Exhibit 10.3

 

[tv491188_ex10-3img01.jpg]

[FORM OF NEO PERFORMANCE AWARD AGREEMENT]

 

3000 John Deere Road, Toano, VA 23168

Phone: (757) 259-4280* Fax (757) 259-7293

 

[Date]

 

[Name]

[Street]

[City, State]

 

RE: Employee Performance-Based Restricted Stock Award Agreement

 

Dear [Name]:

 

Lumber Liquidators Holdings, Inc. (the “Company”) has designated you to be a
recipient of restricted shares of the common stock of the Company, par value
$.001 per share (“Stock”), subject to the performance and employment-based
vesting restrictions and other terms set forth in this Award Agreement and in
the Lumber Liquidators Holdings, Inc. 2011 Equity Compensation Plan, as amended
(the “Plan”).

 

The grant of these restricted shares of Stock is made pursuant to the Plan. The
Plan is administered by the Compensation Committee (the “Committee”) of the
Company’s Board of Directors (the “Board”). The terms of the Plan are
incorporated into this Award Agreement and in the case of any conflict between
the Plan and this Award Agreement, the terms of the Plan shall control. A copy
of the Plan will be provided to you upon request.

 

1.            Grant. In consideration of your agreements contained in this Award
Agreement, the Company hereby grants to you ______ shares [Target Number of
Shares] of Company Stock (the “Restricted Stock”) as of __________________ (the
“Grant Date”). The Restricted Stock is subject to the vesting restrictions set
forth in Section 2 below. Until the vesting restrictions have lapsed, the
Restricted Stock is forfeitable and nontransferable.

 

2.            Vesting. The grant of the Restricted Stock is subject to the
following terms and conditions:

 

(a)           Except as otherwise set forth herein, the Restricted Stock shall
be considered performance-based (“Performance-Based”) and shall become eligible
to become vested with respect to that number of shares of Performance-Based
Restricted Stock subject to this Award Agreement that correlates to the
performance objectives achieved for the two-year performance period beginning
January 1, 2018 and ending December 31, 2019 (the “Performance Period”) set
forth on the attached Exhibit A, as determined by the Committee in its sole
discretion.

 

 

 

 

(b)           The shares of Performance-Based Restricted Stock that are eligible
to become vested based on the Committee’s determination of the performance
objectives set forth on Exhibit A achieved for the Performance Period (as
described in Section 2(a) above) shall then become vested as to (i) fifty
percent (50%) (rounded down to the nearest whole share) of the shares of
Performance-Based Restricted Stock that are then eligible to become vested, as
of such day after the Performance Period ends (which shall be no later than
March 15, 2020) on which the Committee certifies in writing the performance
objectives achieved for the Performance Period and the number of shares of
Performance-Based Restricted Stock that are then eligible to become vested and
(ii) the remaining number of shares of Performance-Based Restricted Stock that
are then eligible to become vested, as of December 31, 2020, subject to your
continued employment with the Company (or any Related Company) through the
applicable vesting date. Notwithstanding the foregoing, none of the shares of
Performance-Based Restricted Stock shall become eligible to become vested if the
performance objectives for the Performance Period set forth on Exhibit A are not
achieved at or above the designated levels set forth therein.

 

(c)           Upon a Change in Control before the end of the Performance Period,
the shares of Performance-Based Restricted Stock subject to this Award Agreement
shall become eligible to vest with respect to that number of shares of
Performance-Based Restricted Stock that equals the number of shares of
Performance-Based Restricted Stock that are eligible to vest at the one hundred
percent (100%) target threshold. In the event no provision is made for the
continuance, assumption or substitution by the Company or its successor in
connection with a Change in Control of the shares of Performance-Based
Restricted Stock, then, contemporaneously with the Change in Control, the shares
of Performance-Based Restricted Stock shall become vested with respect to that
number of shares of Performance-Based Restricted Stock that are eligible to vest
at the time of the Change in Control, to the extent not vested previously,
subject to your continued employment with the Company (or any Related Company)
until the date of the Change in Control. If provision is made for the
continuance, assumption or substitution by the Company or its successor in
connection with the Change in Control of the shares of Performance-Based
Restricted Stock, then the shares of Performance-Based Restricted Stock shall
become vested, to the extent not vested previously, contemporaneously with the
termination of your employment with the Company (or any Related Company) if your
employment is terminated by you for Good Reason or is terminated by the Company
(or any Related Company) and such termination is not a Termination for Cause, in
each case on or after the Change in Control. “Good Reason” and “Termination for
Cause” are defined in Section 17 of this Award Agreement.

 

(d)           If you die or become Disabled (as determined by the Committee)
while you are employed by the Company (or any Related Company) and your
employment with the Company (or any Related Company) is terminated as a result
of such death or Disability prior to the end of the Performance Period (or, if
earlier, a Change in Control), the shares of Performance-Based Restricted Stock
shall remain outstanding until the end of the Performance Period (or, if
earlier, until a Change in Control occurs) and shall become eligible to vest as
if you had remained employed with the Company (or any Related Company) until the
end of the Performance Period (or, if earlier, a Change in Control), and shall
then become vested, at the time such shares of Performance-Based Restricted
Stock would have become vested had you continued employment with the Company (or
any Related Entity) until the end of the Performance Period (or, if earlier, a
Change in Control), equal to the total number of shares of Performance-Based
Restricted Stock that are then eligible to vest multiplied by a fraction (but
not to exceed one (1)), the numerator of which is the number of full months
elapsed from the Grant Date until the date of your death or Disability, and the
denominator of which is the number of months between the Grant Date and the
final vesting date applicable to the shares of Performance-Based Restricted
Stock (which final vesting date will be the date of the Change in Control if no
provision is made for the continuance, assumption or substitution by the Company
or its successor in connection with the Change in Control of the shares of
Performance-Based Restricted Stock). If you die or become Disabled (as
determined by the Committee) while you are employed by the Company (or any
Related Company), and your employment with the Company (or any Related Company)
is terminated as a result of such death or Disability after the end of the
Performance Period (or, if earlier, after a Change in Control), the total number
of shares of Performance-Based Restricted Stock that are then eligible to become
vested shall become vested (including for this purpose any shares in which you
are already vested under this Award Agreement) equal to the total number of
shares of Performance-Based Restricted Stock that are then eligible to vest
(plus any shares in which you are already vested) multiplied by a fraction (not
to exceed one (1)), the numerator of which is the number of full months elapsed
from the Grant Date until the date of your death or Disability, and the
denominator of which is the number of months between the Grant Date and the
final vesting date applicable to the shares of Performance-Based Restricted
Stock (which final vesting date will be the date of the Change in Control if no
provision is made for the continuance, assumption or substitution by the Company
or its successor in connection with the Change in Control of the shares of
Performance-Based Restricted Stock).

 

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(e)           Except as otherwise set forth above, you must be employed by the
Company (or any Related Company) on the relevant date for any Performance-Based
Restricted Stock to vest. If your employment with the Company (or any Related
Company) terminates for any reason other than your death or Disability, any
rights you may have under this Award Agreement with regard to unvested shares of
Performance-Based Restricted Stock shall be null and void. Any rights you may
have under this Award Agreement with regard to unvested shares of
Performance-Based Restricted Stock shall be forfeited and become null and void
at the earliest time at which the shares of Performance-Based Restricted Stock
may no longer become vested pursuant to the terms hereof.

 

3.            Dividends. During the period beginning with the Grant Date and
ending with the Vesting Date or the earlier forfeiture of your Performance-Based
Restricted Stock, (a) dividends or other distributions paid in shares of Stock
shall be subject to the same restrictions as set forth in Section 2 above, and
(b) dividends or other distributions paid in cash shall be accumulated and paid
to you with respect to all of the Performance-Based Restricted Stock granted to
you pursuant to Section 1 of this Award Agreement, if and only if, and within
thirty (30) days after the time, the shares of Performance-Based Restricted
Stock to which the dividends or other distributions relate become vested. You
will not be entitled to receive, and you will forfeit any rights to, any
dividends and other distributions that relate to shares of Performance-Based
Restricted Stock that do not become vested.

 

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4.            Forfeiture and Repayment Provision. If the Committee determines,
in its sole discretion, that you have, at any time, willfully engaged in conduct
that is harmful to the Company (or any Related Company), the Committee may
declare that all or a portion of this Performance-Based Restricted Stock award
is immediately forfeited. If the Committee determines, in its sole discretion,
that you have willfully engaged in conduct that is harmful to the Company (or
any Related Company), you shall repay to the Company all or any vested shares of
Company Stock owned by you as a result of this Award Agreement or all or any of
the amount realized as a result of the sale of Company Stock awarded to you
under this Award Agreement, to the extent required by the Committee. Repayment
or forfeiture required under this Section shall be enforced by the Board or its
delegate, in the manner the Board or its delegate determines to be appropriate.
Your acceptance of the Performance-Based Restricted Stock reflected in this
Award Agreement constitutes acceptance of the forfeiture and repayment
provisions of this Section.

 

5.            Cancellation of Restricted Stock. To facilitate the cancellation
of any Performance-Based Restricted Stock pursuant to Section 2 above, you
hereby appoint the Corporate Secretary of the Company as your attorney in fact,
with full power of substitution, and authorize him or her, upon the occurrence
of a forfeiture pursuant to Section 2 above, to notify the Company’s registrar
and transfer agent of the forfeiture of such shares and, if necessary, to
deliver to the registrar and transfer agent the certificate representing such
shares together with instructions to cancel the shares forfeited. The registrar
and transfer agent shall be entitled to rely upon any notices and instructions
delivered by your attorney in fact concerning a forfeiture under the terms of
this Award Agreement.

 

6.            Custody of Certificates. At the option of the Company, custody of
stock certificates evidencing the Performance-Based Restricted Stock shall be
retained by the Company or held in uncertificated form.

 

7.            Rights as a Shareholder. Subject to the provisions of this Award
Agreement, you generally will have all of the rights of a holder of Company
Stock with respect to all of the Performance-Based Restricted Stock granted to
you pursuant to Section 1 of this Award Agreement from and after the Grant Date
until the shares either vest or are forfeited, including the right to vote such
shares and to receive dividends and other distributions paid thereon in
accordance with the provisions of Section 3.

 

8.             Transfer Restrictions. You may not sell, assign, transfer,
pledge, hypothecate or encumber the Performance-Based Restricted Stock awarded
to you under this Award Agreement prior to the time such Performance-Based
Restricted Stock becomes fully vested in accordance with this Award Agreement.

 

9.            Fractional Shares. A fractional share of Company Stock will not be
issued and any fractional shares may be disregarded by the Company.

 

10.          Adjustments. If the number of outstanding shares of Company Stock
is increased or decreased as a result of a stock dividend, stock split or
combination of shares, recapitalization, merger in which the Company is the
surviving corporation, or other change in the Company’s capitalization without
the receipt of consideration by the Company, the number and kind of your
unvested Performance-Based Restricted Stock shall be proportionately adjusted by
the Committee, whose determination shall be binding.

 

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11.          Notices. Any notice to be given to the Company under the terms of
this Award Agreement shall be addressed to the Corporate Secretary at Lumber
Liquidators Holdings, Inc., 3000 John Deere Road, Toano, Virginia 23168. Any
notice to be given to you shall be addressed to you at the address set forth
above or your last known address at the time notice is sent. Notices shall be
deemed to have been duly given if mailed first class, postage prepaid, addressed
as above.

 

12.          Applicable Withholding Taxes. No Performance-Based Restricted Stock
shall become nonforfeitable or transferable by you until you have paid to the
Company the amount that must be withheld under federal, state and local income
and employment tax laws or you and the Company have made satisfactory
arrangements for the payment of such taxes.

 

13.          Applicable Securities Laws. You may be required to execute a
customary written indication of your investment intent and such other agreements
the Company deems necessary or appropriate to comply with applicable securities
laws. The Company may delay delivery of the Performance-Based Restricted Stock
until you have executed such indication or agreements.

 

14.          Acceptance of Performance-Based Restricted Stock. By signing this
Award Agreement, you indicate your acceptance of the Performance-Based
Restricted Stock and your agreement to the terms and conditions set forth in
this Award Agreement which, together with the terms of the Plan, shall become
the Company’s Performance-Based Restricted Stock Award Agreement with you. You
also hereby acknowledge that a copy of the Plan has been made available and
agree to all of the terms and conditions of the Plan, as it may be amended from
time to time. Unless the Company otherwise agrees in writing, the
Performance-Based Restricted Stock granted under this Award Agreement will not
become vested if you do not accept this Award Agreement within thirty days of
the Grant Date.

 

15.          Clawback. This Performance-Based Restricted Stock is subject to
such clawback as may be determined under the Company’s Clawback Policy (as such
Clawback Policy is in effect from time to time) or as may be required by any
applicable law, government regulation or stock exchange listing requirement.
Your acceptance of the Performance-Based Restricted Stock reflected in this
Award Agreement constitutes acceptance of the clawback provisions described in
this Section 15.

 

This Section 15 is intended to comply with Section 954 of Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010 and all regulations and rulemaking
thereunder and should be interpreted accordingly.

 

16.          Binding Effect. This Award Agreement shall be binding upon and
inure to the benefit of your legatees, distributees, and personal
representatives and the successors of the Company (or any Related Company). Any
references herein to the Company (or any Related Company) shall include any
successor company to either.

 

17.          Definitions. For purposes of this Award Agreement:

 

(a)          “Good Reason” shall have the same meaning as under any employment,
severance or change in control agreement between you and the Company (or any
Related Company), or if no such employment or severance agreement exists or such
agreement does not contain any such definition, “Good Reason” shall mean (i)
failure to pay or provide, or a material reduction in, your base salary or
target bonus, or (ii) a material reduction in your responsibilities within the
Company (or any Related Company).

 

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(b)          “Termination for Cause” shall mean termination of your employment
for “Cause” as defined under any employment, severance or change in control
agreement between you and the Company (or any Related Company) or, if no such
agreement exists or such agreement does not contain any such definition, “Cause”
shall mean your (i) personal dishonesty, (ii) fraud, (iii) willful or repeated
misconduct, (iv) gross negligence, (v) breach of a fiduciary duty to the Company
(or any Related Company), (vi) intentional failure to perform your duties, (vii)
material violation of Company (or any Related Company) policy, (viii)
unsatisfactory performance of your job duties; provided, however, that in such
instances where the Company (or any Related Company), at its sole discretion,
deems such unsatisfactory performance curable, the Company (or any Related
Company) shall give such notice and opportunity to cure as the Company (or any
Related Company) deems reasonable, (ix) material noncompliance with financial
reporting requirements under federal securities laws, (x) conviction of or plea
of guilty or “no contest” to a felony or crime of moral turpitude under the laws
of the United States or any state thereof, and/or (xi) action or inaction that
materially diminishes or impairs the goodwill or reputation of the Company (or
any Related Company).

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company has caused this Performance-Based Restricted
Stock Award Agreement to be signed, as of this ____ date of ___________________,
2018.

 

  LUMBER LIQUIDATORS HOLDINGS, INC.         By:     Name:     Its:  

 

Agreed and Accepted:           [Name of Grant Recipient]           [Date]  

 

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LUMBER LIQUIDATORS HOLDINGS, INC.

EMPLOYEE PERFORMANCE-BASED

RESTRICTED STOCK AWARD AGREEMENT

 

Exhibit A

 

   Achievement Level Percentage  Performance Objectives (Weighting Percentage) 
50%   100%   200%  [●] ([●]%)  $                $                $              
[●] ([●]%)    %    %    %

 

The number of shares of Performance-Based Restricted Stock that will become
eligible to become vested shall equal the number of shares of Performance-Based
Restricted Stock subject to this Award Agreement multiplied by the Final
Weighted Performance Percentage (rounded to the nearest whole share). The Final
Weighted Performance Percentage shall be determined as follows: (A) determine
[●] and [●] achieved for the Performance Period; (B) determine the Achievement
Level Percentage in the chart above that correlates to [●] and [●] achieved for
the Performance Period; if [●] and/or [●] falls between any of the identified
Achievement Level Percentages in the chart above, then the Achievement Level
Percentage for the applicable performance objective shall be determined by
straight line interpolation between the two (rounded to the nearest hundredth of
a percent) (for example, if [●] is $[●], then the Achievement Level Percentage
for [●] will be [●]%); if [●] and/or [●] is less than the fifty percent (50%)
Achievement Level Percentage, the Achievement Level Percentage for that
performance objective shall be zero (0); if [●] and/or [●] exceeds the amount
that would result in an Achievement Level Percentage of two hundred percent
(200%), the Achievement Level Percentage for that performance objective shall be
two hundred percent (200%); (C) multiply for each of [●] and [●] the Achievement
Level Percentage determined under (B) by the Weighting Percentage in the chart
above assigned to that performance objective; and (D) then calculate the sum of
the products determined in (C) for each of the performance objectives; the
resulting sum will be the Final Weighted Performance Percentage; in no event may
the Final Weighted Performance Percentage exceed two hundred percent (200%).

 

Notwithstanding the foregoing, the Committee shall adjust the performance
objectives as the Committee in its discretion may determine is appropriate in
the event of unbudgeted acquisitions or divestitures or other extraordinary,
unusual, infrequently occurring or non-recurring items in the business of
Company or any Related Company, or their business units or products, or as
otherwise set forth in the Plan, to fairly and equitable determine the shares of
Performance–Based Restricted Stock that will become eligible to become vested in
order to prevent any inappropriate enlargement or dilution of the Participant’s
rights under this Agreement.