EX-10.40





 Exhibit 10.40 

THE AZEK COMPANY INC. 

2020 OMNIBUS INCENTIVE COMPENSATION PLAN 

NONQUALIFIED STOCK OPTION AWARD AGREEMENT 

This Nonqualified Stock Option Award Agreement (this “Award Agreement”) evidences an award of nonqualified stock
options (“Options”) by The AZEK Company Inc., a Delaware corporation (“AZEK”) under The AZEK Company Inc. 2020 Omnibus Incentive Compensation Plan (the “Plan”). Capitalized
terms not defined in the Award Agreement have the meanings given to them in the Plan. 
  

			
	Name of Grantee:	  	______________ (the “Grantee”).
		
	Grant Date:	  	__________ (the “Grant Date”).
		
	Number of Options:	  	 ______________________.
  

Each Option represents the right to purchase one share of common stock, par value $0.001 (each, a “Share”), of AZEK at the Exercise
Price set forth below on the terms and conditions set forth herein.

		
	Exercise Price:	  	The Exercise Price will be $_______ (the “Exercise Price”).
		
	Vesting Dates:	  	 _______________________, a “Vesting Date”).

 
 The Options will vest only if the Grantee is, and has been, continuously employed by
AZEK from the Grant Date through the applicable Vesting Date, and any unvested Options will be forfeited upon any termination of Employment for any reason.
  

Notwithstanding the foregoing, and any provision in the Plan:
  

A. Upon a termination of Employment due to death or Disability, any unvested Options scheduled to vest within 12
months of the Grantee’s date of termination will immediately vest as of the date of such termination;
  

B. Upon an involuntary termination of Employment by AZEK without Cause[ or by the Grantee for Good Reason (as
defined in the Employment Agreement)], and subject to the Grantee’s continued compliance with any restrictive covenants in any employment or other agreement with AZEK, any unvested Options scheduled to vest within 12 months of the
Grantee’s date of termination will remain outstanding and continue to vest on the applicable Vesting Date as if the Grantee had remained Employed through such applicable Vesting Date;
and



  
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		  	 C. Upon a termination of Employment by AZEK without Cause[ or by the Grantee for Good
Reason] on or within 24 months following a Change in Control, any outstanding, unvested Options will immediately vest as of the date of such termination.

		
	Term:	  	 The latest date the Option will expire is on the tenth anniversary of the Grant Date (the “Expiration Date”).
However, in the event the Grantee’s Employment terminates for any reason prior to the Expiration Date, vested Options shall remain exercisable for the period as set forth below, unless the Board determines otherwise:

 
 •  Upon a termination of
Employment for any reason other than for Cause, Disability or death, the Grantee may exercise the Options until the date that is 90 days following the later of the date of the termination of Employment or the date the Options vest in accordance with
the terms of this Award Agreement, but in no event later than the Expiration Date.
  

•  Upon a termination of Employment for Cause, the Options shall expire and immediately cease to be
exercisable upon the date of the termination of Employment.
  

•  Upon a termination of Employment due to death or Disability, the Options shall expire one year
after the date of the termination of Employment, but in no event later than the Expiration Date.

		
	Exercise of Option:	  	 Vested Options may be exercised by submitting to AZEK a written notice specifying the number of Options to be exercised accompanied by the
full Exercise Price in cash or by certified or official bank check or in another form as determined by the Compensation Committee of the Board (the “Committee”). The Committee may also make arrangements for the cashless
exercise of an Option.
  
 As soon as reasonably practicable following AZEK’s
determination that the Option has been validly exercised, AZEK will issue the relevant number of Shares to be allocated to the Grantee, subject to applicable tax withholding as provided in Section 3.2 of the
Plan.















			
	Section 409A:	  	It is AZEK’s intent that payments under this Award Agreement are exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and that the Award Agreement be administered accordingly.
		
	Tax Representations; Withholding:	  	The Grantee is advised to review with his/her own tax advisors the federal, state and local tax consequences of receiving and exercising the Options. The Grantee hereby represents to AZEK that he/she is relying solely on such
advisors and not on any statements or representations of AZEK, its Affiliates or any of their respective agents. If, in connection with the exercise of the Options, AZEK is required to withhold any amounts by reason of any federal, state or local
tax, such withholding shall be effected in accordance with Section 3.2 of the Plan.
		
	Transfer Restrictions:	  	The Grantee may not sell, exchange, transfer, assign, pledge, hypothecate or otherwise encumber the Options or the Grantee’s right under the Options to receive Shares, other than to the extent provided in Section 3.5 of
the Plan.
		
	Clawback	  	The Options will be subject to any clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the
Options be repaid to the Company after they have been distributed to the Grantee.
		
	Amendment:	  	The Committee reserves the right at any time to amend the terms and conditions set forth in this Award Agreement, except that the Committee shall not make any amendment in a manner unfavorable to the Grantee (other than if
immaterial), without the Grantee’s consent. Any amendment of this Award Agreement shall be in writing and signed by an authorized member of the Committee or a person or persons designated by the Committee.
		
	Governing Law:	  	This Award Agreement shall be deemed to be made under, and in all respects be interpreted, construed and governed by and in accordance with, the laws of the State of Delaware without regard to conflict of law principles.
		
	All Other Terms:	  	As set forth in the Plan.

 The Plan is incorporated herein by reference. Except as otherwise set forth in the Award Agreement, the Award
Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the Options. In the event that any provision of the Award Agreement is inconsistent with the Plan, the terms of the Plan will control. Except as
specifically provided herein, in the event that any provision of this Award Agreement is inconsistent with any Employment Agreement, the terms of the Employment Agreement will control. By accepting this Award Agreement, the Grantee agrees to be
subject to the terms and conditions of the Plan. 












 This Award Agreement may be executed in counterparts, which together will constitute one and
the same original. 












 IN WITNESS WHEREOF, the parties have caused this Award Agreement to be duly executed
and effective as of the Grant Date. 
  

			
	THE AZEK COMPANY INC.
		
	By:	 	 
		 	Name:
		 	Title:
	
	 Acknowledged and Agreed:

	
	  

	[NAME OF GRANTEE]