Exhibit 10.4
NON-QUALIFIED STOCK OPTION

THIS NON-QUALIFIED STOCK OPTION granted this _______ day of ____, 20XX (the
“Grant Date”), by PATRICK INDUSTRIES, INC. (hereinafter called the "Company"),
to “_____________” (hereinafter called the "Employee"), pursuant to the Patrick
Industries, Inc. ______ Stock Option Program, as Amended and Restated (the
“Plan”).  Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Plan.
 
In consideration of the premises, mutual covenants and agreements herein, the
Company and the Employee agree as follows:
 
1.           Option Grant - The Company hereby grants to the Employee an option
to purchase a total of ____________ shares of Common Stock of the Company
(“Shares”) on the terms and conditions set forth herein.  This option shall not
constitute an “incentive stock option” within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).
 
2.           Option Price - The purchase (exercise) price for each Share
issuable upon exercise of this option shall be $___________ per share, being not
less than the “fair market value” per Share on the Grant Date (as determined
under the Plan).  The fair market value per Share as of the close of business on
the Grant Date was $_________ per share.
 
3.           Time of Exercise - Subject to the provisions of paragraphs 4, 5, 6,
and 9 hereof, this option may be exercised (as described in paragraph 6 hereof)
to a maximum cumulative amount of 10% of the total Shares from and after the
Grant Date, as to 35% of the total Shares from and after the first anniversary
of the Grant Date, as to 70% of the total Shares from and after the second
anniversary of the Grant Date, and as to 100% of the total Shares from and after
the third anniversary of the Grant Date.  The following schedule reflects the
amounts and vesting dates in accordance with the schedule above:
 

 
Vesting Schedule
 
5/21/09
5/21/10
5/21/11
5/21/12
Cumulative Percent
10%
35%
70%
100%
Vested Shares
       

4.           Term - Subject to earlier termination as provided in Section 5
hereof, this option shall terminate, and be of no force or effect after 5:00
p.m. (Eastern Time), on the tenth (10th) anniversary of the Grant Date (the
“Expiration Date”).
 
5.           Effect of Termination of Service - In the event of Employee’s
termination of employment with the Company or any of its subsidiaries (a
“Termination of Service”) prior to the Expiration Date, then (i) all further
vesting of Employee’s rights with respect to the option under Paragraph 3 hereof
shall immediately cease, (ii) any then unvested portion of this option shall be
immediately cancelled and forfeited by the Employee for no consideration and
(iii) any then vested portion of this option shall terminate and lapse following
such Termination of Service as follows:
 
 
(a)
In the event of a Termination of Service for any reason other than death,
Disability or Retirement, this option shall lapse on the earlier of (i) the last
day of the six (6) month period beginning on the date of such Termination of
Service or (ii) the Expiration Date.

 

 
 
 

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(b)
In the event of a Termination of Service by reason of Employee’s death,
Disability or Retirement, this option shall lapse on the earlier of (i) the last
day of the one (1) year period beginning on the date of such Termination of
Service or (ii) the Expiration Date.  In the event of death or Disability, the
legal representative of the Employee, the Employee’s estate, or the person to
whom this option passes by will or the laws of descent and distribution shall be
entitled to exercise this option.  For these purposes, “Disability” shall mean
the inability of the Employee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment that (i) can
be expected to result in death, (ii) has lasted for a continuous period of not
less than 12 months, or (iii) can be expected to last for a continuous period of
not less than 12 months.  For these purposes, “Retirement” shall mean a
retirement in accordance with any retirement plan then in effect for the Company
or any of its subsidiaries.

 
 
(c)
If the Employee dies during the twelve (12) month period following Termination
of Service by reason of Disability or retirement or within six (6) months after
any other termination of employment, then notwithstanding Paragraphs 5(a) and
(b) above, this option shall lapse on the earlier of (i) the Expiration Date,
(ii) the last day of the one year period beginning with the date of Employee's
death.

 
6.           Exercise of Option -
 
 
(a)
This option may be exercised, to the extent then exercisable, only by
appropriate notice in writing delivered to the Secretary of the Company at
Elkhart, Indiana, and accompanied by a check payable to the order of the Company
for the full purchase price of the Shares being purchased.  The Employee shall
also submit, if then required by any federal or state securities law, a written
representation that at the time of exercise it is the Employee’s intention to
acquire the Shares for investment and not for resale.

 
 
(b)
The Company shall have the right to deduct from any compensation or any other
payment of any kind due the Employee, the amount of any federal, state or local
taxes required by law to be withheld as the result of any exercise of this
option.  In lieu of such deduction, the Company may require the Employee to make
a cash payment to the Company at the time of any option exercise equal to the
amount of taxes required to be withheld.  If the Employee does not make such
payment when requested, the Company may refuse to issue any Shares under this
option until arrangements satisfactory to the Company for such payment have been
made.

 
7.           Nontransferability - The option shall not be transferable other
than by will or the laws of descent and distribution, and any permitted
transferee shall take the option subject to all of the terms hereof.  During the
lifetime of the Employee, the option may be exercised only by the Employee or,
in the case of the Employee’s Disability, the Employee’s duly authorized
representative.  Following the death of the Employee, the option may be
exercised only by the Employee’s executor, administrator or permitted transferee
as provided above.  Without limiting the generality of the foregoing, the option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment or similar process, and any attempt to
do so shall be void.
 
8.           Delivery of Certificates -
 
 
(a)
The Company shall not be required to issue or deliver any Shares purchased

 

 
 
 

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upon the exercise of this option prior to the admission of such Shares to
listing on any stock exchange on which Common Stock of the Company may at that
time be listed.  If at any time during the option period the Company shall be
advised by its counsel that the Shares deliverable upon an exercise of the
option are required to be registered under the Federal Securities Act of 1933 or
any state securities law, or that delivery of such Shares must be accompanied or
preceded by a Prospectus meeting the requirements of such Act, the Company will
use its best efforts to effect such registration or provide such Prospectus not
later than a reasonable time following each exercise of this option, but
delivery of Shares by the Company may be deferred until such registration is
effected or such Prospectus is available.  The Employee agrees and acknowledges
that this option may not be exercised unless the foregoing conditions are
satisfied.  The Employee shall have no interest in Shares covered by this option
until certificates for said Shares are issued.
 
 
(b)
No adjustment shall be made for dividends or other distributions made by the
Company to its shareholders or other rights for which the record date is prior
to the date on which the Employee is admitted as a shareholder with respect to
Shares that may be issued upon the exercise of the option.  Notwithstanding the
preceding sentence, in the event of an extraordinary cash dividend or
distribution, the Compensation Committee of the Company’s Board of Directors
(the “Committee”) shall make appropriate and equitable adjustments to the number
of Shares subject to this option and/or to the exercise price hereof as the
Committee determines in its sole and reasonable discretion are necessary to
prevent dilution of Employee’s rights hereunder.  The Committee’s determination
with respect to any such adjustments under this Section 8 shall be conclusive
and binding on the Employee.

 
9.           Adjustment Provisions - If the Company shall at any time change the
number of shares of its Common Stock without new consideration to the Company
(such as by stock dividends or stock splits), the total number of Shares then
remaining subject to purchase hereunder shall be changed in proportion to such
change in issued shares and the option price per share shall be adjusted so that
the total consideration payable to the Company upon the purchase of all Shares
not theretofore purchased shall not be changed.
 
If, during the term of this option, the Common Stock of the Company shall be
changed into cash, securities, or evidences of indebtedness of another
corporation, other property, or any combination thereof, whether as a result of
reorganization, sale, merger, consolidation, or other similar transaction (a
“Transaction”), the Company shall cause adequate provision to be made whereby
(i) the Employee shall thereafter be entitled to receive upon the due exercise
of this option, the cash, securities, evidences of indebtedness, other property,
or any combination thereof the Employee would have been entitled to receive for
Shares acquired through exercise of this option immediately prior to the
effective date of such Transaction and (ii) if the Employee’s employment is
terminated without Cause following the Transaction during the term of this
option, this option shall become fully exercisable for the balance of the option
term.   For these purposes, “Cause” shall mean (A) commission of a felony
involving moral turpitude, (B) substantial failure to perform the duties
required by the Employee’s employment or (C) material negligence or misconduct
in the performance of those duties, all as determined by the Board of Directors
of the Company.  If appropriate, the option price of the shares or securities
remaining subject to purchase following such Transaction may be adjusted, in
each case in such equitable manner as the Committee may select.
 
If the Board of Directors of the Company determines that the Company is unable
to cause adequate provision to be made to allow the Employee to continue to
benefit from the option
 

 
 
 

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after the Transaction, the option shall become fully vested and cancelled in
exchange for a lump sum payment from the Company in an amount equal to the
excess of the then value of the Company’s Common Stock as established in the
Transaction over the option exercise price.
 
10.           Subject to the Plan - This option shall be subject to and governed
by all the terms and conditions of the Plan.  A copy of the Plan is on available
for review by Employee upon request to the Company’s Secretary and is hereby
incorporated by reference.  In the event of any discrepancy or inconsistency
between the terms and conditions of this option and of the Plan, the terms and
conditions of the Plan shall control.
 
11.           Code Section 409A - This option is intended to be exempt from
Section 409A of the Code, and the regulations and guidance promulgated
thereunder (“Section 409A”).  Notwithstanding the foregoing or any provision of
this option to the contrary, if any provision of this option contravenes Section
409A or could cause the Employee to incur any tax, interest or penalties under
Section 409A, the Committee may, in its sole discretion and without the
Employee’s consent, modify such provision to comply with, or avoid being subject
to, Section 409A, or to avoid the incurrence of taxes, interest and penalties
under Section 409A.
 
12.           No Assurance of Continued Employment by the Company - The granting
of the option is in consideration of the Employee’s continuing as an employee of
the Company.  Notwithstanding the foregoing, nothing in this option shall confer
upon the Employee any right to continue as an employee of the Company, or affect
the right of the Company to terminate the Employee’s employment (subject to the
terms of any separate employment contract) at any time in the sole discretion of
the Company, with or without cause.
 
13.           Interpretation - The interpretation and construction of any terms
or conditions of the Plan, or of this option or other matters related to the
Plan by the Committee shall be final and conclusive.
 
14.           Enforceability - This Agreement shall be binding upon the Employee
and such Employee’s estate, personal representative and beneficiaries.
 
15.           Governing Law - This Agreement shall be governed and construed in
accordance with the laws of the State of Indiana (regardless of the law that
might otherwise govern under applicable Indiana principles of conflict of laws).
 

 
 
 

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16.           Amendment - The terms and conditions of this option may be amended
by the mutual agreement of the Company and the Employee or such other persons as
may have an interest herein, evidenced in writing.
 
IN WITNESS WHEREOF, the Committee has caused this option to be executed on the
date first above written.
 

 

PATRICK INDUSTRIES, INC.

By________________________
 
 
 Title______________________