Exhibit 10.3
(WESCO LOGO) [l40312l4031200.gif]
FORM OF
NON-EMPLOYEE DIRECTOR
STOCK APPRECIATION RIGHT AGREEMENT
     1. SAR. This Stock Appreciation Right Agreement (“Agreement”) relates to
and governs each and every stock appreciation right (referred to individually as
a “SAR” and collectively as the “SARs”) granted by WESCO International, Inc.
(the “Company”) to the Grantee identified on the signature page of this
Agreement under the Company’s annual SAR grant program for its non-employee
directors pursuant to the WESCO International, Inc. 1999 Long-Term Incentive
Plan, as amended from time to time (the “Plan”). Each such SAR grant shall be
confirmed and described in a separate Notice of Stock Appreciation Right Grant
to be delivered by the Company to the Grantee. Each such Notice shall be deemed
incorporated by reference into this Agreement, and shall set forth, among other
things, the date of grant of the SAR, the aggregate number of shares of the
Company’s Common Stock, par value $.01 per share (the Common Stock”), covered by
the SAR, and the exercise price (“Exercise Price”) of the SAR. Such Notices and
this Agreement are subordinate to, and the terms and conditions of each SAR
granted to Grantee hereunder are subject to, the terms and conditions of the
Plan. Capitalized terms used in this Agreement shall, unless otherwise defined
herein, have the respective meanings given to such terms in the Plan.
     2. Exercisability. Except as otherwise provided in this Agreement, the SAR
shall become available for exercise, subject to the provisions hereof, as set
forth in the applicable Notice of Stock Appreciation Right Grant, provided,
however, that the Committee may accelerate the exercisability of any SAR, all
SARs or any class of SARs, at any time and from time to time.
     3. Termination of SAR.
          (a) Normal Termination Date. Unless an earlier termination date is
specified in Section 3(b), each SAR shall terminate on the Normal Termination
Date specified in the applicable Notice of Stock Appreciation Right.
          (b) Early Termination. If the Grantee’s Board Service (as defined
below) is terminated as a result of a scheduled expiration of the Grantee’s term
as a member of the Board of Directors of the Company or by reason of the
Grantee’s death or Permanent Disability, then all of the Grantee’s SAR shall be
deemed vested in full as of the date of termination. If the Grantee’s Board
Service is terminated for any other reason prior to the Normal Termination Date,
any portion of the SAR that has not become exercisable on or before the
effective date of such termination of Board Service shall terminate on such
effective date. Any portion of the SAR that has become exercisable on or before
the date of the Grantee’s termination of Board Service, including as a result of
a scheduled expiration of the Grantee’s term as a member of the Board of
Directors of the Company or by reason of the Grantee’s death or

Page 1 of 7

--------------------------------------------------------------------------------

 

Permanent Disability, shall remain exercisable for whichever of the following
periods is applicable, and if not exercised within such period, shall terminate
upon the expiration of such period: (i) if the Grantee’s Board Service is
terminated by reason of the Grantee’s death or Permanent Disability (both an
“Extraordinary Termination”), then any SAR held by the Grantee and then
exercisable shall remain exercisable solely until the first to occur of (A) the
first anniversary of the Grantee’s termination of Board Service or (B) the
Normal Termination Date of the SAR, (ii) if the Grantee’s Board Service is
terminated by reason of the Grantee’s Retirement (also an “Extraordinary
Termination”), then any SAR held by the Grantee and then exercisable shall
remain exercisable solely until the first to occur of (A) the third anniversary
of the Grantee’s termination of Board Service or (B) the Normal Termination Date
of the SAR, and (iii) if the Grantee’s Board Service is terminated for any
reason other than an Extraordinary Termination, then any then exercisable SAR
held by such Grantee shall remain exercisable solely until the first to occur of
(A) sixty days after the date of the Grantee’s termination of Board Service or
(B) the Normal Termination Date of the SAR.
     4. Restrictions on Exercise; Non-Transferability of SAR.
          (a) Restrictions on Exercise. The SAR may be exercised only with
respect to full shares of Common Stock. No fractional shares of Common Stock
shall be issued. Notwithstanding any other provision of this Agreement, the SAR
may not be exercised in whole or in part, and no certificates representing
Shares shall be delivered, (i) unless all requisite approvals and consents of
any governmental authority of any kind having jurisdiction over the exercise of
SAR shall have been secured, (ii) unless the purchase of the Shares upon the
exercise of the SAR shall be exempt from registration under applicable U.S.
federal and state securities laws, and applicable non-U.S. securities laws, or
the Shares shall have been registered under such laws, and (iii) unless all
applicable U.S. federal, state and local and non-U.S. tax withholding
requirements shall have been satisfied. The Company shall use commercially
reasonable efforts to obtain the consents and approvals referred to in clause
(i) of the preceding sentence, to satisfy the withholding requirements referred
to in clause (iii) of the preceding sentence so as to permit the SAR to be
exercised.
          (b) Non-Transferability of SAR. The SAR may be exercised only by the
Grantee or by his estate. The SAR is not assignable or transferable, in whole or
in part, and it may not, directly or indirectly, be offered, transferred, sold,
pledged, assigned, alienated, hypothecated or otherwise disposed of or
encumbered (including without limitation by gift, operation of law or otherwise)
other than by will or by the laws of descent and distribution to the estate of
the Grantee upon his death, provided that the deceased Grantee’s beneficiary or
the representative of his estate shall acknowledge and agree in writing, in a
form reasonably acceptable to the Company, to be bound by the provisions of this
Agreement and the Plan as if such beneficiary or the estate were the Grantee.
          (c) Certain Definitions. As used in this Agreement the following terms
shall have the following meanings:
               (i) “Board Service” shall mean service as a member of the Board
of Directors of the Company.

Page 2 of 7

--------------------------------------------------------------------------------

 

               (ii) “Fair Market Value” shall mean the closing price per share
of the Common Stock on the New York Stock Exchange or other established stock
exchange (or exchanges) on the applicable date, or if no sale of Common Stock
has been recorded on such day, then on the next preceding day on which a sale
was so made. If shares of Common Stock are not traded on an established stock
exchange on the applicable date, Fair Market Value shall be determined by the
Committee in good faith.
               (iii) “Retirement” shall mean retirement from the Company’s Board
of Directors at age 65 or later.
               (iv) “Permanent Disability” shall mean a physical or mental
disability or infirmity that prevents the performance of such Grantee’s duties
as a member of the Company’s Board of Directors lasting (or likely to last,
based on competent medical evidence presented to the Board) for a continuous
period of six months or longer. The Board’s reasoned and good faith judgment of
Permanent Disability shall be final, binding and conclusive on all parties
hereto and shall be based on such competent medical evidence as shall be
presented to it by the Grantee or by any physician or group of physicians or
other competent medical expert employed by the Grantee or the Company to advise
the Board.
     5. Exercise of SAR. To the extent that the SAR shall have become and remain
exercisable as provided in Section 2 and subject to such reasonable
administrative regulations as the Board or the Committee may have adopted, the
SAR may be exercised, in whole or in part, by notice to the Secretary of the
Company in writing given 5 business days prior to the date on which the Grantee
expects to exercise the SAR (the “Exercise Date”), specifying the number of SAR
Shares with respect to which the SAR is being exercised (the “Exercise Shares”)
and the expected Exercise Date. Upon exercise of the SAR, the Grantee shall be
entitled to receive a number of shares of Common Stock (the “Net SAR Shares”)
equal to the quotient obtained by dividing x by y where:

  x   =   the number of Exercise Shares multiplied by the excess, if any, of
(A) the Fair Market Value of a share of Common Stock on the Exercise Date over
(B) the Exercise Price and     y   =   the Fair Market Value of a share of
Common Stock on the Exercise Date.

No fractional share of Common Stock shall be issued to make any payment in
respect of SAR; if any fractional share would be issuable, the number of Net SAR
Shares payable to the Grantee shall be rounded down to the next whole share (no
payment of cash, shares, or other consideration shall be made with respect to
such fractional share). The Company may require the Grantee to furnish or
execute such other documents as the Company shall reasonably deem necessary
(i) to evidence such exercise, (ii) to determine whether registration is then
required under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), and (iii) to comply with or satisfy the requirements of the Securities
Act, applicable state or non-U.S. securities laws or any other law.

Page 3 of 7

--------------------------------------------------------------------------------

 

     6. Representations and Warranties of the Company. The Company represents
and warrants to the Grantee that (a) the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the State of
Delaware, (b) this Agreement has been duly authorized, executed and delivered by
the Company and constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms, and
(c) the Net SAR Shares, when issued, delivered and paid for, upon exercise of
the SAR in accordance with the terms hereof will be duly authorized, validly
issued, fully paid and nonassessable, and free and clear of any liens or
encumbrances other than those created pursuant to this Agreement or otherwise in
connection with the transactions contemplated hereby.
     7. Change in Control and Adjustments to Reflect Capital Changes.
          (a) Accelerated Vesting Upon Change in Control. In the event of a
Change in Control, the SAR shall become immediately and fully exercisable unless
such Change in Control results from the Grantee’s beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act of 1934, as amended) of Common
Stock or other Company Voting Securities (as defined in the Plan).
          (b) Recapitalization. The number and kind of shares subject to the SAR
and the Exercise Price of the SAR shall be appropriately adjusted to reflect any
stock dividend, stock split, or share combination or any recapitalization,
merger, consolidation, exchange of shares, liquidation or dissolution of the
Company or other change in capitalization with a similar substantive effect upon
the Plan or the SAR. The Committee shall have the power and sole discretion to
determine the amount of the adjustment to be made in each case.
          (c) Certain Mergers. After any Merger in which the Company is not the
surviving corporation or pursuant to which a majority of the shares which are of
the same class as the shares that are subject to the SAR are exchanged for, or
converted into, or otherwise become shares of another corporation, the Acquiring
Corporation will either assume the Company’s rights and obligations under this
Agreement or substitute an award in respect of the Acquiring Corporation’s stock
for the SAR, provided, however, that if the Acquiring Corporation does not
assume or substitute for the SAR, the Board shall provide prior to the Merger
that any unexercisable and/or unvested portion of the SAR shall be immediately
exercisable and vested as of a date prior to such Merger, as the Board so
determines. The exercise and/or vesting of the SAR that was permissible solely
by reason of this Section 7(c) shall be conditioned upon the consummation of the
Merger. If the SAR is neither assumed by the Acquiring Corporation nor exercised
as of the date of the Merger, the SAR shall terminate effective as of the
effective date of the Merger. Comparable rights shall accrue to the Grantee in
the event of successive Mergers of the character described above.
          (d) Certain Definitions.

Page 4 of 7

--------------------------------------------------------------------------------

 

               (i) “Change in Control” means the first to occur of the following
events: (a) the acquisition by any person, entity or “group” (as defined in
Section 13(d) of the Exchange Act), other than the Company, its subsidiaries,
any employee benefit plan of the Company or its subsidiaries, or Cypress
Merchant Banking Partners L.P. or any successor investment vehicle, of 30% or
more of the combined voting power of the Company’s then outstanding voting
securities; (b) the merger or consolidation of the Company, as a result of which
persons who were stockholders of the Company immediately prior to such merger or
consolidation, do not, immediately thereafter, own, directly or indirectly, more
than 70% of the combined voting power entitled to vote generally in the election
of directors of the merged or consolidated company; (c) the liquidation or
dissolution of the Company; (d) the sale, transfer or other disposition of all
or substantially all of the assets of the Company to one or more persons or
entities that are not, immediately prior to such sale, transfer or other
disposition, affiliates of the Company; and (e) during any period of not more
than two years, individuals who constitute the Board as of the beginning of the
period and any new director (other than a director designated by a person who
has entered into an agreement with the Company to effect a transaction described
in clause (a) or (b) of this sentence) whose election by the Board or nomination
for election by the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who were directors at
such time or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board.
               (ii) “Merger” means any merger, reorganization, consolidation,
share exchange, transfer of assets or other transaction having similar effect
involving the Company.
     8. No Rights as Stockholder. The Grantee shall have no voting or other
rights as a stockholder of the Company with respect to any SAR Shares until the
exercise of the SAR and the issuance of a certificate or certificates to him for
such Shares. No adjustment shall be made for dividends or other rights for which
the record date is prior to the issuance of such certificate or certificates.
     9. Miscellaneous.
          (a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such delivery, to the Company, or the Grantee, as
the case may be, at the following addresses or to such other address as the
Company or the Grantee, as the case may be, shall specify by notice to the
others:

  (i)   if to the Company, to it at:         WESCO International, Inc.
Suite 700
225 West Station Square Drive
Pittsburgh, Pennsylvania 15219-1122       Attention: Legal Department  

Page 5 of 7

--------------------------------------------------------------------------------

 

  (ii)   if to the Grantee, to the Grantee at the address set forth on the
signature page hereof.

All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
          (b) Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision
contained herein.
          (c) Waiver; Amendment.
               (i) Waiver. Any party hereto or beneficiary hereof, may, by
written notice to the other parties (A) extend the time for the performance of
any of the obligations or other actions of the other parties under this
Agreement, (B) waive compliance with any of the conditions or covenants of the
other parties contained in this Agreement and (C) waive or modify performance of
any of the obligations of the other parties under this Agreement. Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party or
beneficiary, shall be deemed to constitute a waiver by the party or beneficiary
taking such action of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party hereto or beneficiary
hereof of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach and no failure by a
party or beneficiary to exercise any right or privilege hereunder shall be
deemed a waiver of such party’s or beneficiary’s rights or privileges hereunder
or shall be deemed a waiver of such party’s or beneficiary’s rights to exercise
the same at any subsequent time or times hereunder.
               (ii) Amendment. This Agreement may not be amended, modified or
supplemented orally, but only by a written instrument executed by the Grantee
and the Company.
          (d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other parties.
          (e) Applicable Law. This Agreement shall be governed by and construed
in accordance with the law of the Commonwealth of Pennsylvania, regardless of
the law that might be applied under principles of conflict of laws, except to
the extent that the corporate law of the State of Delaware specifically and
mandatorily applies.

Page 6 of 7

--------------------------------------------------------------------------------

 

          (f) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
          (g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
          (h) Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.
          (i) Tax Status of SAR. The SAR is not intended to be treated as an
arrangement that provides for a deferral of compensation subject to Section 409A
of the Internal Revenue Code. This Agreement shall be construed and applied so
as to ensure that the SAR is not covered by Section 409A; and this Agreement
shall be deemed amended to the extent reasonably necessary, as determined by the
Committee in its sole discretion, to exclude the SAR from the application of
Section 409A. Without limiting the generality of the foregoing, in accordance
with the proposed regulations promulgated under Section 409A and Notice 2005-1
of the Internal Revenue Service, the Exercise Price of a SAR shall never become
less than the Fair Market Value of the underlying shares of Common Stock on the
date of grant.
          IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement.

            WESCO INTERNATIONAL, INC.
      By:           Name:           Title:           THE GRANTEE:
      By:           Name:              

Page 7 of 7