Document:

EX-10.53 Appendix I to Participation Agreement

 

Exhibit 10.53

APPENDIX I

TO

PARTICIPATION AGREEMENT,

LEASE AGREEMENT AND OTHER OPERATIVE DOCUMENTS

DEFINITIONS AND INTERPRETATION

     A. Interpretation. In each Operative Document, unless a clear contrary intention
appears, (i) the singular number includes the plural number and vice versa, (ii) reference to any
Person includes such Person’s successors and assigns but, if applicable, only if such successors
and assigns are permitted by the Operative Documents, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually, (iii) reference to any gender
includes each other gender, (iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as amended or modified and in
effect from time to time in accordance with the terms thereof and, if applicable, the terms of the
other Operative Documents, (v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to
time, including rules and regulations promulgated thereunder and reference to any section or other
provision of any Applicable Law means that provision of such Applicable Law from time to time in
effect and constituting the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision, (vi) reference in any Operative Document to any
Article, Section, Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix,
Schedule or Exhibit thereto, (vii) “hereunder”, “hereof”, “hereto” and words of similar import
shall be deemed references to an Operative Document as a whole and not to any particular Article,
Section or other provision hereof, (viii) “including” (and with correlative meaning “include”)
means including without limiting the generality of any description preceding such term, (ix) “or”
is not exclusive and (x) relative to the determination of any period of time, “from” means “from
and including”, “to” means “to but not including” and “through” means “to and including”.

     B. Accounting Terms. In each Operative Document, unless expressly otherwise provided,
accounting terms shall be construed and interpreted, and accounting determinations and computations
shall be made, in accordance with GAAP.

     C. Conflict in Operative Documents. If there is any conflict between any Operative
Documents, such Operative Document shall be interpreted and construed, if possible, so as to avoid
or minimize such conflict but, to the extent (and only to the extent) of such conflict, in the
event of any conflict between the Participation Agreement and any other Operative Document, the
Participation Agreement shall control.

     D. Defined Terms. Unless a clear contrary intention appears, terms defined herein
have the respective indicated meanings when used in each Operative Document.

     “Acceleration” means the acceleration of the Lessee’s obligation to pay the Lease
Balance and purchase the Lessor’s interest in the Leased Property pursuant to the provisions of
Article XIV of the Lease, including, without limitation, the acceleration of such
obligation pursuant to Section 15.3 of the Lease.

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     “Address” means, with respect to any Person, such Person’s address set forth in
Section 8.2 of the Participation Agreement or such other address as such Person shall have
identified to the parties to the Participation Agreement in writing.

     “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For purposes of this
definition, the term “control” (including the correlative meanings of the terms
“controlling,” “controlled by” and “under common control with”), as used
with respect to any Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of such Person, whether through the ownership of
voting securities or by contract or otherwise; provided, however, (but without limiting the
foregoing) that no pledge of voting securities of any Person without the current right to exercise
voting rights with respect thereto shall by itself be deemed to constitute control over such
Person.

     “After-Tax Basis” means (i) with respect to any payment to be received by an
Indemnitee (which, for purposes of this definition, shall include any Tax Indemnitee), the amount
of such payment supplemented by a further payment or payments so that, after deducting from such
payments the amount of all Taxes (net of any Tax credits, refunds, deductions or reductions or
other Tax benefits arising from the payment by the Indemnitee of any amount, including Taxes, for
which the Indemnitee is being indemnified) actually then-currently imposed on the Indemnitee by any
Governmental Authority or taxing authority with respect to such payments, the balance of such
payments shall be equal to the original payment to be received and (ii) with respect to any payment
to be made by any Indemnitee, the amount of such payment supplemented by a further payment or
payments so that, after increasing such payment by the amount of any current credits or other Tax
benefits realized by the Indemnitee under the laws of any Governmental Authority or taxing
authority resulting from the making of such payments, the sum of such payments (net of such credits
or benefits) shall be equal to the original payment to be made; provided, however, for the purposes
of this definition, and for purposes of any payment to be made to an Indemnitee on an after-tax
basis, it shall be assumed that such Indemnitee is subject to taxation at the highest marginal
federal income tax rate applicable to corporations and the highest marginal state and local tax
rates generally applicable to corporations in the jurisdiction in which such Indemnitee has its
principal place of business and that such Indemnitee has sufficient income to utilize any
deductions, credits (other than foreign tax credits, the use of which shall be determined on an
actual basis) and other Tax benefits arising from any payments described in clause (ii) of this
definition.

     “Alterations” means the construction or installation of non-trade fixtures,
alterations, improvements, modifications, changes, replacements, removals and additions to the
Leased Property including without limitation, any repair or restoration pursuant to Article
XI of the Lease or otherwise.

     “Applicable Law” means all existing and future applicable laws, rules, regulations
(including Environmental Laws) statutes, treaties, codes, ordinances, permits, certificates, orders
and licenses of and interpretations by any Governmental Authorities, and applicable judgments,
decrees, injunctions, writs, orders or like action of any court, arbitrator or other
administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction (including
those pertaining to health, safety or the environment (including, without limitation, wetlands) and
those pertaining to

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the construction, use or occupancy of the Leased Property) and any restrictive covenant or
deed restriction or easement of record affecting the Leased Property.

     “Applicable Rate” means a rate per annum equal at all times during each respective
Interest Period to the sum of (a) the LIBO Rate, plus (b) five and 50/100 percent (5.5%) per annum,
plus (c) commencing on January 1, 2009, an additional one percent (1%) per annum%.

     “Approved Leasehold Financing” is defined in Section 10.4(a) of the Lease.

     “Approved Leasehold Mortgagee” is defined in Section 10.4(a) of the Lease.

     “Appurtenances” shall mean all (i) agreements, easements, rights-of-way or use, rights
of ingress and/or egress, privileges, appurtenances, tenements, hereditaments and other rights and
benefits at any time belonging or pertaining to the Land and/or the Improvements or any part
thereof, including, without limitation, the use of any streets, ways, alleys, vaults or strips of
land adjoining, abutting, adjacent or contiguous to the Land and/or the Improvements, and (ii)
permits, licenses and rights, whether or not of record, pertaining or appurtenant to the Land
and/or the Improvements.

     “Awards” means any award or payment received by or payable to the Lessor or the Lessee
on account of any Condemnation or Event of Taking (less the actual costs, fees and expenses
incurred in the collection thereof, for which the Person incurring the same shall be reimbursed
from such award or payment as permitted or required by the Operative Documents).

     “Bankruptcy Code” means Title 11 of the United States Code, 11 U.S.C. Section 101
et seq.

     “Bankruptcy Law” means the Bankruptcy Code or any other applicable insolvency law or
law for the relief of debtors of the United States of America or any State or Commonwealth thereof.

     “Basic Rent” means an amount equal to the product of (a) the Applicable Rate and (b)
the Lease Balance as of the applicable Rent Payment Date.

     “Break Funding Amount” is defined in Section 5.10(b) of the Participation
Agreement.

     “Business Day” means any day other than a Saturday, Sunday or other day on which banks
are required or authorized by law or custom to be closed for business in New York, New York.

     “Casualty” means an event of damage or casualty relating to all or part of the Leased
Property which does not constitute an Event of Loss.

     “Claims” means liabilities, obligations, damages, losses, demands, penalties, fines,
assessments by federal state or local authorities, claims, actions, suits, judgments, settlements,
utility charges, costs, expenses and disbursements (including, without limitation, reasonable legal
fees and expenses) of any kind and nature whatsoever.

     “Closing Date” means February 15, 2007 or such other date as is determined by the
Lessor and the Lessee for the closing of the Overall Transaction.

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     “Code” means the Internal Revenue Code of 1986, as the same may be amended from time
to time, or any comparable successor law.

     “Commitment Letter” means that certain Commitment Letter from Lessor’s Affiliates,
Credit Suisse Securities (USA) LLC and Credit Suisse, Cayman Islands Branch, accepted and agreed to
by Guarantor, effective January 5, 2007, including the Termsheet attached thereto.

     “Condemnation” means any condemnation, requisition, confiscation, seizure or other
taking, whether temporary or permanent, or sale of the use, occupancy or title to the Leased
Property or any part thereof in, by or on account of any actual eminent domain proceeding or other
action by any Governmental Authority or other Person under the power of eminent domain, or any
transfer in lieu of or in anticipation thereof, which in any case does not constitute an Event of
Taking. A Condemnation shall be deemed to have “occurred” on the earliest of the dates that use,
occupancy or title is taken.

     “Contemplated Lease Financing” shall have the meaning provided therefor in the
Purchase Agreement, and defined terms used in such definition shall also have the meanings provided
therefor in the Purchase Agreement.

     “Contractual Obligation” means, as applied to any Person, any provision of any
Securities issued by that Person or any indenture, mortgage, deed of trust, contract, undertaking,
agreement, instrument or other document to which that Person is a party or by which it or any of
its properties is bound or to which it or any of its properties is subject (including, without
limitation, any restrictive covenant affecting any of the properties of such Person).

     “Default” means any event, condition or failure which, with notice or lapse of time or
both, would become an Event of Default.

     “Environmental Laws” means and includes the Resource Conservation and Recovery Act of
1976, (RCRA) 42 U.S.C. §§ 6901-6987, as amended by the Hazardous and Solid Waste Amendments of
1984, the Comprehensive Environmental Response, Compensation and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601-9657, (CERCLA), the
Hazardous Materials Transportation Act of 1975, 49 U.S.C. §§ 1801-1812, the Toxic Substances
Control Act, 15 U.S.C. §§ 2601-2671, the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq., and all similar federal, state
and local environmental laws, ordinances, rules, orders, statutes, decrees, judgments, injunctions,
codes and regulations, and any other federal, state or local laws, ordinances, rules, codes and
regulations relating to the environment, human health or natural resources or the regulation or
control of or imposing liability or standards of conduct concerning the environment (including the
protection of human health from environmental hazards), Hazardous Materials or the clean-up or
other remediation of the Leased Property, or any part thereof, as any of the foregoing may have
been from time to time amended, supplemented or supplanted.

     “Environmental Permits” means all permits, licenses, authorizations, certificates and
approvals of Governmental Authorities required by Environmental Laws.

     “Environmental Site Assessment” means a Phase One environmental site assessment (the
scope and performance of which meets or exceeds ASTM Standard Practice E1527-05 Standard

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Practice for Environmental Site Assessments: Phase One Environmental Site Assessment Process
(and which meets the “all appropriate inquiry” standards as required under Environmental Laws)) of
the Leased Property, and, if warranted based upon a reasonable interpretation of the Phase One
assessment, a Phase Two environmental site assessment, and otherwise in form and scope reasonably
satisfactory to the Lessor and prepared by an environmental engineer or consultant reasonably
satisfactory to the Lessor.

     “Environmental Violation” means any action, omission, occurrence or condition that
violates or results in non-compliance with any Environmental Law.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time or any successor federal statute.

     “ERISA Affiliate” means any corporation or any trade or business (whether or not
incorporated) that, together with the Lessee or the Guarantor, is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Code.

     “ERISA Event” means (a) any “reportable event,” as defined in Section 4043 of ERISA or
the regulations issued thereunder with respect to a Plan (other than a reportable event for which
the notice to the PBGC is waived); (b) the existence with respect to any Plan of an “accumulated
funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any Plan; (d) the
incurrence by the Lessee, the Guarantor or any ERISA Affiliate of any liability under Title IV of
ERISA with respect to the termination of any Plan; (e) the receipt by the Lessee, the Guarantor or
any ERISA Affiliate from the PBGC or a Plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by
the Lessee, the Guarantor or any ERISA Affiliate of any liability with respect to the withdrawal or
partial withdrawal from any Multiemployer Plan, or as a result of any failure to comply with ERISA
in connection with any Plan or Multiemployer Plan; or (g) the receipt by the Lessee, the Guarantor
or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Lessee, the
Guarantor or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.

     “Eurocurrency Reserve Requirements” means, for any day, the aggregate (without
duplication) of the maximum rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System of the United States (or any
successor) (the “Board”) or other Governmental Authority having jurisdiction with respect
thereto) dealing with reserve requirements prescribed for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of the
Federal Reserve System.

     “Event of Default” means any event or condition designated as an “Event of Default” in
Article XIII of the Lease.

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     “Event of Loss” is defined in Section 11.1 of the Lease.

     “Event of Taking” is defined in Section 11.2 of the Lease.

     “Fair Market Sales Value” means, with respect to the Leased Property or any portion
thereof, the fair market sales value as determined by an independent appraiser chosen by the Lessor
that would be obtained in an arms-length transaction between an informed and willing buyer (other
than a lessee currently in possession) and an informed and willing seller, under no compulsion,
respectively, to buy or sell and neither of which is related to the Lessor or the Lessee, for the
purchase of the Leased Property. Such fair market sales value shall be calculated as the value for
the use of the Leased Property assuming, in the determination of such fair market sales value, that
the Leased Property is in the condition and repair required to be maintained by the terms of the
Lease (unless such fair market sales value is being determined for purposes of Section 14.1
of the Lease and except as otherwise specifically provided in the Lease, or the Participation
Agreement, in which case this assumption shall not be made).

     “Falcon Purchase Agreement” means the Purchase Agreement, dated as of December 31,
2004, by and among the Guarantor, the guarantors named therein, the agent named therein and the
purchasers named therein.

     “Fee Mortgagee” means any Person to whom the Lessor grants a deed of trust or mortgage
lien on the Leased Property pursuant to Section 10.5 of the Lease.

     “Final Rent Payment Date” is defined in Section 14.1(e) of the Lease.

     “Full Replacement Cost” is defined in Section 9.1 of the Lease.

     “GAAP” means generally accepted accounting principles in the United States of America
as in effect from time to time and consistently applied.

     “Governmental Action” means all permits, authorizations, registrations, consents,
approvals, waivers, exceptions, variances, orders, judgments, decrees, licenses, exemptions,
publications, filings, notices to and declarations of or with, or required by, any Governmental
Authority, or required by any Applicable Law and shall include, without limitation, all siting,
building, environmental and operating permits and licenses that are required for the acquisition,
construction, transfer, use, occupancy, zoning and operation of the Leased Property.

     “Governmental Authority” means the government of the United States of America, the
government of any other nation, any political subdivision of the United States of America or any
other nation (including, without limitation, any state, territory, federal district, municipality
or possession) and any federal, state, county, municipal or other governmental or regulatory
authority, agency, board, body, commission, instrumentality or court, or any political subdivision
thereof.

     “Guarantor” means Terremark Worldwide, Inc., a Delaware corporation, its permitted
successors and assigns.

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     “Guaranty” means the Guaranty, dated as of the date of the Participation Agreement and
effective as of the effective date of the Participation Agreement, made by the Guarantor for the
benefit of the Lessor, together with any amendments and supplements thereto.

     “Hazardous Material” means any substance, waste or material which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous,
including petroleum, crude oil or any fraction thereof, petroleum derivatives, by products and
other hydrocarbons and is or becomes regulated under any Environmental Law and also including
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls (“PCBs”), toxic mold
and radon gas.

     “Improvements” means the improvements described on Appendix II of the Lease.

     “Indebtedness” shall have the meaning provided therefor in the Purchase Agreement, and
defined terms used in such definition shall also have the meanings provided therefor in the
Purchase Agreement.

     “Indemnified Claims” is defined in Section 7.3 of the Participation Agreement.

     “Indemnitee” means the Lessor and its Affiliates, successors, permitted assigns,
permitted transferees, stockholders, partners, members, employees, officers, directors and agents;
provided, however, that in no event shall the Lessee be an Indemnitee.

     “Indemnitee Group” means the respective successors, assigns, stockholders, partners,
members, employees, officers, directors and agents of the Lessor and its Affiliates.

     “Insurance Requirements” means all terms and conditions of any insurance policy either
required by the Lease or by any of the Operative Documents to be maintained by the Lessee and all
reasonable and appropriate requirements of the issuer of any such policy.

     “Interest Period” means (i) initially, the period commencing on the Closing Date
through and including the last day of the third full calendar month following the month in which
the Closing Date occurs, and (ii) each three-month period thereafter.

     “Land” means the land described in Appendix II to the Lease including all
Appurtenances.

     “Late Charge” means any interest at the Overdue Rate and late charges payable by the
Lessee pursuant to Section 4.4 of the Lease.

     “Laws” means all ordinances, statutes, rules, regulations, orders, injunctions, writs,
treaties or decrees of any Governmental Authority or any governmental or political subdivision or
agency thereof, or of any court or similar entity established by any thereof.

     “Lease” means the Lease Agreement, dated as of the date of the Participation Agreement
and effective as of the effective date of the Participation Agreement, between the Lessor and the
Lessee, together with any amendments and supplements thereto, and including the Lease Supplement.

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     “Lease Balance” means, as of any date of determination, an amount equal to the sum of
(i) the original principal balance of Four Million Four Hundred Thirty-One Thousand Eight Hundred
Eleven and 99/100 Dollars ($4,431,811.99) advanced by the Lessor on the Closing Date, as the same
may be increased from time to time to account for any PIK Rent Payment(s) made by the Lessee
pursuant to Section 4.3(b) of the Lease, and (ii) without duplication, all accrued and
unpaid Basic Rent, all Supplemental Rent then payable, and all other amounts owing under the
Operative Documents as of such date by the Lessee to the Lessor.

     “Lease Supplement” means the Lease Supplement, Memorandum of Lease and Remedies, dated
as of the date of the Participation Agreement, between the Lessor, the Lessee and James W. DeBoer,
as trustee, which describes the Lease and certain of its provisions, and is intended to be recorded
in the Real Property Records.

     “Lease Term” means (i) the Term of the Lease or (ii) such shorter period as may result
from earlier termination of the Lease as provided therein.

     “Lease Termination Date” means June 30, 2009, or such earlier date on which the Lease
Term shall end as provided in the Lease.

     “Leased Property” means the Land and the Improvements, taken together.

     “Lessee” means NAP of The Capital Region, LLC, a Florida limited liability company,
and its permitted successors and assigns.

     “Lessee Financing Statements” means such UCC financing statements required to be filed
by the UCC to perfect the security interests described in the Lease, with the Lessee as the debtor
and the Lessor as the secured party.

     “Lessee’s Net Payment” is defined in Section 15.2(b) of the Lease.

     “Lessee’s Personal Property” is defined in Article XVI of the Lease.

     “Lessor” means Culpeper Lessor 2007-1 LLC, a Delaware limited liability company, its
successors and assigns.

     “Lessor Liens” means Liens on or against the Leased Property or any portion thereof,
the Lease or any payment of Rent under the Lease which result from any act of, or any Claim
against, the Lessor unrelated to the Operative Documents.

     “LIBO Base Rate” means, with respect to each day during each Interest Period, the rate
per annum determined by the Lessor or its Affiliate at approximately 11:00 a.m. (London time) on
the date that is two Business Days prior to the commencement of such Interest Period by reference
to the British Bankers’ Association Interest Settlement Rates for deposits in dollars (as set forth
by any service selected by the Lessor or its Affiliate that has been nominated by the British
Bankers’ Association as an authorized information vendor for the purpose of displaying such rates)
for a period equal to such Interest Period; provided that, to the extent that an interest rate is
not ascertainable pursuant to the foregoing provisions of this definition, the “LIBO Base Rate”
shall be the interest rate per annum determined by the Lessor or its Affiliate to be the average of
the rates per

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annum at which deposits in dollars are offered for such relevant Interest Period to major
banks in the London interbank market in London, England by the Lessor or its Affiliate at
approximately 11:00 a.m. (London time) on the date that is two Business Days prior to the beginning
of such Interest Period.

     “LIBO Rate” means, with respect to each day during each Interest Period, a rate per
annum determined for such day in accordance with the following formula:

LIBO Base Rate

1.00 — Eurocurrency Reserve Requirements

     “Lien” means any lien, mortgage, deed of trust, encumbrance, pledge, charge, lease,
easement, servitude, right of others (legal or equitable) or security interest of any kind,
including any thereof arising under any conditional sale or other title retention agreement and in
the case of securities, any purchase option, call or similar right of a third party with respect to
such securities.

     “Loss Proceeds” shall have the meaning specified in Section 11.6 of the Lease.

     “Material” means material in relation to the business, operations, affairs, condition
(financial or otherwise), assets, properties, or prospects of the Lessee or the Guarantor and, with
respect to the Leased Property, that could have a material adverse effect on the Leased Property,
the value of the Leased Property or the usefulness, utility or useful life of the Improvements.

     “Material Adverse Effect” means, with respect to the Lessee or the Guarantor, a
material adverse effect on (i) the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or financial prospects of the Lessee or the
Guarantor, as applicable, (ii) the ability of Lessee to perform its obligations under the Operative
Documents to which it is a party, (iii) the validity or enforceability of any of the Operative
Documents or any rights or remedies under any thereof, or (iv) the development, occupancy, use,
operation, utility or useful life or value of the Leased Property.

     “Multiemployer Plan” means a multiemployer plan (as defined in Section 4001(a)(3) of
ERISA) to which the Lessee, the Guarantor or any ERISA Affiliate has or had an obligation to
contribute.

     “Official Recorder” means the Governmental Authority that maintains the Real Property
Records in any jurisdiction in which the Leased Property is located.

     “Operative Documents” means the Participation Agreement, the Lease, the Lease
Supplement, and the Guaranty.

     “Outstanding Lease Obligations” is defined in Section 15.2(b) of the Lease.

     “Overall Transaction” means all the transactions and activities referred to in or
contemplated by the Operative Documents.

     “Overdue Rate” means the lesser of (i) the highest interest rate permitted by
Applicable Law and (ii) an interest rate per annum equal to the Applicable Rate, plus two percent
(2%).

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     “Participation Agreement” means the Participation Agreement, dated as of February ___,
2007, among the Lessor, the Lessee and the Guarantor, together with all amendments and supplements
thereto.

     “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 10756, as amended.

     “PBGC” is the Pension Benefit Guaranty Corporation.

     “Pension Plan” means any pension or other benefit plan subject to the provisions of
ERISA.

     “Permitted Encumbrances” means easements, rights of way and reservations against the
Land that are listed on Schedule B to Title Policy or permitted by Article VI of the Lease
and, in each case, accepted by the Lessor.

     “Permitted Liens” means (i) the respective rights and interests of the Lessee and the
Lessor as provided in the Operative Documents, (ii) Lessor Liens, (iii) Liens for Taxes not yet
due, (iv) materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other like Liens arising
after the Closing Date in the ordinary course of business for amounts either not yet due or being
contested in good faith and by appropriate proceedings and so long as (I) no Event of Default shall
have occurred and be continuing, (II) such proceedings shall not involve any risk of the sale,
forfeiture or loss of any part of the Leased Property, title thereto or any interest therein and
shall not interfere with the use or disposition of the Leased Property or the payment of Rent, and
(III) any reserve or other appropriate provision required by GAAP shall have been made in respect
of the Lien, so long as enforcement thereof is stayed pending such proceedings, and Lessee will
promptly, and in any event, not later than 30 days after Lessee acquires actual knowledge of the
filing thereof, and prior to the enforcement of the same, at its own expense, remove and discharge
of record, by bond or otherwise, any such Lien, and (v) as to the Land, Permitted Encumbrances.

     “Person” means an individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust, unincorporated organization or Government
Authority.

     “PIK Rent Payment” is defined in Section 4.3(b) of the Lease.

     “Plan” means any employee pension benefit plan (other than a Multiemployer Plan) (i)
subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA
and (ii) in respect of which Guarantor or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an “employer” or a “contributing sponsor” as
defined in Sections 3(5) and 4001(a)(13) of ERISA, respectively.

     “Property Costs” is defined in Section 2.6 of the Participation Agreement.

     “Purchase Agreement” means the Purchase Agreement, dated as of January 5, 2007, by and
among the Guarantor, as issuer, the guarantors named therein, the agent named therein, and the
purchasers named therein.

     “Purchase Option” is defined in Section 15.1 of the Lease.

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     “Purchase Option Price” means an amount equal to the Lease Balance as of the closing
date of the purchase of the Leased Property pursuant to the exercise by the Lessee of the Purchase
Option set forth in, and in accordance with, Section 15.1 of the Lease.

     “Purchase Procedure” means Purchase Procedure as defined in Section 15.5 of
the Lease.

     “Real Property Records” means the publicly available records maintained by the
Official Recorder for the recordation of deeds, mortgages and other instruments affecting the title
to real property in the jurisdiction of the Official Recorder.

     “Release” means any release, pumping, pouring, emptying, injecting, escaping,
leaching, dumping, seepage, spill, leak, flow, discharge, disposal or emission of a Hazardous
Material into or upon or under any land or water or air, or otherwise into the environment,
including, without limitation, by means of burial, disposal, discharge, emission, injection,
spillage, leakage, seepage, leaching, dumping, pumping, pouring, escaping, emptying, placement and
the like.

     “Rent” means Basic Rent and Supplemental Rent, collectively, as provided under the
Lease.

     “Rent Payment Date” means the first day of each calendar quarter during the Lease
Term, commencing on April 1, 2007, with the last Rent Payment Date being the Lease Termination
Date.

     “Rent Period” means initially the period commencing on the Closing Date and ending on
the first Rent Payment Date, and thereafter each period from one Rent Payment Date to the next
following Rent Payment Date.

     “Reportable Event” means a “reportable event” as defined by Title IV of ERISA and
applicable regulations thereunder (other than a reportable event for which notice to the PBGC is
waived).

     “Requirements of Law” means, as to any Person, the charter and by-laws or other
organizational or governing documents of such Person, and any law, rule or regulation, permit,
approval, authorization, license or variance, order or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject, including, without limitation,
the Securities Act, the Securities Exchange Act, Regulations T, U and X, and any building,
environmental or land use requirement or permit or occupational safety or health law, rule or
regulation.

     “Responsible Officer” means, with respect to any Person, the Chief Executive Officer,
the President, any Senior Vice President or Executive Vice President, any Vice President, the Chief
Financial Officer, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer.

     “Sales Proceeds” is defined in Section 15.2(b) of the Lease.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Senior Notes” means the notes issued by the Guarantor pursuant to the Falcon Purchase
Agreement.

I-11

 

     “Standby Fee” means the Standby Fees payable by the Lessee or Guarantor pursuant to
the Commitment Letter.

     “State” means the Commonwealth of Virginia.

     “Subordinated Notes” means the notes issued by the Guarantor pursuant to the Purchase
Agreement.

     “Subsidiary” means for any Person any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of the board of
directors or other Persons performing similar functions are at the time directly or indirectly
owned by such Person.

     “Supplemental Rent” means any and all amounts, liabilities and obligations other than
Basic Rent which the Lessee assumes or agrees or is otherwise obligated to pay under the Lease or
any other Operative Document (whether or not designated as Supplemental Rent) to the Lessor or any
other party, including, without limitation, late charges and default interest, Taxes, assessments,
insurance premiums, fees, and all other costs and expenses of every nature whatsoever incurred by
Lessee incident to ownership, management, maintenance, repair, replacement, restoration, and
operation of the Leased Property, amounts under Articles XV and XVII of the Lease,
Fair Market Sales Value payments and indemnities, the Standby Fee and expenses and damages for
breach of any covenants, representations, warranties or agreements.

     “Tax” or “Taxes” is defined in Section 7.4 (a) of the Participation
Agreement.

     “Tax Indemnitee” means the Lessor and its Affiliates, successors, permitted assigns,
permitted transferees, employees, officers, directors and agents thereof, provided, however, that
in no event shall the Lessee be a Tax Indemnitee.

     “Term” is defined in Section 2.2 of the Lease.

     “Terremark” means Terremark Worldwide, Inc., a Delaware corporation.

     “Title Insurance Company” means First American Title Insurance Company and its
successors and assigns.

     “Title Policy” is defined in Section 3.1(a)(v) of the Participation Agreement.

     “Transaction Expenses” means all costs and expenses incurred in connection with the
preparation, execution and delivery of the Operative Documents and the transactions contemplated by
the Operative Documents, including without limitation:

     (a) the reasonable fees, out-of-pocket expenses and disbursements of counsel for each
of the Transaction Parties in negotiating the terms of the Operative Documents and the other
transaction documents, preparing for the closing under, and rendering opinions in connection
with, such transactions and in rendering other services customary for counsel representing
parties to transactions of the types involved in the transactions contemplated by the
Operative Documents;

I-12

 

     (b) the reasonable fees, out-of-pocket expenses and disbursements of any law firm or
other external counsel of any of the Transaction Parties in connection with (1) any
amendment, supplement, waiver or consent with respect to any Operative Documents and (2) any
enforcement of any rights or remedies against the Lessor or the Lessee in respect of the
Operative Documents;

     (c) any other reasonable fees, out-of-pocket expenses, disbursements or cost of the
Transaction Parties related to the Operative Documents or any of the other transaction
documents;

     (d) any and all Taxes and fees incurred in recording, registering or filing any
Operative Document or any other transaction document, any deed, declaration, mortgage,
security agreement, notice or financing statement with any public office, registry or
governmental agency in connection with the transactions contemplated by the Operative
Documents;

     (e) any title fees, premiums and escrow costs and other expenses relating to title
insurance and the closings contemplated by the Operative Documents; and

     (f) all expenses relating to all Environmental Site Assessments.

     “Transaction Parties” means, collectively, the Lessor, the Lessee and the Guarantor.

     “UCC” means the Uniform Commercial Code of the State, as in effect from time to time.

     “UCC Financing Statements” means the Lessee Financing Statements and any other Uniform
Commercial Code Financing Statement given by the Lessee to be filed with the offices of the
Virginia State Corporation Commission, the Real Property Records (as to fixture filings) and the
applicable personal property records offices for each such filing.

     “Withdrawal Liability” means liability to the Lessee, the Guarantor or any ERISA
Affiliate as a result of its complete or partial withdrawal from a Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

[End of Appendix I]

I-13EX-10.1

 

EXHIBIT 10.1

LESCO, INC. EMPLOYMENT RETENTION PLAN

     The Company’s Board of Directors (the “Board”) has determined that it is in the best interest
of the Company and its shareholders to provide certain employees with additional incentives during
a Change in Control Period (as defined below) to provide their continued dedication to the Company
notwithstanding the possibility, threat, or occurrence of a transaction resulting in the Company’s
Change in Control (as defined below), due to the uncertainties and risks that a Change in Control
could pose for such employees.

     The LESCO, Inc. Employment Retention Plan (the “Plan”) has been established by LESCO, Inc.
(the “Company”) for the purpose of providing certain of its employees with incentives to continue
employment with the Company on an objective and impartial basis in the event of the Company’s
Change in Control.

     The terms and conditions of the Plan applicable to each employee identified by the Board as
eligible for a benefit under the Plan are set forth below. In addition, certain other benefits for
which an employee may be eligible in accordance with the terms of the Plan shall be established and
provided for in an Employment Retention Agreement (the “Agreement”) between the Company and such
employee. Further, by entering into the Agreement, both the Company and the employee shall thereby
acknowledge their desire and consent to be bound by the terms and conditions of the Plan and the
Agreement.

     In the event a Plan term and a term in the Agreement conflict, the Plan’s terms shall control.

ARTICLE I

DEFINITIONS

	1.	 	“Agreement” means the individual Employment Retention Agreement between the Company and each
Employee eligible to participate herein. A form of such Agreement is attached hereto and
incorporated herein as Appendix B.
	 
	2.	 	“Annual Base Salary” means an Employee’s annual base pay as of the date of the Trigger Event
or on which a Change in Control occurs, whichever is higher.
	 
	3.	 	A “Change in Control” for the purpose of this Plan means the occurrence of any of the
following:

	 	(a)	 	The acquisition by any individual, entity or group within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 50% or more of either (i) the then-outstanding
common shares of the Company (the “Outstanding Company Common Shares”) or (ii) the
combined voting power of the then-outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); but for purposes of this subsection (a), the following acquisitions of
voting securities shall not constitute a

 

 

	 	 	 	Change in Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation controlled
by the Company, (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section
I(4), or (v) any acquisition of less than 50% which becomes a Change in Control
passively as the result of a separate acquisition under clause (ii) or (iii) of this
subsection (a); or
	 
	 	(b)	 	Individuals who, as of the date of the Agreement, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board;
but any individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board or by a vote of
at least a majority of the members of a committee of the Board consisting entirely of
members of the Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding from the Incumbent Board, for this
purpose, any such individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
	 
	 	(c)	 	Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, (i) the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Shares and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then-outstanding common shares and the combined voting power
of the then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries), and (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 50% or more of, respectively,
the then-outstanding common shares of the corporation resulting from such Business
Combination, or the combined voting power of the then-outstanding voting securities of
such corporation except to the extent that such ownership existed prior to the Business
Combination, and (iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or

2

 

	 	(d)	 	A joint venture, sale of assets or other transaction with a third party which
results in the Company no longer having the need for a function and an executive with
Employee’s responsibility to manage such function; or
	 
	 	(e)	 	Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

	4.	 	“Change in Control Period” is the period set forth in the Employee’s Agreement, which shall
commence on the Effective Date and end on the date established in such Agreement.
	 
	5.	 	“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder.
	 
	6.	 	“Company” means LESCO, Inc. and any successor thereto that specifically adopts the Plan.
	 
	7.	 	“Date of Termination” means the date of an Employee’s Separation from Service (as defined
herein) in accordance with Section I(14).
	 
	8.	 	“Disability” means the absence of the Employee from the Employee’s duties with the Company on
a full-time basis for 180 consecutive business days as a result of incapacity due to mental or
physical illness, which is determined to be total and permanent by a physician selected by the
Company or its insurers and reasonably acceptable to the Employee or the Employee’s legal
representative.
	 
	9.	 	“Effective Date” means the first date during the Term of the Agreement (as defined herein) on
which a Change in Control occurs. Anything in the Plan or the Agreement to the contrary
notwithstanding, if a Change in Control occurs and if the Employee’s employment with the
Company is terminated less than thirty (30) days prior to the date on which the Change in
Control occurs, and if it is reasonably demonstrated by the Employee, as determined by the
Board, that such termination of employment (i) was at the request of a third party who has
taken steps reasonably calculated to effect a Change in Control, or (ii) otherwise arose in
connection with or in anticipation of a Change in Control, then for all purposes of the Plan
and the Agreement, the “Effective Date” shall mean the date immediately prior to the date of
such termination of employment.
	 
	10.	 	“Employee” means any individual employed by the Company who is designated by the Board as
eligible to receive a payment or benefits under the Plan. Each such Employee shall be listed
on Appendix A to the Plan, which is attached hereto and incorporated herein by reference.
	 
	11.	 	“Good Reason” means:

	 	(a)	 	the assignment to the Employee of any duties inconsistent in any material
respect with the Employee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, or any other action by the
Company which results in a diminution in such position, authority, duties or

3

 

	 	 	 	responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;
	 
	 	(b)	 	the Company requires the Employee, without his prior written consent, to be
based at any office or location that is more than thirty (30) miles from the Company’s
corporate headquarters in Cleveland, Ohio;
	 
	 	(c)	 	any purported termination by the Company of the Employee’s employment otherwise
than for Cause; or
	 
	 	(d)	 	any failure by the Company to comply with and satisfy Article V of the Plan.
	 
	 	(e)	 	For purposes of this Section I(12), any good faith determination of “Good
Reason” made by the Employee shall be conclusive. For avoidance of doubt and despite
the length of the Change of Control Period, a voluntary termination of the Employee’s
employment under the circumstances described in clauses (a)-(c) of this Section I(12)
following the first anniversary of the Agreement Effective Date shall not constitute
termination for Good Reason.

	12.	 	“Prior Retention Agreements” means any plan, program, agreement, arrangement, or similar
arrangement previously entered into between the Company and an Employee and in effect prior to
the Effective Date, which provides an amount or benefit payable to or on behalf of the
Employee upon a Separation from Service as a result of a Change in Control, as defined under
such other plan, program, agreement, arrangement, or similar arrangement.
	 
	13.	 	“Separation from Service” means an Employee’s termination from employment with the Company
due to such Employee’s death, permanent and total disability, retirement, or other such
termination of employment. An Employee will not be deemed to have experienced a Separation
from Service if such Employee is on military leave, sick leave, or other bona fide leave of
absence, to the extent such leave does not exceed a period of six (6) months or, if longer,
such longer period of time as is protected by either statute or contract. An Employee will
not be deemed to have experienced a Separation from Service if such Employee continues to
provide “significant services” to the Company as an Employee. For purposes of the preceding
sentence, an Employee will be considered to provide “significant services” if such Employee
provides continuing services that average at least twenty percent (20%) of the services
provided by such Employee to the Company during the immediately preceding three (3) full
calendar years of employment(or, if less, the period of employment) and the annual
remuneration paid for such services is at least twenty percent (20%) of the average annual
compensation earned during the final three (3) full calendar years of employment (or, if less,
the period of employment). In addition, an Employee that provides additional services to the
Company that are provided in a capacity other than as an Employee (i.e., independent
consultant) after such Employee’s termination of employment with the Company shall not be
considered to have experienced a Separation from Service if such additional services, and the
remuneration earned for such additional services, is at least fifty percent (50%) of the
Employee’s

4

 

	 	 	average annual service and average annual compensation earned during the final three (3)
full calendar years of such Employee’s employment with the Company (or, if less, the period
of employment).
	 
	14.	 	“Specified Employee” means, as of the Triggering Event, any Employee of the Company where (i)
the Employee owns more than five percent (5%) of the Company’s stock, (ii) the Employee owns
more than one percent (1%) of the Company’s stock and has compensation in excess of One
Hundred Fifty Thousand Dollars ($150,000), or (iii) the Employee is an officer of the
Company and has compensation in excess of One Hundred Thirty Thousand Dollars ($130,000),
and (iv) any of the Company’s stock is publicly traded on an established securities
market or otherwise. The foregoing compensation amounts may be adjusted from time to time in
accordance with the cost-of-living adjustments under Code Section 416(i).
	 
	15.	 	A “Termination for Cause” for the purposes of this Plan will be deemed to have occurred if,
and only if, the following conditions occur:

	 	(a)	 	the willful and continued failure of the Employee to perform substantially the
Employee’s duties with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), for 10 or more
days after a written demand for substantial performance is delivered to the Employee by
the Board, which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Employee has not substantially performed the
Employee’s duties, or
	 
	 	(b)	 	the willful engaging by the Employee in illegal conduct or gross misconduct
which is materially and demonstrably injurious to the Company.

	 	 	For purposes of this provision, no act or failure to act, on the part of the Employee, shall
be considered “willful” unless (x) it is done or omitted to be done in bad faith or without
reasonable belief that the Employee’s action or omission was in the best interests of the
Company, or (y) it is done or omitted to be done in direct contravention of a directive of
the Board. Any act, or failure to act, based upon authority given pursuant to a resolution
duly adopted by the Board or upon the instructions of the Chief Executive Officer or an
Executive Officer of the Company to whom the Employee reports or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by
the Employee in good faith and in the best interests of the Company. The cessation of
employment of the Employee shall not be deemed to be for Cause unless and until there shall
have been delivered to the Employee a copy of a resolution duly adopted by the affirmative
vote of not less than three quarters of the entire membership of the Board at a meeting of
the Board called and held for such purpose (after reasonable notice is provided to the
Employee and the Employee is given an opportunity, together with counsel, to be heard before
the Board), finding that, in the good faith opinion of the Board, the Employee is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.

5

 

	16.	 	“Term of the Agreement” shall mean the period in which the Agreement shall remain in effect
between the Company and the Employee. The Term of the Agreement shall be set forth in each
Employee’s Agreement.
	 
	17.	 	A “Triggering Event” for the purpose of this Plan will be deemed to have occurred if the
Employee experiences a Separation from Service during the Change in Control Period under any
one of the following conditions:

	 	(a)	 	the Employee’s Separation from Service is initiated by the Company for any
reason other than a Termination for Cause;
	 
	 	(b)	 	subject to the conditions set forth in Section I(12), the Employee’s Separation
from Service is voluntary and for Good Reason; or
	 
	 	(c)	 	the Employee’s Separation from Service is due to his death or Disability, as
defined herein.

ARTICLE II

SEVERANCE BENEFITS

	1.	 	Upon the occurrence of a Triggering Event, the Company shall make the following payments to
the Employee:

	 	(a)	 	a payment equal to the Employee’s Annual Base Salary that has accrued through
the Date of Termination, but has not yet been paid as of the Date of Termination; and
	 
	 	(b)	 	any compensation previously deferred by the Employee (together with any accrued
interest or earnings thereon) to the extent the plan, program, or arrangement under
which such amounts were deferred by the Employee permit such payment, and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the amounts
described in subsections (a) and (b) shall be hereinafter referred to as the “Accrued
Obligations”).

	2.	 	In addition to any amounts set forth in Section II(1) above, upon the occurrence of a
Triggering Event, the Company shall make the following severance payments or provide the
following severance benefits (collectively, “severance benefits”) to the Employee in one lump
sum payment, unless otherwise specifically provided for below:

	 	(a)	 	reasonable outplacement services, as incurred, for the twelve (12) month period
following the Triggering Event, the scope and provider of which shall be selected by
the Employee in his sole discretion; provided, however, that in no event shall the cost
of the outplacement services exceed the greater of twenty percent (20%) of the
Employee’s Annual Base Salary or Twenty-five Thousand Dollars ($25,000); and

6

 

	 	(b)	 	severance benefits that are payable to or on behalf of the Employee, which are
set forth in the Employee’s Agreement; such severance benefits will be in addition to
any other compensation or remuneration to which the Employee is, or becomes, entitled
to receive from the Company, except to the extent such entitlement existed or arose
under a Prior Retention Agreement; and
	 
	 	(c)	 	to the extent the Employee holds options in the common shares of the Company,
an amount equal to the excess of the “fair market value” (which shall be defined as the
closing price of LESCO, Inc. common shares on the Triggering Event) over the option
exercise price of shares that are subject to such options in favor of Employee, whether
or not exercisable at that time, provided that the Employee surrenders those options to
the Company; and
	 
	 	(d)	 	to the extent the Employee holds other long-term stock incentive awards held by
the Employee (whether in the form of phantom units, performance shares, restricted
shares or other awards of whatever nature) (collectively referred to as “Long-Term
Stock Incentives”) shall fully vest, all restrictions and conditions shall be removed
on the Date of Termination, and, to the extent that the Employee surrenders or
otherwise receives cash in lieu of such Long-Term Stock Incentives (for whatever
reason), the Employee shall be paid an amount equal to the excess of the fair market
value (as defined under Section II(2)(c)) over the value of the Long-Term Stock
Incentive, as established by the plan, program, arrangement, or agreement awarding such
Long-Term Stock Incentive, on the date granted to the Employee.
	 
	 	(e)	 	The amounts payable to the Employee under this Section II(2) will commence
being paid to the Employee within thirty (30) days of the Triggering Event; provided,
however, that a Change in Control does, in fact, occur. Notwithstanding the foregoing,
in the event the Employee is a Specified Employee and a payment under this Section
II(2) is not payable in a lump sum amount within thirty (30) days of the Triggering
Event and is not otherwise excludable from Code Section 409A’s definition of “deferred
compensation,” then such payment or benefit shall not be made to the Employee until the
date that is six (6) months after the Triggering Event. At such time, the Employee
will receive one lump sum catch-up payment equal to the amount that would have been
paid over the previous six (6) month period. All remaining benefits, if any, shall be
payable as otherwise provided for under the Plan or Agreement. Such determination will
be made by the Company at the time of the Triggering Event.

	3.	 	In addition to any amounts set forth in Sections II(1) and II(2) above, and upon the
occurrence of a Triggering Event, the Company shall provide the Employee and/or the Employee’s
family with continuing medical, dental, and vision benefits (“Continuing Benefits”), which are
at least equal to those Continuing Benefits that would have been provided to them in
accordance with the Company’s then existing medical, dental, or vision programs if a
Triggering Event had not occurred. Such Continuing Benefits shall be provided to the Employee
and/or the Employee’s family for a period of months following the Triggering Event that equals
the Change in Control Period; provided,

7

 

	 	 	however, that if the Employee becomes re-employed with a different employer and is eligible
to receive medical, dental, or vision benefits under another employer-provided plan, the
Continuing Benefits described herein shall cease immediately. Notwithstanding the
foregoing, in the event the Employee is a Specified Employee and the Continuing Benefits are
not otherwise excludable from Code Section 409A’s definition of “deferred compensation,”
then such Continuing Benefits shall not be provided to the Employee until the date that is
six (6) months after the Triggering Event, at which time, the amount that would have been
payable to or on behalf of the Employee for the six (6) month period shall be paid in one
lump sum amount and the Continuing Benefits not yet provided to the Employee and/or his
family will be provided in the manner otherwise provided for under this Section II(3).

ARTICLE III

SETOFF

     No amounts otherwise due or payable under this Plan will be subject to setoff or counterclaim
by either party hereto.

ARTICLE IV

FULL SETTLEMENT & ATTORNEY’S FEES

     The Company’s obligation to make the payments provided for in the Plan and otherwise to
perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the Employee or others.
In no event shall the Employee be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Employee under any of the provisions of the Plan.
The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and
expenses which the Employee may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Employee or others of the validity or enforceability of, or
liability under, any provision of the Plan or any guarantee of performance thereof (including as a
result of any contest by the Employee about the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal rate provided for in
Code Section 7872(f)(2)(A); provided, however, that in the case of Specified Employee and to the
extent required by application of Code Section 409A, such reimbursement shall be delayed for a
period of six (6) months following such Specified Employee’s Separation from Service. At such
time, the Employee will receive one lump sum catch-up payment equal to the amount that would have
been paid over the previous six (6) month period. All remaining benefits, if any, shall be payable
as otherwise provided for under the Plan or Agreement. Notwithstanding the foregoing to the
contrary, the Company shall not pay fees in excess of $100,000.

8

 

ARTICLE V

SUCCESSORS AND PARTIES IN INTEREST

     The Plan will be binding upon and will inure to the benefit of the Company and its successors
and assigns, including, without limitation, any corporation which acquires, directly or indirectly,
by purchase, merger, consolidation or otherwise, all or substantially all of the business or assets
of the Company. Without limitation of the foregoing, the Company will require any such successor,
by agreement in form and substance satisfactory to the Employee, expressly to assume and agree to
perform the Plan in the same manner and to the same extent that it is required to be performed by
the Company. The Plan will be binding upon and will inure to the benefit of the Employee, his
heirs at law and his personal representatives.

ARTICLE VI

ATTACHMENT

     Neither the Plan nor any severance benefits payable hereunder will be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge or to execution, attachment,
levy or similar process at law, whether voluntary or involuntary.

ARTICLE VII

EMPLOYMENT CONTRACT

     The Plan will not in any way constitute an employment plan or agreement between the Company
and the Employee and it will not oblige the Employee to continue in the employ of the Company, nor
will it oblige the Company to continue to employ the Employee, but it will merely require the
Company to pay severance benefits to the Employee under certain circumstances, as aforesaid. In
addition, this Plan will be considered terminated as to any specific Employee, and of no further
force and effect, if the Employee ceases to be employed in a position with the Company that is at
the same or a higher level position than the position previously held by the Employee with the
Company on the Effective Date (as determined by the Board of Directors of the Company in its sole
discretion) prior to a Change in Control of the Company.

ARTICLE VIII

RIGHTS UNDER OTHER PLANS AND PROGRAMS

     Notwithstanding any other provision of the Plan, or any other plan, program, agreement, or
arrangement between the Company and the Employee, the severance benefits payable or provided under
the Plan shall be in lieu of any other severance benefits or payments to which the Employee may
otherwise be eligible for under any other plan, program, arrangement, agreement,

9

 

or similar arrangement that had been established and maintained by the Company for the purpose of
providing severance benefits, by virtue of the Employee’s Separation from Service.

ARTICLE IX

CONFIDENTIAL INFORMATION

     The Employee shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any of its affiliated
companies, and their respective businesses, which shall have been obtained by the Employee during
the Employee’s employment by the Company or any of its affiliated companies and which shall not be
or become public knowledge (other than by acts by the Employee or representatives of the Employee
in violation of the Plan). After termination of the Employee’s employment with the Company, the
Employee shall not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no event shall an asserted violation
of the provisions of this Article IX constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under the Plan.

ARTICLE X

NOTICES

     All notices and other communications required to be given hereunder shall be in writing and
will be deemed to have been delivered or made when mailed, by certified mail, return receipt
requested, if to the Employee, to the last address which the Employee shall provide to the Company,
in writing, for this purpose, but if the Employee has not then provided such an address, then to
the last address of the Employee then on file with the Company; and if to the Company, then to the
last address which the Company shall provide to the Employee, in writing, for this purpose, but if
the Company has not then provided the Employee with such an address, then to:

LESCO, Inc.

1301 East 9th Street, Suite 1300

Cleveland, Ohio 44114-1849

ARTICLE XI

GOVERNING LAW AND JURISDICTION

     This Plan will be governed by, and construed in accordance with, the laws of the State of
Ohio, except for the laws governing conflict of laws. If either party institutes a suit or other
legal proceedings, whether in law or equity, the Employee and the Company hereby irrevocably
consent to the jurisdiction of the Common Pleas Court of the State of Ohio (Cuyahoga County) or the
United States District Court for the Northern District of Ohio.

10

 

ARTICLE XII

ENTIRE PLAN

     This Plan constitutes the entire understanding between the Company and the Employee concerning
the subject matter hereof and supersedes all prior written or oral plans, programs, agreements,
arrangements, or understandings between the parties hereto, including, without limitation, the
Prior Retention Agreements.

ARTICLE XIII

AMENDMENT, MODIFICATION, OR TERMINATION

     No term or provision of the Plan may be changed, waived, amended, modified, or terminated,
except by written instrument. Notwithstanding the foregoing, the Company reserves the right to
unilaterally amend, modify, or terminate the Agreement or the Plan in any manner that the Company
deems advisable in order to ensure the Plan’s compliance with the provisions of Code Section 409A;
provided, however, that no such action shall materially reduce the value of the benefits provided
to the Employee hereunder.

ARTICLE XIV

CODE SECTION 409A COMPLIANCE

     The Plan is intended to be operated in compliance with the provisions of Code Section 409A
(including any applicable rulings or regulations promulgated thereunder). In the event that any
provision of the Plan fails to satisfy the provisions of Code Section 409A and cannot be amended,
modified, or terminated in accordance with Article XIII, then such provision shall be void and
shall not apply to an Employee’s severance benefits, to the extent practicable. In the event that
it is determined to not be feasible to so void a Plan provision as it applies to any amount payable
to or on behalf of the Employee, such Plan provision shall be construed in a manner so as to comply
with the requirements of Code Section 409A.

11

 

     IN WITNESS WHEREOF and as conclusive evidence the Plan has been adopted by the Company’s duly
authorized representatives effective
19th day of February, 2007.

	 	 	 
	 

	 	LESCO, INC.
	 
	 	 
	 

	 	/s/ Martin E. Erbaugh
	 

	 	 
	 

	 	Martin E. Erbaugh, Chairman
	 
	 	 
	 

	 	/s/ Christopher Mills
	 

	 	 
	 

	 	Christopher Mills, Director
	 
	 	 
	 

	 	/s/ Michael E. Gibbons
	 

	 	 
	 

	 	Michael E. Gibbons, Director

12

 

APPENDIX A

	 	 	 
	Employee Name	 	Title
	Jeffrey L. Rutherford

	 	Chief Executive Officer
	 
	 	 
	Bruce K. Thorn

	 	Senior Vice President
	 
	 	 
	Richard F. Doggett

	 	Senior Vice President
	 
	 	 
	Kathleen M. Minahan

	 	Vice President
	 
	 	 
	Michael A. Weisbarth

	 	Vice President
	 
	 	 
	Kevin L. Wade

	 	Vice President
	 
	 	 
	Robert H. Fisher

	 	Associate Vice President
	 
	 	 
	Chris Paczak

	 	Associate Vice President
	 
	 	 
	Michelle Farmer

	 	Associate Vice President
	 
	 	 
	Teresa Martin

	 	Executive Assistant

13

 

APPENDIX B

EMPLOYMENT RETENTION AGREEMENT

     THIS EMPLOYMENT RETENTION AGREEMENT (this “Agreement”), is entered into between LESCO,
Inc., an Ohio corporation (the “Company”), and                                          (“Employee”), in accordance with the
LESCO, Inc. Employment Retention Plan (the “Plan”), and is made this ___day of                                         ,
2007.

	1.	 	INTRODUCTION

     The Company established the Plan for the purpose of providing certain of its employees with
incentives to continue employment with the Company on an objective and impartial basis in the event
of the Company’s Change in Control. The Employee desires to continue in the Company’s employment
in accordance with the terms and conditions set forth in the Plan, a copy of which is attached
hereto as Exhibit A and is incorporated herein by reference. In the event any Plan term or
condition conflicts with any term or condition of the Agreement, the Plan’s term or condition
shall, at all times, control. All terms capitalized throughout the Agreement shall have the
meaning set forth in the Plan, unless otherwise specifically provided for herein.

     The Company and Employee (the “Parties”) now enter into this Agreement to establish their
rights and obligations under the Plan, and, to the extent not expressly set forth in the Plan, to
provide for certain additional rights and responsibilities of the Parties. In consideration of the
Parties’ mutual promises and obligations contained herein and as further established under the
Plan, the Parties, intending to be legally bound, hereby agree to the terms and conditions set
forth below or provided for within the Plan.

	2.	 	TERM OF AGREEMENT

     The Term of the Agreement shall be the period commencing on the Effective Date and ending on
the date that is the earlier of the Employee’s Separation from Service or the first anniversary of
the Effective Date.

	3.	 	CHANGE IN CONTROL PERIOD

     Change in Control Period shall mean the period commencing with the Effective Date and ending
on the                      anniversary of such Effective Date.

	4.	 	SEVERANCE PAYMENTS

	 	(a)	 	Upon the occurrence of a Triggering Event, Company shall pay to Employee the
amounts set forth below, which shall be payable in one lump sum payment within thirty
(30) days of the Triggering Event, unless otherwise specifically provided for in the
Plan or the subsections below:

	 	(i)	 	all amounts specifically set forth in Article II of the Plan;
and
	 
	 	(ii)	 	an amount equal to the product of                      times the
Employee’s Annual Base Salary; and

14

 

	 	(iii)	 	an amount equal to the maximum yearly contribution the Company
could make to the Employee’s account in the LESCO, Inc. Salary Savings Plan and
Trust, or any successor qualified defined contribution retirement plan, based
on the amount contributed to such retirement plan by the Employee during the
year of the Triggering Event; and
	 
	 	(iv)	 	to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”).

	 	(b)	 	Notwithstanding anything to the contrary in the Plan or the Agreement, if any
portion of the compensation or benefits payable to or on behalf of the Employee under
the Plan, or under any other agreement with, or plan of, the Company (in the aggregate
“Total Payments”) would constitute an “excess parachute payment” under Code Section
280G, then the payments to be made to the Employee under the Plan shall be reduced such
that the value of the aggregate Total Payments that Employee is entitled to receive
shall be one dollar ($1) less than the maximum amount that Employee may receive without
becoming subject to the tax imposed by Code Section 4999, or which the Company may pay
without loss of deduction under Code Section 280G. The calculation of such potential
excise tax liability, as well as the method in which the compensation reduction is
applied, shall be conducted and determined by the Company’s independent accountants
whose determinations shall be binding on the Parties.

	5.	 	AMENDMENT, MODIFICATION, AND TERMINATION

     No term or provision of this Agreement may be changed, waived, amended, modified, or
terminated, except by written instrument. Notwithstanding the foregoing, the Company reserves the
right to unilaterally amend, modify, or terminate this Agreement in any manner that the Company
deems advisable in order to ensure this Agreement’s and the Plan’s continued compliance with the
provisions of Code Section 409A; provided, however, that no such action shall materially reduce the
value of the benefits provided to the Employee hereunder.

15

 

     IN WITNESS WHEREOF, as conclusive evidence of the adoption of the Agreement and as
acknowledgement of the Company’s and the Employee’s agreement and consent to be bound by the terms
of the Plan, the parties have hereunto set their hands as of the date and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYEE	 	 	 	LESCO, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	 	 	 
	[Name	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its	 	 	 	 
	 	 	 	 	 	 	 	 	 
	[Title]	 	 	 	 	 	 	 	 

16

 

EMPLOYMENT RETENTION AGREEMENT

     THIS EMPLOYMENT RETENTION AGREEMENT (this “Agreement”), is entered into between LESCO,
Inc., an Ohio corporation (the “Company”), and JEFFREY L. RUTHERFORD (“Employee”), in accordance
with the LESCO, Inc. Employment Retention Plan (the “Plan”), and is made this ___day of
                                        , 2007.

	1.	 	INTRODUCTION

     The Company established the Plan for the purpose of providing certain of its employees with
incentives to continue employment with the Company on an objective and impartial basis in the event
of the Company’s Change in Control. The Employee desires to continue in the Company’s employment
in accordance with the terms and conditions set forth in the Plan, a copy of which is attached
hereto as Exhibit A and is incorporated herein by reference. In the event any Plan term or
condition conflicts with any term or condition of the Agreement, the Plan’s term or condition
shall, at all times, control. All terms capitalized throughout the Agreement shall have the
meaning set forth in the Plan, unless otherwise specifically provided for herein.

     The Company and Employee (the “Parties”) now enter into this Agreement to establish their
rights and obligations under the Plan, and, to the extent not expressly set forth in the Plan, to
provide for certain additional rights and responsibilities of the Parties. In consideration of the
Parties’ mutual promises and obligations contained herein and as further established under the
Plan, the Parties, intending to be legally bound, hereby agree to the terms and conditions set
forth below or provided for within the Plan.

	2.	 	TERM OF AGREEMENT

     The Term of the Agreement shall be the period commencing on the Effective Date and ending on
the date that is the earlier of the Employee’s Separation from Service or the first anniversary of
the Effective Date.

	3.	 	CHANGE IN CONTROL PERIOD

     Change in Control Period shall mean the period commencing with the Effective Date and ending
on the third (3rd) anniversary of such Effective Date.

	4.	 	SEVERANCE PAYMENTS

	 	(a)	 	Upon the occurrence of a Triggering Event, Company shall pay to Employee the
amounts set forth below, which shall be payable in one lump sum payment within thirty
(30) days of the Triggering Event, unless otherwise specifically provided for in the
Plan or the subsections below:

	 	(i)	 	all amounts specifically set forth in Article II of the Plan;
and
	 
	 	(ii)	 	an amount equal to the product of three times the sum of (1)
the Employee’s Annual Base Salary, and (2) $225,000; and
	 
	 	(iii)	 	an amount equal to the maximum yearly contribution the Company
could make to the Employee’s account in the LESCO, Inc. Salary Savings Plan and
Trust, or

17

 

	 	 	 	any successor qualified defined contribution retirement plan, based on the
amount contributed to such retirement plan by the Employee during the year
of the Triggering Event; and
	 
	 	(iv)	 	to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the “Other Benefits”).

	 	(b)	 	Notwithstanding any other provision of the Agreement or Plan to the contrary, in
the event it is determined that any portion of the amounts payable or made available to
the Employee under the Plan or Agreement (including, without limitation, the issuance
of common shares of the Company; the granting or vesting of restricted shares; and the
granting, vesting, exercise or termination of options), or under any other agreement
with, or plan of, the Company (in the aggregate “Total Payments”) constitute “excess
parachute payments” within the meaning of Code Section 280G and are subject to the
excise tax imposed by Code Section 4999 (or any similar tax or assessment), then the
Employee shall be entitled to receive an additional payment or payments (a “Gross-Up”),
which shall equal an amount necessary to place the Employee in the same after-tax
position (after considering all applicable penalty, federal, state, local income and
employment taxes on such excise taxes, as well as any interest thereon) he would have
been in had no such excise taxes or assessments been imposed on the Total Payments
pursuant to Code Section 4999. The calculation of the amount of Gross-Up and the
payment required in connection therewith shall be made by the Company’s independent
accountants within thirty (30) calendar days after benefit payments commence under
Section 4 of the Agreement and Section II of the Plan. Any Gross-Up due to the
Employee shall be paid within five (5) calendar days following the determination of the
Gross-Up amount. The determinations of the Company’s independent accountants shall be
binding on the Parties.

	5.	 	AMENDMENT, MODIFICATION, AND TERMINATION

     No term or provision of this Agreement may be changed, waived, amended, modified, or
terminated, except by written instrument. Notwithstanding the foregoing, the Company reserves the
right to unilaterally amend, modify, or terminate this Agreement in any manner that the Company
deems advisable in order to ensure this Agreement’s and the Plan’s continued compliance with the
provisions of Code Section 409A; provided, however, that no such action shall materially reduce the
value of the benefits provided to the Employee hereunder.

18

 

     IN WITNESS WHEREOF, as conclusive evidence of the adoption of the Agreement and as
acknowledgement of the Company’s and the Employee’s agreement and consent to be bound by the terms
of the Plan, the parties have hereunto set their hands as of the date and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYEE	 	 	 	LESCO, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Jeffrey L. Rutherford	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Chief Executive Officer	 	 	 	 	 	 	 	 

19

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