) or Section
14 (d)(2) of the Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13(d)(3)
or any successor rule or regulation promulgated under the
Exchange Act) of securities representing 20% or more of the
Voting Stock;
(iv) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange
Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) that a
Change in Control of the Company has or may have occurred or
will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during any period of two consecutive years, individuals
who at the beginning of any such period constitute the members
of the Board cease for any reason to constitute at least a
majority thereof; provided, however, that for purposes of this
Section, each member of the Board who is first elected, or
first nominated for election by the Company's stockholders, by
a vote of at least two-thirds of the members of the Board or a
committee thereof then still in office who were members of the
Board at the beginning of any such period will be deemed to
have been a member of the Board at the beginning of such
period.
Notwithstanding the foregoing provisions of Section (iii) or (iv)
hereof, unless otherwise determined in a specific case by majority vote
of the Board, a "Change in Control" will not be deemed to have occurred
for purposes of the Agreement solely because (i) the Company, (ii) an
entity in which the Company directly or indirectly beneficially owns
50% or more of the voting securities, or (iii) any employee stock
ownership plan or any other employee benefit plan sponsored by the
Company, either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report of item
therein) under the Exchange Act, disclosing beneficial ownership by it
of Shares, whether in excess of 20% or otherwise, or because the
Company reports that a Change in
Page 5 of 8
Exhibit 10(w)
Control of the Company has or may have occurred or will or may occur in
the future by reason of such beneficial ownership.
5. Non-Transferability of Option. The Option may not be transferred in any
manner otherwise than by will or the laws of descent and distribution and (other
than in the event of the Optionee's death or incapacity) may be exercised only
by the Optionee. The terms of the Option granted hereunder shall be binding upon
the executors, administrators, heirs, successors, and assigns of the Optionee.
6. Optionee Is Not a Shareholder. The Optionee shall not have any rights to
dividends or any other rights of a shareholder with respect to any Shares
subject to the Option until such Shares shall have been issued to him (as
evidenced by the appropriate entry on the books of a duly authorized transfer
agent of the Company and delivery of certificates representing such Shares to
him, except as provided in Section 7B hereof).
7. Representations and Warranties of the Optionee. Optionee represents,
warrants, and acknowledges as follows:
A. The Company has not made and is not making any representation or
warranty, either express or implied, concerning the Shares or any
matter or thing relating to or affecting the Company or any of its
affiliates except as specifically set forth in this Agreement and in
any documents delivered to the Optionee pursuant to the requirements of
Federal and/or State securities laws; and
B. Optionee understands that sales or other dispositions of any Shares
which are made in reliance upon Rule 144 under the Securities Act of
1933 will be subject to certain restrictions including holding periods
and a limitation on the amount of Shares sold in accordance with the
terms and conditions of such Rule 144.
8. Adjustment Provisions.
A. If prior to the expiration of the Option, there shall be any
reorganization, merger, consolidation, reclassification,
recapitalization, combination or exchange of the Shares, a stock split,
stock dividend, rights offering or other event affecting the Shares,
other than the sale of additional Shares, the Shares subject to the
Option and the Option Price shall be equitably adjusted by the
Committee, in accordance with any applicable rules and regulations of
the Commissioner of Internal Revenue or other regulatory body, as the
Committee deems appropriate to reflect such change; provided, however,
that the number of Shares will always be a whole number, and the
purchase price per Share of the Option outstanding will, in the case of
an increase in the number of Shares, be proportionately increased.
B. If the Company grants to the holders of its Shares rights to
subscribe for additional Shares or other securities, such rights shall
not apply to the Shares subject to the Option except to the extent that
written notice by the Optionee exercising the Option has been delivered
to the Company on or before the date
Page 6 of 8
Exhibit 10(w)
fixed for determining the shareholders entitled to receive such rights.
The date of exercise of the Option shall be deemed to be the date
notice of exercise is received by the Company.
C. No adjustment provided for in this Section 8 shall require the sale
or issuance of a fractional share.
9. General Provisions.
A. All certificates for Shares delivered hereunder will be subject to
such stock transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which
the Shares are then listed, and any applicable federal or state
securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
B. Nothing in this Agreement will interfere with or limit in any way
the right of the Company or any subsidiary of the Company to terminate
Optionee's employment at any time, nor does this Agreement confer upon
Optionee any right to continued employment with the Company or any
subsidiary of the Company.
C. This Agreement will be applied and construed in accordance with and
governed by the laws of the State of Ohio, excluding its conflict of
laws rules.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page 7 of 8
Exhibit 10(w)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
Date of Grant:
------------- -------------, -------
LESCO, Inc.
By
------------------------------
Xxxxxxx X. Xxxxxxxxxx
President and
Chief Executive Officer
You received two originals of this stock option agreement. Please sign both. You
must return a signed original to the Human Resources Department by [30 DAYS] to
indicate your acceptance of the award. You may retain the other original for
your records. You will not be deemed to have become a Participant, or to have
any rights with respect to the Award, until and unless you have executed and
returned this Stock Option Agreement and otherwise complied with the applicable
terms and conditions of the Plan.
Optionee hereby agrees to accept as binding, conclusive, and final all decisions
or interpretations by the Committee of any questions arising under this
Agreement.
DATED:
----------------- ---------------------------------
(Optionee)
---------------------
Page 8 of 8