STOCK OPTION AGREEMENT OF BMC WEST CORPORATION
Exhibit
10.27
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;
Vesting; 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 the stock price.
|
Fair
Market Value
to
be
Reached*
|
Number
of
Option Shares
Vesting
When Common Stock
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 terminated 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 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 common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(in one transaction or 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 in full 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 or 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 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 delivery 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 share 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 the written notice(s) required by this
Section 4 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 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 of 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 be 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 the 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 Member, (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), 4(b), 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 may 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 provisions 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
By:_________________________
Title:________________________
/s/
Xxxxxx X.
Xxxxxx
Street
Address
City,
State and Zip
Code
Social
Security
Number
