Document:

azek-ex1026_500.htm

Exhibit 10.26

 

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:
	
[Participant Name] (the “Grantee”).

	
Grant Date:
	
[Grant Date] (the “Grant Date”).

	
Number of Options:
	
[Number of Awards Granted]

	
 
	
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 $[Grant Price] (the “Exercise Price”).

	
Vesting Dates:
	
A number of Options equal to one-third of the Options (rounded to the nearest whole number) shall vest on each of the first two anniversaries of the Grant Date, and the remaining Options will vest on the third anniversary of the Grant Date (each such anniversary, 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 (such period, the “Vesting Period”), 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, a prorated number of the Options will immediately vest based on the Grantee’s date of termination relative to the length of each applicable Vesting Period;

B.Upon an involuntary termination of Employment by AZEK without Cause or, if applicable, by the Grantee for Good Reason (as defined in the Employment Agreement), and subject to the Grantee’s (i) execution of, and without revoking, a release of claims in a form provided by AZEK and (ii) 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; 

C.Upon a termination of the Grantee’s Employment due to Retirement, any unvested Options will remain outstanding and continue to vest on the Vesting Date as if the Grantee had continued to be Employed through the applicable Vesting Date, and any vested Options will remain outstanding and exercisable for a period of ten (10) years from the Grant Date. For this purpose, “Retirement” will mean a termination of Employment in which the following apply: (1) the sum of Grantee’s age plus length of service as of the date of termination equals 65, with a minimum of two years of service and a minimum age of 58, (2) Grantee provided one-year advance notice to AZEK of Retirement, and (3) the Grant Date is not within six months prior to the Grantee’s date of termination. As a condition to the continued vesting under this Section, Grantee must execute, and not revoke, a release of claims in a form provided by AZEK and comply with any non-competition, non-solicitation, confidentiality or other covenants to which Grantee is subject; and 

D.Upon a termination of Employment by AZEK without Cause or, if Grantee has an Employment Agreement containing the right to resign for Good Reason, by the Grantee for Good Reason (as defined in the Employment Agreement) 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.

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Exercise of Option:
	
Each election to exercise the Option shall be made, in the manner prescribed by the Company, with the third party stock plan administrator appointed by the Company, by the Participant or the Participant's executor, administrator, or legally appointed representative (in the event of the Participant’s incapacity) or the person or persons to whom the Option is transferred by will or the applicable laws of descent and distribution (collectively, the “Option Holder”) and received and approved by the Company and third party stock plan administrator, accompanied by this Agreement and payment in full as provided in the Plan. The purchase price shall be paid to the third party stock plan administrator appointed by the Company by either (i) delivery of cash or check; (ii) wire transfer; or (iii) through a broker-assisted cashless exercise program implemented in connection with the Plan. In the event that the Option is exercised by an Option Holder other than the Participant, the Company will be under no obligation to deliver Shares hereunder unless and until it is satisfied as to the authority of the Option Holder to exercise the 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.

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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.

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

 

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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: 

 

 

 

[Participant Name]

 

-6-azek-ex1031_498.htm

Exhibit 10.31

THE AZEK COMPANY INC.

KEY EMPLOYEE BONUS PLAN

	
1.
	
Effective Date and Purpose

The Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of The AZEK Company Inc. (“AZEK” and, together with its subsidiaries and affiliates and their respective successors and assigns, the “Company”) hereby adopts The AZEK Company Inc.’s Key Employee Bonus Plan (the “Plan”) effective as of November [•], 2021 (the “Effective Date”). The purpose of the Plan is to provide an incentive to attract, retain and reward selected employees of the Company to contribute to the Company’s growth and profitability.

	
2.
	
Eligibility

Participation in the Plan shall be limited to employees who are selected by the Senior Leadership Team (the “SLT”) and subsequently approved by the Chief Executive Officer (the “CEO”) or the Committee with respect to participants who are subject to the disclosure requirements of Section 16(a) of the Exchange Act (each such employee, a “Section 16 Officer” and any employee approved to participate in the Plan, a “Key Employee”). To be eligible to receive an Award (as defined below) with respect to any Performance Period (as defined below), a Key Employee must be actively employed by the Company on the last day of the Performance Period in which an Award is earned and the day the Award is paid in accordance with Section 4(e), except as otherwise determined by the CEO or the Committee, as applicable. Newly hired eligible employees may be eligible to receive a prorated Award for a Performance Period. 

	
3.
	
Administration

The administration of the Plan shall be consistent with the purpose and the terms of the Plan. The Plan shall be administered by the Committee, which may amend, suspend or terminate the Plan, or any Key Employee’s participation in the Plan, at any time. Notwithstanding the foregoing, the CEO may exercise the authority of the Committee to the extent provided herein and, with respect to such authority delegated herein to the CEO, any references to the Committee herein shall be deemed to include the CEO as applicable. The Committee shall have full authority to establish the rules and regulations relating to the Plan, to interpret the Plan and those rules and regulations, to decide the facts in any case arising under the Plan and to make all other determinations, including factual determinations, and to take all other actions necessary or appropriate for the proper administration of the Plan. All powers of the Committee shall be executed in its sole discretion, in the best interest of the Company, not as a fiduciary, and in keeping with the objectives of the Plan and need not be uniform as to similarly situated individuals. 

All Awards are made conditional upon the Key Employee’s acknowledgement by acceptance of the Award, and that all decisions and determination of the Committee shall be final and binding on the Key Employee, his or her beneficiaries and any other person having or claiming an interest under such Award. The administration of the Plan by the Committee including all such rules and regulations, interpretations, selections, determinations, approvals, decisions, delegations, amendments, terminations and other actions, shall be final and binding. Target Award Levels and Awards need not be uniform as among Key Employees.

	
4.
	
Determination of Awards

(a)Performance Period.  Each “Performance Period” shall be a fiscal year of the Company or any other period designated by the Committee with respect to which an Award may be earned.

 

 

(b)Setting Target Award Levels and Performance Goals.

(i)For each Performance Period, the Committee shall determine: (A) the Key Employees for the Performance Period, (B) each Key Employee’s Target Award Level, and (C) the Performance Goals for the Performance Period (and how they are weighted, if applicable).  With respect to Key Employees who are not Section 16 Officers, the CEO shall have authority to determine:  (A) the Key Employees for the Performance Period, (B) each Key Employee’s Target Award Level and (C) the Performance Goals for the Performance Period (and how they are weighted if applicable).

(ii)The Committee may establish the target incentive amount for any Participant with respect to any Performance Period in its sole discretion (the “Target Award Level”). The Target Award Level may be designated as a dollar amount, percentage of base salary, or such other measure, as determined by the Committee, and may be established at or with different levels, including minimum or maximum levels, and at such time or times as the Committee determines in its sole discretion. The Committee may at any time prior to the final determination of Awards change the Target Award Level of any Key Employee or assign a different Target Award Level to a Key Employee to reflect any change in the Key Employee’s responsibility level or position during the course of the Performance Period.

(iii)The Committee may establish performance goals (the “Performance Goals”) (and how they are weighted, if applicable) for Key Employees, specific business units and/or the Company as a whole at such time or times as the Committee determines in its sole discretion. The Performance Goals may be (but need not be) different for each Performance Period and different Performance Goals may be applicable to different Key Employees.

(c)Earning an Award. Generally, the actual amount of the incentive award earned by a Key Employee under the Plan for any Performance Period (an “Award”) will be based on the level of achievement of the Performance Goals established by the Committee for that Performance Period. A Key Employee will receive no Award if the level of achievement of all Performance Goals is below the minimum required to earn an Award for the applicable Performance Period.

(d)Discretionary Awards; Adjustment of Awards. In addition to the Award paid to a Key Employee under the Plan, if any, the Committee, may pay to a Key Employee an additional amount, taking into account such factors as it deems appropriate and determines in its sole and absolute discretion.  The Committee may adjust all or part of an Award, including downward or upward adjustments, based upon a Key Employee’s individual performance or other factors determined by the Committee in its discretion.

(e)Payment of Awards. A Key Employee’s Award shall be paid in cash, an AZEK equity-based award of equivalent value, or such other form of consideration determined by the Committee in its sole discretion, or a combination of the foregoing, as soon as administratively practicable after the end of the Performance Period, and no later than March 15 of the following calendar year.

	
5.
	
Miscellaneous Provisions

(a)No Employment Right. The Plan is not a contract between the Company and the eligible employees or the Key Employees. Neither the establishment of the Plan, nor any action taken hereunder, shall be construed as giving any eligible employee or any Key Employee any right to be retained in the employ of the Company or a right to an Award. The Company is under no obligation to continue the Plan. Nothing contained in the Plan shall limit or affect in any manner or degree the normal and usual powers 

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of management, exercised by the officers and the Board or committees thereof, to change the duties or the character of employment of any employee of the Company or to remove the individual from the employment of the Company at any time, all of which rights and powers are expressly reserved.

(b)No Assignment. A Key Employee’s right and interest under the Plan may not be assigned or transferred and any attempted assignment or transfer shall be null and void and shall extinguish, in the Key Employee’s sole discretion, the Company’s obligation under the Plan to pay Awards with respect to the Key Employee.

(c)Unfunded Plan. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund, or to make any other segregation of assets, to assure payment of Awards.

(d)Withholding Taxes. The Company shall have the right to deduct from Awards paid any taxes or other amounts required by law to be withheld.

(e)Section 409A of the Code. The Company intends that Awards under this Plan shall be exempt from Section 409A of the Internal Revenue Code and the regulations promulgated thereunder (“Section 409A”), and this Plan shall be interpreted, construed and administered in accordance with such intent. To the extent that any Award is not exempt from the application of the requirements of Section 409A, this Plan and the Award shall be construed and interpreted in a manner so as to comply with such requirements. 

(f)Clawback. All Awards under this Plan shall be subject to forfeiture or other penalties under any clawback policy or provision that may be implemented by the Company from time to time or set forth in an applicable Award, whether adopted prior to, on or after the Effective Date.

(g)Governing Law. The validity, construction, interpretation and effect of the Plan shall exclusively be governed by and determined in accordance with the law of the State of Delaware.

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