EMPLOYMENT AGREEMENT
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Amendment to Employment Agreement

Change in Control Severance Agreement

Exhibit 10.32

EMPLOYMENT AGREEMENT

        This Agreement (this "Agreement"), dated as of August 13, 2004 (the "Effective Date"), is made by and between Interline Brands, Inc., a New Jersey corporation (the "Company"), and Mr. Michael J. Grebe (the "Executive").


Recitals

        1.     The Company desires to (a) employ the Executive as the Company's President and Chief Executive Officer, (b) retain the Executive as a director of the Company subject to his election to the Board by the shareholders of the Company and (c) enter into an agreement embodying the terms of those relationships.

        2.     The Executive is willing to serve as the President and Chief Executive Officer of the Company and is willing to serve as a director of the Company (subject to his election to the Board by the shareholders of the Company) on the terms set forth herein.


Agreement

        NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and other good and valuable consideration, the Company and the Executive hereby agree as follows:

1.     Definitions.

        1.1.  "Affiliate" means any person or entity controlling, controlled by or under common control with the Company.

        1.2.  "Board" means the Board of Directors of the Company.

        1.3.  "Cause" means (a) the Executive's conviction of, or pleading nolo contendere to, a felony, (b) the Executive's conviction of, or pleading nolo contendere to, any crime, whether a felony or misdemeanor, involving the purchase or sale of any security, mail or wire fraud, theft, embezzlement or Company property, (c) the Executive's gross neglect of his duties hereunder, (d) the Executive's willful misconduct in connection with the performance of his duties hereunder or any other material breach by the Executive of this Agreement or (e) the Executive's failure to follow the lawful directions of the Board, consistent with the terms of this Agreement; provided, however that the Executive shall not be deemed to have been terminated for Cause unless (i) written notice has been delivered to him setting forth the reasons for the Company's intention to terminate him for Cause and (ii) a period of 30 days has elapsed since delivery of such notice.

        1.4.  "Change in Control" shall mean:

        1.4.1.    The acquisition, after the Effective Date, by an individual, entity or group (within the meaning of Section 13(d)(3) or 14 (d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act")), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either (a) the shares of the common stock of the Company (the "Common Stock"), or (b) the combined voting power of the voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company, (ii) any acquisition by any underwriter in connection with any firm commitment underwriting of securities to be issued by the Company, or (iii) any acquisition by any corporation if, immediately following such acquisition, 50% or more of the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation (entitled to vote generally in the election of directors), is beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who, immediately prior to such acquisition, were the beneficial owners of the Common Stock and


the Voting Securities in substantially the same proportions, respectively, as their ownership, immediately prior to such acquisition, of the Common Stock and Voting Securities; or

        1.4.2.    The occurrence of a reorganization, merger or consolidation, other than a reorganization, merger or consolidation with respect to which all or substantially all of the individuals and entities who were the beneficial owners immediately prior to such reorganization, merger or consolidation of the Common Stock and Voting Securities beneficially own, directly or indirectly, immediately after such reorganization, merger or consolidation 50% or more of the then outstanding common stock and voting securities (entitled to vote generally in the election of directors) of the corporation resulting from such reorganization, merger or consolidation in substantially the same proportions as their respective ownership, immediately prior to such reorganization, merger or consolidation, of the Common Stock and the Voting Securities; or

        1.4.3.    The occurrence of (a) a complete liquidation or substantial dissolution of the Company, or (b) the sale or other disposition of all or substantially all of the assets of the Company, other than to a subsidiary, wholly-owned, directly or indirectly, by the Company; or

        1.4.4.    After the expiration of 24 months following the Effective Date, individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute a majority of the members of the Board; provided that any individual who becomes a director after the date hereof whose election or nomination for election by the Company's shareholders was approved by two-thirds of the members of the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened "election contest" relating to the election of the directors of the Company (as such terms are used in Rule 14a-1 1 under the Exchange Act), a "tender offer" (as such term is used in Section 14(d) of the Exchange Act) or a proposed transaction described in Sections 1.4.1, 1.4.2 or 1.4.3 of this Agreement) shall be deemed to be members of the Incumbent Board.

        1.5.  "Disability" means the Executive's inability to render, for a period of six consecutive months, services hereunder by reason of permanent disability, as determined by the written medical opinion of an independent medical physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to such an independent medical physician, each shall appoint one medical physician and those two physicians shall appoint a third physician who shall make such determination. In no event shall the Executive be considered disabled for the purposes of this Agreement unless the Executive is deemed disabled pursuant to the Company's long-term disability plan.

        1.6.  "Good Reason" means the Company without prior express written consent of the Executive (a) materially reducing the Executive's position, duties, title or authority, (b) decreasing the Executive's compensation or the benefits under the employee benefit or health or welfare plans or programs of the Company are in the aggregate materially decreased (excluding reductions due to general benefit plan changes applicable to Company employees generally), (c) failing to pay the Executive's compensation or to provide for the Executive's benefits when due, (d) requiring the Executive to move his primary place of employment more than 35 miles from the then current place of employment, if such move materially increases his commute, (e) failing to nominate the Executive for election to the Board of Directors of the Company (by the committee of such Board responsible for making such nominations) or (f) committing any other material breach of this Agreement, if any of the foregoing (a) through (f) are not remedied by the Company (if capable of remedy) within 30 days after receiving notice thereof from the Executive.

        1.7.  "Offering" means the Company's initial public offering of the Company's Common Stock as described in the final prospectus to be filed with the Securities Exchange Commission by the Company.

2.    Employment.    Subject to the terms and provisions set forth in this Agreement, the Company hereby agrees that the Executive shall be employed as the Company's President and Chief Executive Officer,

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and further agrees that the Executive shall be a member of the Board of the Company (and a member of the Board's Executive Committee) during the Term of Employment, provided that he is elected to the Board by the shareholders of the Company as provided in Section 4.1, and the Executive hereby accepts such employment and directorship.

3.    Term of Employment.    The term of employment under this Agreement shall commence on the Effective Date and, unless earlier terminated under Section 6 below or extended pursuant to the next sentence, shall terminate on the second anniversary of the Effective Date (the "Term of Employment"). The Term of Employment shall automatically be extended for an additional one year period on each January 1st after the Effective Date unless, not later than 90 days prior to any such January 1st, either party to this Agreement shall have given written notice to the other that the Term of Employment shall not be extended or further extended beyond its then automatically extended term, if any.

4.     Positions, Responsibilities and Duties.

        4.1.    Positions.    During the Term of Employment, the Executive shall be employed and serve as the Company's President and Chief Executive Officer. In such positions, the Executive shall have such duties and authority as are customarily associated with the office and position of President and Chief Executive Officer, including, without limitation, complete operational management authority, together with the Chief Operating Officer, with respect to, and total responsibility for, the overall operations and day-to-day business and affairs of the Company. In addition, the Executive shall be nominated for election by the shareholders of the Company as a director of the Company at the annual meeting of shareholders of the Company to be held in [month, year] and, if then elected by the shareholders, at subsequent meetings of shareholders at which his term of office as a director would otherwise expire, for the duration of the Term of Employment. If the Executive is elected to the Board, the Executive shall further be a member of the Board's Executive Committee (or similar or equivalent committee), if any, during the Term of Employment. The Executive shall report solely and directly to the Board. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities which would be likely to result in a non-compliance with or violation of any applicable law or regulation.

        4.2.    Duties.    During the Term of Employment, the Executive shall devote substantially all of his business time to the business and affairs of the Company and the Executive shall use his reasonable best efforts to perform faithfully and efficiently the duties and responsibilities contemplated by this Agreement; provided, however, that the Executive shall be allowed, to the extent such activities do not substantially interfere with the performance by the Executive of his duties and responsibilities hereunder, to (a) manage the Executive's personal, financial and legal affairs, and (b) serve on corporate, civic or charitable boards or committees, provided that the Executive shall inform the Company of his service on any corporate boards.

5.     Compensation and Other Benefits.

        5.1.    Base Salary.    During the Term of Employment, the Executive shall receive an annual base salary ("Base Salary") payable in accordance with the Company's normal payroll practices of no less than US $386,030. The Board shall review the Executive's Base Salary and shall increase such Base Salary by no less than five percent (5%) as of January 1, 2005. Thereafter, the Board shall review the Executive's Base Salary annually and shall increase such Base Salary by no less than five percent (5%) as of January 1 of each year of the Term of Employment.

        5.2.    Annual Bonus.    In respect of each calendar year during the Term of Employment, beginning in calendar year 2004, the Executive shall be entitled to receive an annual bonus (the "Bonus") if the Executive achieves target or better objective performance goals established by mutual agreement between the Executive and the Board prior to each calendar year, or the Effective Date, as the case may be. The amount of such Bonus, if any, shall be up to 120% of Base Salary, based on achievement

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of objective performance goals. The Bonus shall be paid as soon as practicable after the end of each calendar year and on the date of the end of the Term of Employment, if the Term of Employment is not extended, whether or not the Executive is employed by the Company on the payment date of the Bonus. The Bonus shall not be paid if during any such calendar year the Executive (a) voluntarily terminates this Agreement without Good Reason or (b) is terminated for Cause (as such terms are defined in this Agreement).

        5.3.    Retirement and Savings Plans.    During the Term of Employment, the Executive shall be entitled to participate as of the Effective Date in all incentive, pension, retirement, savings, 401(k) and other employee pension benefit plans, policies and programs (the "Retirement Plans") maintained by the Company from time to time for the benefit of senior executives and/or other employees.

        5.4.    Welfare Benefit Plans.    During the Term of Employment, the Executive, the Executive's spouse, if any, and their dependents, if any, shall be entitled as of the Effective Date, without any waiting periods exceeding thirty days and without any pre-existing condition limitations, to participate in and be covered on the same basis as other senior executive officers of the Company under all the welfare benefit plans, policies and/or programs maintained by the Company from time to time including, without limitation, all medical, hospitalization, dental, disability, life, accidental death and dismemberment and travel accident insurance plans, policies and/or programs (the "Welfare Plans").

        5.5.    Expense Reimbursement.    During and in respect of the Term of Employment, the Executive shall be entitled to receive prompt reimbursement for expenses incurred by the Executive in performing his duties and responsibilities hereunder in accordance with the Company's policies on expense reimbursements, in effect from time to time.

        5.6.    Vacation and Fringe Benefits.    During the Term of Employment, the Executive shall be entitled to four weeks paid vacation each calendar year plus a reasonable amount of paid time off in accordance with the generally applicable Company policy. The Executive shall be entitled to carry over up to four weeks of unused vacation to a subsequent calendar year and shall further be entitled to have up to four weeks of such accrued vacation time paid out by the Company following termination of the Executive's employment (a) due to death, (b) by the Company without Cause or (c) by the Executive due to Disability or for Good Reason.

        5.7.    Automobile Allowance.    During the Term of Employment, the Executive shall be entitled to an automobile allowance of $15,000 per year, payable in equal monthly installments. During the Term of Employment, the Company shall also reimburse the Executive for all reasonable costs of repairing, maintaining, insuring and providing fuel for the automobile acquired by the Executive pursuant to such automobile allowance.

        5.8.    Equity Awards.    Immediately prior to and in connection with the Offering, the Executive shall receive equity awards in accordance with the terms of the Interline Brands, Inc. 2004 Equity Incentive Plan and the equity award agreements between the Executive and the Company, which terms shall be negotiated in good faith and agreed upon by the Company and the Executive. The effectiveness of this Section 5.8 shall be contingent on, and shall only become effective upon the date of, the closing of the Offering.

        5.9.    Loan Forgiveness and Additional Payment.    On or before the earliest of (i) immediately prior to the Offering or (ii) the consummation of a Change in Control, the Company shall forgive outstanding loans owed to the Company by the Executive in the amount of $749,998 and the Executive shall receive an additional cash payment in respect of his tax obligations arising from such loan forgiveness in the amount of $549,400.

        5.10.    Retention Bonus.    The Executive shall be entitled to a retention bonus (the "Retention Bonus") which shall be computed pursuant to such formula and shall vest and be paid over such period as shall be negotiated in good faith and agreed upon by the Company and the Executive. In the event

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the Executive's employment with the Company terminates on account of his death, Disability, by the Company without Cause or by the Executive for Good Reason, any unpaid portion of the Retention Bonus shall be due and payable to the Executive or his estate, not later than 30 days following such termination. In the event the Executive terminates his employment with the Company without Good Reason or the Company terminates his employment for Cause, the Executive shall forfeit any unpaid portion of the Retention Bonus. The effectiveness of this Section 5.10 shall be contingent on, and shall only become effective upon the date of, the closing of the Offering.

        5.11.    Success Bonus.    In the event of a Change in Control, the Executive shall be entitled to a bonus (the "Success Bonus"), in an amount which shall be negotiated in good faith and agreed upon by the Company and the Executive, and which amount shall be payable in one lump sum on the date of the closing of the Change in Control.

6.     Termination.

        6.1.    Termination Due to Death.    In the event of the Executive's death, the Executive's estate or his legal representative, as the case may be, shall be entitled to: (a) any Base Salary accrued but unpaid as of the date of death plus Base Salary (as set forth in Section 5.1 of this Agreement) continuation for a period of two years from the date of the Executive's death; (b) a pro-rata Bonus payment for the calendar year of the Executive's death equal to no less than the Bonus that the Executive would have been entitled to if he had remained employed by the Company at the end of such calendar year multiplied by a fraction, the numerator of which is the number of days transpired in the calendar year up to and including the date of the death of the Executive, and the denominator of which is 365; (c) immediate payment of any unpaid expense reimbursements, unpaid automobile allowance and unused accrued vacation days through the date of the Executive's death; (d) any other benefits to which the Executive, the Executive's estate or the Executive's legal representative is entitled under any of the Retirement and Welfare Plans; and (e) any other payments and/or benefits provided for in any agreement between the Company and the Executive in the event of death, including without limitation, any equity award vesting or exercisability acceleration and any extended post-termination exercise periods.

        6.2.    Termination Due to the Executive's Disability.    Upon 30 days prior written notice to the Executive, the Company may terminate the Executive's employment hereunder due to Disability. In such event, the Executive or his legal representative, as the case may be, shall be entitled to: (a) any Base Salary accrued but unpaid as of the date of the Executive's termination due to Disability plus Base Salary (as set forth in Section 5.1 of this Agreement) continuation for a period of two years from the date of the Executive's termination due to Disability; (b) a pro-rata Bonus payment for the calendar year of the Executive's termination equal to no less than the Bonus that the Executive would have been entitled to if he had remained employed by the Company at the end of such calendar year multiplied by a fraction, the numerator of which is the number of days transpired in the calendar year up to and including the date on which the Executive is terminated by the Company due to Disability, and the denominator of which is 365; (c) immediate payment of any unpaid expense reimbursements, unpaid automobile allowance and unused accrued vacation days through the date of the Executive's termination; (d) any other benefits to which the Executive or the Executive's legal representative is entitled under any of the Retirement and Welfare Plans; and (e) any other payments and/or benefits provided for in any agreement between the Company and the Executive in the event of a termination of the Executive's employment due to Disability, including without limitation, any equity award vesting or exercisability acceleration and any extended post-termination exercise periods.

        6.3.    Termination Without Cause or by the Executive for Good Reason.    Upon 10 days prior written notice to the Executive, the Company may terminate the Executive's employment hereunder without Cause. Upon 10 days prior written notice to the Company, the Executive may terminate his employment hereunder with the Company for Good Reason. The Executive may also terminate his

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employment for any reason within the 30 day period commencing on the first anniversary of a Change in Control and such termination shall be treated for purposes of this Agreement as a termination by the Executive for Good Reason. In any such event, the Executive shall be entitled to: (a) an amount equal to two times the Executive's Base Salary (as set forth in Section 5.1 of this Agreement) as of the date of termination, payable in one lump sum upon the date of termination; (b) an amount equal to two times the average of the Bonus amounts paid for the prior three year period, such sum to be payable in equal installments in accordance with the Company's usual payroll practices over a period of two years following the date of termination; provided, however, that if the Executive's employment is terminated by the Company without Cause or by the Executive for Good Reason at any time following a Change in Control, or for any reason within the 30-day period commencing on the first anniversary of a Change in Control, such amount shall be payable in one lump sum upon the date of termination; and provided further, however, that the Executive shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive for Good Reason (1) if the Executive reasonably demonstrates that the Executive's employment was terminated prior to a Change in Control without Cause (i) at the request of an individual, entity or group who has entered into an agreement with the Company, the consummation of which will constitute a Change in Control (or who has taken other steps reasonably calculated to effect a Change in Control) (a "Person") or (ii) otherwise in connection with, as a result of or in anticipation of a Change in Control, or (2) if the Executive terminates his employment for Good Reason prior to a Change in Control and the Executive reasonably demonstrates that the circumstance(s) or event(s) which constitute such Good Reason occurred (i) at the request of such Person or (ii) otherwise in connection with, as a result of or in anticipation of a Change in Control; (c) continuation of benefits under the Welfare Plans in effect as of the date of termination for a period of two years following the date of termination at the Company's sole expense; (d) immediate payment of any unpaid expense reimbursements, unpaid automobile allowance and unused accrued vacation days through the date of termination; (e) any other payments and/or benefits to which the Executive is entitled under any of the Welfare and Retirement Plans; and (f) any other payments and/or benefits provided in this Agreement or any agreement between the Company and the Executive in the event of a termination for Good Reason, including without limitation, any equity award vesting or exercisability acceleration and any extended post-termination exercise periods; provided that the Executive shall not be entitled to participate in any other severance plan or arrangement sponsored by the Company unless such plan or arrangement provides otherwise.

        6.4.    Termination For Cause.    Subject to the provisions of this Section 6.4, the Company may terminate the Executive's employment for Cause. In such event, the Executive shall be entitled to: (a) any Base Salary accrued but unpaid through the date of termination; (b) immediate payment of any unpaid expense reimbursements and unpaid automobile allowance; (c) any other payments and/or benefits to which the Executive is entitled under any of the Retirement and Welfare Plans; and (d) any other payments and/or benefits provided in this Agreement in the event of a termination for Cause. In any case described in this Section 6.4, the Executive shall be given written notice authorized by a vote of at least a majority of the members of the Board that the Company intends to terminate the Executive's employment for Cause. Such written notice shall specify the particular act or acts, or failure to act, which is or are the basis for the decision to so terminate the Executive's employment for Cause.

        6.5.    Termination Without Good Reason.    Upon 30 days prior written notice to the Company, the Executive shall have the right to terminate his employment hereunder without Good Reason or any reason at all. In such event, the Executive shall be entitled to: (a) any Base Salary accrued but unpaid through the date of termination; (b) immediate payment of any unpaid expense reimbursements and unpaid automobile allowance; (c) any other payments and/or benefits to which the Executive is entitled under any of the Retirement and Welfare Plans; and (d) any other payments and/or benefits provided in this Agreement in the event of a termination for Cause.

        6.6.    No Mitigation; No Offset.    In the event of any termination of employment under this Section 6, the Executive shall be under no obligation to seek other employment and there shall be no

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offset against any amounts due the Executive under this Agreement on account of any remuneration attributable to any subsequent employment that the Executive may obtain. Any amounts due under this Section 6 are in the nature of severance payments, or liquidated damages, or both, and are not in the nature of a penalty.

        6.7.    Non-extension Severance.    If the Executive's Term of Employment is not extended for any reason, the Executive will be considered to be terminated without Cause and the provisions of Section 6.3 shall apply to such termination.

        6.8.    Certain Other Payments.

        6.8.1.    If the Executive is liable for the payment of any excise tax (the "Basic Excise Tax") pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any successor or like provision, with respect to any payment or property transfers received or to be received under this Agreement or otherwise (the "Payments"), the Company shall pay the Executive an amount (the "Special Reimbursement") which, after payment to the Executive (or on the Executive's behalf) of any federal, state and local taxes, including, without limitation, any further excise tax under said Section 4999, with respect to or resulting from the Special Reimbursement, equals the net amount of the Basic Excise Tax.

        6.8.2.    All calculations required to be made under this Section, including the amount of the Special Reimbursement, shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the "Accounting Firm"), which shall be made in good faith, and which shall provide detailed supporting calculations both to the Company and the Executive within fifteen (15) business days of the receipt of notice from the Company or the Executive that there has been a Payment, or at such earlier time as is requested by the Company or the Executive (collectively, the "Determination"). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Executive may appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company and the Company shall enter into any agreement requested by the Accounting Firm in connection with the performance of the services hereunder. The Special Reimbursement under this Section 6.8 with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines, absent manifest error, that no Basic Excise Tax is payable by the Executive, it shall furnish the Executive with a written opinion to such effect, and to the effect that failure to report the Basic Excise Tax, if any, on the Executive's applicable income tax return will not result in the imposition of a negligence or similar penalty. Absent manifest error, the Determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that a Special Reimbursement amount which will not have been paid by the Company should have been paid ("Underpayment") or Special Reimbursement amounts are paid by the Company which should not have been paid ("Overpayment"), consistent with the calculations required to be made hereunder. In the event that the Executive thereafter is required to make payment of the Basic Excise Tax or any other tax resulting from or relating to the payment of the Special Reimbursement, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the Company to or for the benefit of the Executive. In the event the amount of the Special Reimbursement exceeds the amount necessary to reimburse the Executive for his Basic Excise Tax or any other tax resulting from or relating to the payment of the Special Reimbursement, the Accounting Firm shall determine in good faith the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate

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provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Executive (to the extent he has received a refund if the applicable tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Executive shall cooperate, to the extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Basic Excise Tax and or any other tax resulting from or relating to payment of the Special Reimbursement; provided, however, if the Executive determines in good faith that continued contesting or disputing with the Internal Revenue Service would or is likely to have an adverse impact on the Executive's overall tax or economic position or obligation (which good faith determination shall take into account the magnitude of the amounts involved and the Company's financial condition or financial prospects), then, upon notice from the executive to that effect, the Executive shall, without foregoing any right to the Special Reimbursement required hereunder, have no further obligation to continue any such contest or dispute, or cooperate in respect thereof.

        6.9.    Payment.    Except as otherwise provided in this Agreement and subject to the Executive's prior execution of a general release in substantially the form annexed hereto as Exhibit A, any payments to which the Executive shall be entitled under this Section 6, including, without limitation, any economic equivalent of any benefit, shall be made as promptly as possible following the date of termination. If the amount of any payment due to the Executive cannot be finally determined within 30 days after the date of termination, such amount shall be estimated on a good faith basis by the Company and the estimated amount shall be paid no later than 45 days after such date of termination. As soon as practicable thereafter, the final determination of the amount due shall be made and any adjustment requiring a payment to or from the Executive shall be made as promptly as practicable.

7.    Non-exclusivity of Rights.    Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan, policy or program provided or maintained by the Company and/or any Affiliate and for which the Executive may qualify, nor shall anything herein limit or otherwise prejudice such rights as the Executive may have under any other existing or future agreements with the Company and/or any Affiliate, including, without limitation, any stock option agreements or plans. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plans or programs of the Company and/or any Affiliate at or subsequent to the Term of Employment shall be payable in accordance with such plans or programs.

8.    Full Settlement.    The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others.

9.    Legal Fees and Other Expenses.    In the event that a claim for payment or benefits under this Agreement is disputed, the Executive shall be reimbursed for all attorney fees and expenses incurred by the Executive in pursuing and/or defending any such claim, provided that the Executive substantially prevails in respect of any material issue which is the subject of such claim by reason of litigation, arbitration or settlement. In addition, the Executive shall be paid or reimbursed for all legal fees and expenses incurred by the Executive in connection with the review, preparation and negotiation of this Agreement.

10.   Successors.

        10.1.    The Executive.    This Agreement is personal to the Executive and, without the prior express written consent of the Company, shall not be assignable by the Executive, except that the Executive's rights to receive any compensation or benefits under this Agreement may be transferred or disposed of pursuant to testamentary disposition, intestate succession or pursuant to a domestic relations order.

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This Agreement shall inure to the benefit of and be enforceable by the Executive's heirs, beneficiaries and/or legal representatives.

        10.2.    The Company.    This Agreement shall inure to the benefit of and be binding upon the Company and its respective successors and assigns. The Company shall require any successor to all or substantially all of its business and/or assets, whether direct or indirect, by purchase, merger, consolidation, acquisition of stock, or otherwise, by an agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent as the Company would be required to perform if no such succession had taken place.

11.    Indemnification.    The Company agrees that if the Executive is made a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he is or was a director or officer of the Company and/or any Affiliate or is or was serving at the request of the Company and/or any Affiliate as a director, officer, member, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including, without limitation, service with respect to employee benefit plans, whether or not the basis of such Proceeding is alleged action in an official capacity as a director, officer, member, employee or agent while serving as a director, officer, member, employee or agent, he shall be indemnified and held harmless by the Company to the fullest extent authorized by applicable state corporation law, as the same exists or may hereafter be amended, against all expenses incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if the Executive has ceased to be an officer, director or agent, or is no longer employed by the Company and shall inure to the benefit of his heirs, executors and administrators.

12.   Restrictive Covenants.

        12.1.    Non-Solicitation.    If, during the Term of Employment, the Executive (a) voluntarily terminates his employment with the Company without Good Reason or (b) the Executive is terminated by the Company for Cause, the Executive, for a period of one year after any such termination, shall not (except on the Company's behalf), directly or indirectly, on his own behalf or on behalf of any other person, firm, partnership, corporation or other entity, (i) solicit or service the business of any of the Company's clients, any of the Company's former clients which were clients within six months prior to the termination of his employment or any of the prospective clients which were being actively solicited by the Company at the time of the termination of his employment or (ii) attempt to cause or induce any employee of the Company to leave the Company.

        12.2.    Confidentiality.    The Executive shall not, during the Term of Employment and at any time thereafter, without the prior express written consent of the Board, directly or indirectly, divulge, disclose or make available or accessible any Confidential Information (as defined below) to any person, firm, partnership, corporation, trust or any other entity or third party (other than when required to do so in good faith to perform the Executive's duties and responsibilities under this Agreement or when (a) required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power, or (b) necessary to prosecute the Executive's rights against the Company or to defend himself against any allegations). In addition, the Executive shall not create any derivative work or other product based on or resulting from any Confidential Information (except in the good faith performance of his duties under this Agreement). The Executive shall also proffer to the Board's designee, no later than the effective date of any termination of his employment with the Company for any reason, and without retaining any copies, notes or excerpts thereof, all memoranda, computer disks or other media, computer programs, diaries, notes, records, data, customer or client lists, marketing plans and strategies, and any other documents consisting of or containing Confidential Information that are in the Executive's actual or constructive possession or which are subject to his control at such time. For purposes of this Agreement, "Confidential Information" shall mean all information respecting the business and activities of the Corporation, or any Affiliate of the

9


 

Company, including, without limitation, the terms and provisions of this Agreement, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, data gathering methods and/or strategies of the Company. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of the Executive's breach of any portion of this Section 12.2.

        12.3.    Non-Competition.    The Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates and accordingly agrees as follows:

        12.3.1.    During the Term of Employment and for a period ending on the expiration of (a) one year following the Executive's termination for Cause or without Good Reason and (b) two years following the Executive's termination without Cause or for Good Reason, the Executive will not directly or indirectly, (i) engage in any business for the Executive's own account that competes with the business of the Company, (ii) enter the employ of, or render any services to, any person engaged in any business that competes with the business of the Company, (iii) acquire a financial interest in, or otherwise become actively involved with, any person engaged in any business that competes with the business of the Company, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or (iv) interfere with business relationships (whether formed before or after the date of this Agreement) between the Company or any of its Affiliates that are engaged in a business similar to the business of the Company (the "Company Affiliates") and customers or suppliers of the Company or the Company Affiliates.

        12.3.2.    Notwithstanding anything to the contrary in this Agreement, the Executive may directly or indirectly own, solely as an investment, securities of any person engaged in the business of the Company which are publicly traded on a national or regional stock exchange or on the over-the-counter market if the Executive (i) is not a controlling person of, or a member of a group which controls, such person and (ii) does not, directly or indirectly, own one percent (1%) or more of any class of securities of such person.

13.   Miscellaneous.

        13.1.    Applicable Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, applied without reference to principles of conflict of laws.

        13.2.    Amendments.    This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

        13.3.    Notices.    All notices and other communications hereunder shall be in writing and shall be given by hand-delivery to the other parties or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

 

 

To the Executive:

 

Michael J. Grebe
804 Hawks Nest Court
Ponte Vedra Beach, FL 32082


with a copy to:


 


Stephen W. Skonieczny, Esq.
Dechert LLP
30 Rockefeller Plaza
New York, New York 10112

 

 

 

10



To the Company:


 


Laurence Howard
INTERLINE BRANDS, INC.
801 W. Bay Street
Jacksonville, FL 32204


with a copy to:


 


Mark A. Underberg, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison LLP
1285 Avenue of the Americas
New York, NY 10019

or to such other address as any party shall have furnished to the others in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.

        13.4.    Withholding.    The Company may withhold from any amounts payable under this Agreement such federal, state or local income taxes to the extent the same required to be withheld pursuant to any applicable law or regulation.

        13.5.    Severability.    The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

        13.6.    Captions.    The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

        13.7.    Beneficiaries/References.    The Executive shall be entitled to select (and change) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of the Executive's death or a judicial determination of his incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or other legal representative(s).

        13.8.    Entire Agreement.    This Agreement contains the entire agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect to the subject matter hereof.

        13.9.    Representations.    The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement.

        13.10.    Survivorship.    The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement or the Executive's Term of Employment hereunder for any reason to the extent necessary to the intended provision of such rights and the intended performance of such obligations.

        13.11.    Representations.

        13.11.1.    Equity Awards.    The Company represents and warrants to the Executive that all shares issued pursuant to any equity award granted to the Executive by the Company, upon issuance to the Executive, will be exempt from Section 16(b) of the Exchange Act pursuant to the Rules promulgated thereunder, if such Rules apply.

        13.11.2.    Authorization.    The Company represents and warrants to the Executive that this Agreement, the any equity award agreement will be authorized by all necessary action of the Company and will be the binding agreement of the Company, enforceable against it in accordance with the terms thereof. The Company is not prevented from entering into or performing this Agreement by any law, order, rule or regulation, its certificate of incorporation, bylaws or any agreement to which it is a party.

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        IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and the Company has caused this Agreement to be executed in its name on its behalf, all as of the date first written above.

 

 

 

 

 

 

 

INTERLINE BRANDS, INC.


 


 


/s/  GIDEON ARGOV      


 

 

By:

 

Gideon Argov
Director


 


 


/s/  MICHAEL J. GREBE      


Michael J. Grebe

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Exhibit 10.37

AMENDMENT ONE TO
EMPLOYMENT AGREEMENT

        This amendment (the "Amendment"), to the employment agreement entered into by and between Michael J. Grebe (the "Executive") and Interline Brands, Inc. (the "Company"), dated as of August 13, 2004 (the "Employment Agreement"), is made and entered into as of December 2, 2004.

W I T N E S S E T H:

        WHEREAS, the Company and the Executive have entered into the Employment Agreement, which provides for the terms and conditions of the Executive's continued employment with the Company; and

        WHEREAS, Section 5.10 of the Employment Agreement provides that the Executive shall be entitled to a retention bonus which shall be computed pursuant to such formula and shall vest and be paid over such period as shall be negotiated in good faith and agreed upon between the Company and the Executive; and

        WHEREAS, the Company and the Executive have negotiated in good faith to determine the formula, vesting and payment of such retention bonus in accordance with the Employment Agreement and have further determined it to be in the best interests of the Company and the Executive to amend Section 5.10 of the Employment Agreement as herein provided.

        NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

I.

Section 5.10 of the Employment Agreement is hereby amended to read in its entirety as follows:



5.10.

One Time Bonus.    The effectiveness of this Section 5.10 shall be contingent upon and shall only become effective upon the date of the closing of the Offering. On the date of the closing of the Offering, the Executive shall receive from the Company a one-time payment of $2,591,970 paid in cash.

II.

All other provisions of the Employment Agreement shall remain unchanged and in full force and effect.

III.

This Amendment may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the date first above written.

EXECUTIVE

 

INTERLINE BRANDS, INC.

 



 

 


By:  Michael J. Grebe

 

By:





 

 

EX-10.19 7 a2190929zex-10_19.htm EXHIBIT 10.19

EXHIBIT 10.19

 

AMENDMENT TO
EMPLOYMENT AGREEMENT

 

This AMENDMENT (this “Amendment”) to the Employment Agreement (the “Employment Agreement”), dated as of August 13, 2004 and as previously amended on December 2, 2004, between Interline Brands, Inc., a New Jersey corporation (the “Company”), and Michael J. Grebe (“Executive”) is dated as of December  31, 2008.

 

WHEREAS, the Company and Executive wish to amend the Employment Agreement as provided herein to reflect certain changes required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereby agree as follows:

 

1.             Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Employment Agreement.

 

2.             Amendment to Section 1.4 of the Employment Agreement.  The definition of “Change in Control” is hereby amended by adding the following language at the end thereof to read as follows:

 

“Moreover, in the event that payments hereunder would otherwise be considered “deferred compensation” subject to Section 409A, a Change in Control shall not be deemed to occur unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder.”

 

3.             Amendment to Section 5.2 of the Employment Agreement.  Section 5.2 of the Employment Agreement is hereby amended by adding the following language at the end thereof to read as follows:

 

“Any bonus payable hereunder shall be paid in any event on or prior to March 15 of the year following the year such bonus is earned.”

 

4.             Amendment to Section 5.5 of the Employment Agreement.  Section 5.5 of the Employment Agreement is hereby amended by adding the following language at the end thereof to read as follows:

 

“To the extent that any reimbursements pursuant to this Section 5.5 or otherwise under Section 5 of this Agreement are taxable to Executive, any such reimbursement payment due to Executive shall be paid to Executive as promptly as practicable, and in all events on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred.  Any such reimbursements are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Executive receives in

 



 

one taxable year shall not affect the amount of such benefits or reimbursements that Executive receives in any other taxable year.”

 

5.             Amendment to Section 6 of the Employment Agreement.

 

(a)           Sections 6.1 and 6.2 of the Employment Agreement are each hereby amended to provide that any payments of a pro-rata Bonus shall be payable at such time as bonuses for the relevant year would have otherwise been paid had Executive’s employment not terminated.

 

(b)           Section 6.3 of the Employment Agreement is hereby amended to provide that, if necessary to comply with Section 409A, the amount payable under Section 6.3(a) (Base Salary lump sum payment) shall be payable shall be paid in the form of salary continuation for a period of two years from the date of the Executive’s termination (provided that if the date of the Executive’s termination occurs during the two-year period following a Change in Control, such amount shall be payable in a lump sum upon the date of termination).

 

(c)           Section  6.9 of the Employment Agreement is amended by adding the following language at the end thereof to read as follows:

 

“Executive shall execute and deliver such release the Company within 60 days following the date of Executive’s termination of employment.  Notwithstanding anything to the contrary in this Agreement, in the event that such payments hereunder would otherwise be considered “deferred compensation” subject to Section 409A, any such payments shall not commence until the 61st day following the Date of Termination.”

 

6.             A new Section 14 of the Employment Agreement is hereby added to read as follows:

 

“14.         Section 409A.

 

(i)            For purposes of this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect from time to time.   The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within the meaning of Section 409A will comply with Section 409A, and this Agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes, penalties or interest under Section 409A.  In this regard, the provisions of this Section 18 shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A.   Notwithstanding the foregoing, the Company does not guarantee any particular tax effect, and Executive shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of Executive in connection with this Agreement (including any taxes, penalties and interest under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold Executive (or any beneficiary) harmless from any or all of such taxes, penalties or interest.  With respect to the time of payments of any

 

2



 

amounts under this Agreement that are “deferred compensation” subject to Section 409A, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A.  For purposes of Section 409A, each of the payments that may be made under this Agreement are designated as separate payments.

 

(ii)  Notwithstanding anything in this Agreement to the contrary, if Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and is not “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, no payments under this Agreement that are “deferred compensation” subject to Section 409A shall be made to Executive prior to the date that is six months after the date of Executive’s “separation from service” (as defined in Section 409A) or, if earlier, Executive’s date of death.  Following any applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a business day.

 

(iii)          In addition, for a period of six months following the date of separation from service, to the extent that the Company reasonably determines that any of the benefit plan coverages are described in Section 6.3(c) are “deferred compensation” and may not be exempt from U.S. federal income tax, Executive shall in advance pay to the Company an amount equal to the stated taxable cost of such coverages for six months (and at the end of such six-month period, Executive shall be entitled to receive from the Company a reimbursement of the amounts paid by Executive for such coverages), and any payments, benefits or reimbursements paid or provided to Executive under Section 6.3(c) of this Agreement shall be paid or provided as promptly as practicable, and in all events not later than the last day of the third taxable year following the taxable year in which the Executive’s separation from service occurs.

 

(iv)          For the avoidance of doubt, it is intended that any indemnification or expense reimbursement made hereunder shall be exempt from Section 409A.  Notwithstanding the foregoing, if any indemnification or expense reimbursement made hereunder shall be determined to be “deferred compensation” within the meaning of Section 409A, then (i) the amount of the indemnification or expense reimbursement during one taxable year shall not affect the amount of the indemnification or expense reimbursement during any other taxable year, (ii) the indemnification or expense reimbursement shall be made on or before the last day of Executive’s taxable year following the year in which the expense was incurred, and (iii) the right to indemnification or expense reimbursement hereunder shall not be subject to liquidation or exchange for another benefit.

 

(v)           Any payment by the Company of any Special Reimbursement provided in Section 6.8 of this Agreement will be paid as provided therein but in all events not later than the end of Executive’s taxable year next following Executive’s taxable year in which Executive remits the related taxes, and any other indemnification payment provided in Section 6.8 of this Agreement shall be paid to Executive as provided therein but in all events on or before the last day of Executive’s taxable year following the taxable year in which the taxes that are the subject of the claim are remitted to the taxing authority or where, as a result of such claim, no taxes are remitted, by the end of Executive’s taxable year following Executive’s taxable year in which the

 

3



 

claim is completed (if an audit) or there is a final and nonappealable settlement or other resolution of the claim.”

 

7.             Continuing Effect of Employment Agreement.  Except as expressly modified hereby, the provisions of the Employment Agreement are and shall remain in full force and effect.

 

8.             Governing Law.  This Amendment shall be governed by, construed under, and interpreted in accordance with the laws of the State of Florida applicable to agreements made and to be wholly performed within that State, without regard to its conflict of laws provisions or any conflict of laws provisions of any other jurisdiction which would cause the application of any law other than that of the State of Florida.

 

9.             Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

[Signature page follows]

 

4



 

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the date first written above.

 

 

INTERLINE BRANDS, INC.

 

 

 

/s/ Thomas J. Tossavainen

 

By:  Thomas J. Tossavainen

 

Its:  Chief Financial Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Michael J. Grebe

 

Michael J. Grebe

 

[Signature page to amendment to
Employment Agreement between the Company and Michael J. Grebe]

 

5





 

 

EX-10.42 2 a07-5743_1ex10d42.htm EX-10.42

Exhibit 10.42

INTERLINE BRANDS, INC.
CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT is entered into as of the [     ] day of [     ], 2007 (the “Effective Date”) by and between INTERLINE BRANDS, INC., a Delaware corporation (the “Company”), and                          (“Executive”).

W I T N E S S E T H

WHEREAS, the Company considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders; and

WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Compensation Committee of the “Board” (as defined in Section 1) has determined that it is in the best interests of the Company and its stockholders to secure Executive’s continued services and to ensure Executive’s continued and undivided dedication to Executive’s duties in the event of any threat or occurrence of a “Change in Control” (as defined in Section 1) of the Company; and

WHEREAS, the Compensation Committee, at a meeting held on [                   ], 2007, has authorized the Company to enter into this Agreement.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, the Company and Executive hereby agree as follows:

1.                                       Definitions.  As used in this Agreement, the following terms shall have the respective meanings set forth below:

(a)                                  “Affiliate” means, with respect to a specified person, a person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the person specified.

(b)                                 “Board” means the Board of Directors of the Company.

(c)                                  “Bonus Amount” means (i) the average of the annual bonus earned by Executive from the Company (or its Affiliates) in respect of the last three (3) completed fiscal years of the Company or such lesser number of fiscal years for which Executive was employed by the Company and eligible to earn an annual bonus from the Company immediately preceding Executive’s Date of Termination (annualized in the

 



event Executive was not employed by the Company (or its Affiliates) for the whole of any such fiscal year), or (ii) if the Date of Termination occurs before Executive has been employed for a full fiscal year, and before the date Company pays Executive Executive’s annual bonus for the fiscal year in which Executive’s employment commenced, Executive’s target annual bonus for the fiscal year of the Company which includes Executive’s Date of Termination.

(d)                                 “Cause” means (i) Executive’s conviction of, or pleading nolo contendere to, a felony, (ii) Executive’s gross neglect of Executive’s duties to the Company, (iii) Executive’s willful misconduct in connection with the performance of Executive’s duties to the Company, which results in material and demonstrable damage to the Company or (iv) Executive’s failure to follow the lawful directions of the Board, consistent with Executive’s position with the Company; provided, however that Executive shall not be deemed to have been terminated for Cause unless (A) written notice has been delivered to Executive setting forth the reasons for the Company’s intention to terminate Executive for Cause and (B) a period of 14 days has elapsed since delivery of such notice and, in the case of clauses (ii) and (iv) above, Executive has failed to cure the circumstances claimed to constitute Cause within such 14-day period.  For purpose of the preceding sentence, no act or failure to act by Executive shall be considered “willful” unless done or omitted to be done by Executive in bad faith and without reasonable belief that Executive’s action or omission was in the best interests of the Company.  Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company (or upon the instructions of any other officer of the Company senior to Executive) shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company.  Cause shall not exist unless and until the Company has delivered to Executive a copy of a resolution duly adopted by three-quarters (3/4) of the entire Board (excluding Executive if Executive is a Board member) at a meeting of the Board called and held for such purpose (after reasonable notice to Executive and an opportunity for Executive, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board an event set forth in clauses (i), (ii), (iii), or (iv) has occurred and specifying the particulars thereof in detail.  The Company must notify Executive of any event constituting Cause within ninety (90) days following knowledge of any member of the Board other than Executive (if applicable) of its existence or such event shall not constitute Cause under this Agreement.

(e)                                  “Change in Control” means any of the following:  (i) 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”)) (other than a Subsidiary or any employee benefit plan (or any related trust) of the Company), (a “Person”) becomes after the date hereof the beneficial owner of 50% or more of either the then outstanding Stock or the combined voting power of the then outstanding voting securities of the Company entitled to vote in the election of directors; (ii) during any 24-month period individuals who, as of the Effective Date, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after the Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a

2

 



vote or written consent of at least a majority of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company (as such terms are used in Rule 14a-11 under the Exchange Act); (iii) the consummation of a merger, reorganization or consolidation with respect to which the individuals and entities who were the respective beneficial owners of the Stock and voting securities of the Company immediately before such merger, reorganization or consolidation do not, after such merger, reorganization or consolidation, beneficially own, in substantially the same proportion as their ownership, immediately before such merger, reorganization or consolidation, 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 in the election of directors; or (iv) the approval by shareholders of the Company of (A) the sale or other disposition of all or substantially all of the assets of the Company (other than to a Subsidiary of the Company), or (B) the liquidation or dissolution of the Company.

Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur solely because any Person acquires beneficial ownership of more than 50% of the then outstanding Stock as a result of the acquisition of the Stock by the Company which reduces the number of shares of Stock outstanding; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Stock that increases the percentage of outstanding Stock beneficially owned by such person, a Change in Control of the Company shall then occur.

(f)                                    “Code” means the Internal Revenue Code of 1986, as amended, and regulations and rulings thereunder.  References to a particular section of the Code shall include references to successor provisions.

(g)                                 “Date of Termination” means (1) the effective date on which Executive’s employment by the Company terminates as specified in a prior written notice by the Company or Executive, as the case may be, to the other, delivered pursuant to Section 13 or (2) if Executive’s employment by the Company terminates by reason of death, the date of death of Executive.

(h)                                 “Disability” means termination of Executive’s employment by the Company due to Executive’s absence from Executive’s duties with the Company on a full-time basis for at least one hundred eighty (180) consecutive days as a result of Executive’s incapacity due to physical or mental illness.

(i)                                     “Exchange Act” means the Securities Exchange Act of 1934, as amended.  References to a particular section of, or rule under, the Exchange Act shall include references to successor provisions.

(j)                                     “Good Reason” means, without Executive’s express written consent, the occurrence of any of the following events after a Change in Control:

3

 



(i)                                     any (A) change in the duties or responsibilities (including reporting responsibilities) of Executive that is inconsistent in any material and adverse respect with Executive’s position(s), duties or responsibilities with the Company immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities); provided, however, that Good Reason shall not be deemed to occur upon a change in duties or responsibilities (other than reporting responsibilities) that is solely and directly a result of the Company no longer being a publicly traded entity and does not involve any other event set forth in this paragraph (j) or (B) material and adverse change in Executive’s titles or offices (including, if applicable, membership on the Board) with the Company as in effect immediately prior to such Change in Control;

(ii)                                  a material breach of an employment agreement to which Executive and the Company are parties;

(iii)                               a reduction by the Company in Executive’s rate of annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter;

(iv)                              any requirement of the Company that Executive (A) be based anywhere more than thirty-five (35) miles from the office where Executive is located at the time of the Change in Control, if such relocation increases Executive’s commute by more than twenty (20) miles, or (B) travel on Company business to an extent substantially greater than the travel obligations of Executive immediately prior to such Change in Control;

(v)                                 a reduction by the Company of more than 5% in Executive’s aggregate benefits under employee benefit plans, welfare benefit plans and fringe benefit plans in which Executive is participating immediately prior to such Change in Control, unless Executive is permitted to participate in other plans providing Executive with substantially equivalent benefits in the aggregate (at substantially equivalent cost with respect to welfare benefit plans);

(vi)                              the failure of the Company to provide Executive with paid vacation in accordance with the most favorable vacation policies of the Company and its Affiliates as in effect for Executive immediately prior to such Change in Control, including the crediting of all service for which Executive had been credited under such vacation policies prior to the Change in Control;

(vii)                           any refusal by the Company to continue to permit Executive to engage in activities not directly related to the business of the Company in which Executive was permitted to engage prior to the Change in Control;

4

 



(viii)                        any purported termination of Executive’s employment which is not effectuated pursuant to Section 14 (and which will not constitute a termination hereunder); or

(ix)                                the failure of the Company to obtain the assumption and, if applicable, guarantee, agreement from any successor (and parent corporation) as contemplated in Section 12(b).

An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by Executive shall not constitute Good Reason.  Executive’s right to terminate employment for Good Reason shall not be affected by Executive’s incapacity due to mental or physical illness and Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason; provided, however, that Executive must provide notice of termination of employment for Good Reason within ninety (90) days following Executive’s knowledge of an event constituting Good Reason or such event shall not constitute a termination for Good Reason under this Agreement.

(k)                                  “Qualifying Termination” means a termination of Executive’s employment (i) by the Company other than for Cause or (ii) by Executive for Good Reason.  Termination of Executive’s employment on account of death or Disability shall not be treated as a Qualifying Termination.

(l)                                     “Safe Harbor Amount” means the greatest pre-tax amount of “Payments” (as defined in Section 4(a)) that could be paid to Executive without causing Executive to become liable for any “Excise Tax” (as defined in Section 4(a)) in connection therewith.

(m)                               “SEC” means the Securities and Exchange Commission.

(n)                                 “Stock” means the Common Stock of the Company.

(o)                                 “Subsidiary” means a corporation or other entity, whether incorporated or unincorporated, of which at least a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company.

(p)                                 “Termination Period” means the period of time beginning with a Change in Control and ending two (2) years following such Change in Control.  Notwithstanding anything in this Agreement to the contrary, if (i) Executive’s employment is terminated prior to a Change in Control for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control and (ii) (A) such termination (or Good Reason event) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control and a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur, or (B) such termination (or

5

 



Good Reason event) otherwise occurs in connection with a potential Change in Control and such Change in Control does occur, then for purposes of this Agreement, the date immediately prior to the date of such termination of employment or event constituting Good Reason shall be treated as the date of a Change in Control.  For purposes of determining the timing of payments and benefits to Executive under Section 3, the date of the actual Change in Control shall be treated as Executive’s Date of Termination under Section 1(g).

2.                                       Term of Agreement.  This Agreement shall be effective on the date hereof and shall continue in effect until and unless the Company shall have given one (1) years’ written notice of cancellation; provided, that, notwithstanding the delivery of any such notice, this Agreement shall continue in effect for a period of two (2) years after a Change in Control, if such Change in Control shall have occurred during the term of this Agreement.  Notwithstanding anything in this Section to the contrary, this Agreement shall terminate if Executive or the Company terminates Executive’s employment prior to a Change in Control except as provided in the second sentence of Section 1(o).

3.                                       Payments Upon Termination of Employment.

(a)                                  Qualifying Termination - Severance.  If during the Termination Period the employment of Executive shall terminate pursuant to a Qualifying Termination, then the Company shall provide to Executive, subject to the proviso to the first sentence of Section 10:

(i)                                     within ten (10) days following the Date of Termination, a lump-sum cash amount equal to the sum of (A) Executive’s base salary through the Date of Termination and any bonus amounts which have become payable, to the extent not theretofore paid or deferred, (B) a pro rata portion of Executive’s annual bonus for the fiscal year in which Executive’s Date of Termination occurs in an amount equal to (1) Executive’s target annual bonus, multiplied by (2) a fraction, the numerator of which is the number of days in the fiscal year in which the Date of Termination occurs through the Date of Termination and the denominator of which is three hundred sixty-five (365), and (C) any accrued vacation pay, in each case to the extent not theretofore paid; plus

(ii)                                  within ten (10) days following the Date of Termination, a lump-sum cash amount equal to (i) one and one-half (1.5) times Executive’s highest annual rate of base salary during the 12-month period immediately prior to Executive’s Date of Termination plus (ii) one and one-half (1.5) times Executive’s Bonus Amount, paid within ten (10) days following the Date of Termination; provided that, if necessary to avoid tax penalties under Section 409A of the Code, the payment shall be delayed, without interest, until the first day which is at least six months following the Date of Termination.

(b)                                 Qualifying Termination - Benefits.  If during the Termination Period the employment of Executive shall terminate pursuant to a Qualifying Termination, the Company shall, subject to the proviso to the first sentence of

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Section 10, continue to provide, for a period of eighteen (18) months following Executive’s Date of Termination, Executive (and Executive’s dependents, if applicable) with the same level of medical and dental benefits upon substantially the same terms and conditions (including contributions required by Executive for such benefits) as existed immediately prior to Executive’s Date of Termination (or, if more favorable to Executive, as such benefits and terms and conditions existed immediately prior to the Change in Control); provided, that, if Executive cannot continue to participate in the Company plans providing such benefits, the Company shall otherwise provide such benefits on the same after-tax basis as if continued participation had been permitted.  Notwithstanding the foregoing, in the event Executive becomes reemployed with another employer and becomes eligible to receive medical and/or dental benefits from such employer, the Company’s obligation to provide such medical and/or dental benefits described herein shall cease.

(c)                                  Execution of Release.  Any payments or benefits that would otherwise be payable or provided to Executive under Sections 4(a)(i)(B), 4(a)(ii) and 4(b) shall not be payable or provided unless and until the Company has received from Executive a signed release of employment-related claims against the Company, its Subsidiaries and their respective employees, officers and directors, in a form prepared by the Company and reasonably acceptable to Executive.

(d)                                 Nonqualifying Termination.  If during the Termination Period the employment of Executive shall terminate other than by reason of a Qualifying Termination, then the Company shall pay to Executive within thirty (30) days following the Date of Termination, a lump-sum cash amount equal to the sum of Executive’s base salary through the Date of Termination and any bonus amounts which have become payable, to the extent not theretofore paid or deferred, and any accrued vacation pay, to the extent not theretofore paid.  The Company may make such additional payments, and provide such additional benefits, to Executive as the Company and Executive may agree in writing, or to which Executive may be entitled under the compensation and benefit plans, policies, and arrangements of the Company.

4.                                       Certain Additional Payments by the Company.

(a)                                  If it is determined (as hereafter provided) that any payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or arrangement, including without limitation any stock option, stock appreciation right or similar right, or the lapse or termination of any restriction on or the vesting or exercisability of any of the foregoing (each a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or to any similar tax imposed by state or local law, or any interest or penalties with respect to such excise tax (such tax or taxes, together with any such interest and penalties, are hereafter collectively referred to as the “Excise Tax”), then Executive will be entitled to receive an additional payment or payments (a “Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (including any interest or penalties imposed with

7

 



respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the previous sentence, if the aggregate value of the Payments for purposes of Sections 280G and 4099 of the Code equals or exceeds 100%, but is not greater than 110%, of the Safe Harbor Amount, then no Gross-Up Payment shall be payable to Executive and the aggregate amount of Payments payable to Executive shall be reduced in the manner selected by Executive to the Safe Harbor Amount.

(b)                                 Subject to the provisions of Section 4(f) hereof, all determinations required to be made under this Section 4, including whether an Excise Tax is payable by Executive and the amount of such Excise Tax and whether a Gross-Up Payment is required and the amount of such Gross-Up Payment, will be made by the public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “Accounting Firm”).  Executive will direct the Accounting Firm to submit its determination and detailed supporting calculations to both the Company and Executive within 15 calendar days after the date of Executive’s termination of employment, if applicable, and any other such time or times as may be requested by the Company or Executive.  If the Accounting Firm determines that any Excise Tax is payable by Executive, the Company will pay the required Gross-Up Payment to Executive within five business days after receipt of such determination and calculations.  If the Accounting Firm determines that no Excise Tax is payable by Executive, it will, at the same time as it makes such determination, furnish Executive with an opinion that Executive has substantial authority not to report any Excise Tax on Executive’s federal, state, local income or other tax return.  Subject to the provisions of this Section, any determination by the Accounting Firm as to the amount of the Gross-Up Payment will be binding upon the Company and Executive.  As a result of the uncertainty in the application of Section 4999 of the Code (or any successor provision thereto) and the possibility of similar uncertainty regarding applicable state or local tax law at the time of any determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made (an “Underpayment”), consistent with the calculations required to be made hereunder.  In the event that an Underpayment is made and the Company exhausts or fails to pursue its remedies pursuant to Section 4(f) hereof and Executive thereafter is required to make a payment of any Excise Tax, Executive will direct the Accounting Firm to determine the amount of the Underpayment that has occurred and to submit its determination and detailed supporting calculations to both the Company and Executive as promptly as possible.  Any such Underpayment will be promptly paid by the Company to, or for the benefit of, Executive within five business days after receipt of such determination and calculations.

(c)                                  The Company and Executive will each provide the Accounting Firm access to and copies of any books, records and documents in the possession of the Company or Executive, as the case may be, reasonably requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection with the preparation and issuance of the determination contemplated by Section 4(b) hereof.

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(d)                                 The federal, state and local income or other tax returns filed by Executive will be prepared and filed on a consistent basis with the determination of the Accounting Firm with respect to the Excise Tax payable by Executive.  Executive will make proper payment of the amount of any Excise Tax and, at the request of the Company, provide to the Company true and correct copies (with any amendments) of Executive’s federal income tax return as filed with the Internal Revenue Service and corresponding state and local tax returns, if relevant, as filed with the applicable taxing authority, and such other documents reasonably requested by the Company, evidencing such payment.  If prior to the filing of Executive’s federal income tax return, or corresponding state or local tax return, if relevant, the Accounting Firm determines that the amount of the Gross-Up Payment should be reduced, Executive will within five business days pay to the Company the amount of such reduction.

(e)                                  The fees and expenses of the Accounting Firm for its services in connection with the determinations and calculations contemplated by Sections 4(b) and (d) hereof will be borne by the Company.  If such fees and expenses are initially advanced by Executive, the Company will reimburse Executive the full amount of such fees and expenses within five business days after receipt from Executive of a statement therefor and reasonable evidence of Executive’s payment thereof.

(f)                                    Executive will notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of a Gross-Up Payment.  Such notification will be given as promptly as practicable but no later than 10 business days after Executive actually receives notice of such claim and Executive will further apprise the Company of the nature of such claim and the date on which such claim is requested to be paid (in each case, to the extent known by Executive).  Executive will not pay such claim prior to the earlier of (i) the expiration of the 30-calendar-day period following the date on which Executive gives such notice to the Company and (ii) the date that any payment of amount with respect to such claim is due.  If the Company notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive will:

(i)                                     provide the Company with any written records or documents in Executive’s possession relating to such claim reasonably requested by the Company;

(ii)                                  take such action in connection with contesting such claim as the Company will reasonably request in writing from time to time, including without limitation accepting legal representation with respect to such claim by an attorney competent in respect of the subject matter and reasonably selected by the Company;

(iii)                               cooperate with the Company in good faith in order effectively to contest such claim; and

(iv)                              permit the Company to participate in any proceedings relating to such claim;

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provided, however, that the Company will bear and pay directly all costs and expenses (including interest and penalties) incurred in connection with such contest and will indemnify and hold harmless Executive, on an after-tax basis, for and against any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of such representation and payment of costs and expenses.  Without limiting the foregoing provisions of this Section 4(f), the Company will control all proceedings taken in connection with the contest of any claim contemplated by this Section 4(f) and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim (provided that Executive may participate therein at Executive’s own cost and expense) and may, at its option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company will determine; provided, however, that if the Company directs Executive to pay the tax claimed and sue for a refund, the Company will advance the amount of such payment to Executive on an interest-free basis and will indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance; and provided further, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which the contested amount is claimed to be due is limited solely to such contested amount.  Furthermore, the Company’s control of any such contested claim will be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(g)                                 If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 4(f) hereof, Executive receives any refund with respect to such claim, Executive will (subject to the Company’s complying with the requirements of Section 4(f) hereof) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after any taxes applicable thereto).  If, after the receipt by Executive of an amount advanced by the Company pursuant to Section 4(f) hereof, a determination is made that Executive will not be entitled to any refund with respect to such claim and the Company does not notify Executive in writing of its intent to contest such denial or refund prior to the expiration of 30 calendar days after such determination, then such advance will be forgiven and will not be required to be repaid and the amount of such advance will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid pursuant to this Section 4.

5.                                       Withholding Taxes.  The Company may withhold from all payments due to Executive (or Executive’s beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other law, the Company is required to withhold therefrom.  In the case of the withholding of an Excise Tax, such withholding shall be consistent with any determination made under Section 4.

6.                                       Reimbursement of Expenses.  If any contest or dispute shall arise under this Agreement involving termination of Executive’s employment with the

10

 



Company or involving the failure or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall reimburse Executive, on a current basis, for all reasonable legal fees and expenses, if any, incurred by Executive in connection with such contest or dispute (regardless of the result thereof); provided, however, Executive shall be required to repay any such amounts to the Company to the extent that a court or an arbitration panel issues a final order from which no appeal can be taken, or with respect to which the time period to appeal has expired, setting forth that Executive has not substantially prevailed on at least one material issue in dispute.

7.                                       Employment by Affiliates.  Employment by the Company for purposes of this Agreement shall include employment by any Affiliate.

8.                                       Restrictive Covenants.

(a)                                  Non-Competition and Non-Solicitation.  Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its Affiliates, the valuable confidential business information in Executive’s possession and the customer goodwill associated with the ongoing business practice of the Company, and accordingly agrees as follows:

(i)                                     For a period ending on the expiration of one year following the termination of Executive’s employment (the “Restricted Period”), Executive will not directly or indirectly, (A) engage in any business for Executive’s own account that competes with the business of the Company, (B) enter the employ of, or render any services to, any person engaged in any business that competes with the business of the Company, (C) acquire a financial interest in, or otherwise become actively involved with, any person engaged in any business that competes with the business of the Company, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, trustee or consultant, or (D) interfere with business relationships (whether formed before or after the date of this Agreement) between the Company or any of its Affiliates that are engaged in a business similar to the business of the Company (the “Company Affiliates”) and customers or suppliers of the Company or the Company Affiliates.

(ii)                                  Notwithstanding anything to the contrary in this Agreement, Executive may directly or indirectly own, solely as a passive investment, securities of any person engaged in the business of the Company which are publicly traded on a national or regional stock exchange or on the over-the-counter market if Executive (A) is not a controlling person of, or a member of a group which controls, such person and (B) does not, directly or indirectly, own one percent (1%) or more of any class of securities of such person.

(iii)                               During the Restricted Period, and for an additional one year after the end of the Restricted Period, Executive shall not,

11

 



directly or indirectly, (A) without the written consent of the Company, solicit or encourage any employee of the Company or the Company Affiliates to leave the employment of the Company or the Company Affiliates, or (B) without the written consent of the Company (which shall not be unreasonably withheld), hire any such employee who has left the employment of the Company or the Company Affiliates (other than as a result of the termination of such employment by the Company or the Company Affiliates) within one year after the termination of such employee’s employment with the Company or the Company Affiliates.

(iv)                              During the Restricted Period, Executive will not, directly or indirectly, solicit or encourage to cease to work with the Company or the Company Affiliates any consultant then under contract with the Company or the Company Affiliates.

(b)                                 Non-Disclosure of Confidential Information.  Executive will not at any time (whether during or after Executive’s employment with the Company) disclose or use for Executive’s own benefit or purposes or the benefit or purposes of any other person, firm, partnership, joint venture, association, corporation or other business organization, entity or enterprise other than the Company and any of its Subsidiaries or Affiliates, any trade secrets, information, data, or other confidential information relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans, or the business and affairs of the Company generally, or of any Subsidiary or Affiliate of the Company, provided, however, that the foregoing shall not apply to information which is generally known to the industry or the public other than as a result of Executive’s breach of this covenant. Executive agrees that upon termination of Executive’s employment with the Company for any reason, Executive will return to the Company immediately all memoranda, books, papers, plans, information, letters and other data, and all copies thereof or therefrom, in any way relating to the business of the Company and its Affiliates, except that Executive may retain personal notes, notebooks and diaries. Executive further agrees that Executive will not retain or use for Executive’s account at any time any trade names, trademark or other proprietary business designation used or owned in connection with the business of the Company or its Affiliates.

(c)                                  Non-disparagement.  Executive agrees (whether during or after Executive’s employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or the officers or directors of the Company other than to the extent reasonably necessary in order to (i) assert a bona fide claim against the Company arising out of Executive’s employment with the Company, or (ii) respond in a truthful and appropriate manner to any legal process or give truthful and appropriate testimony in a legal or regulatory proceeding.

(d)                                 Mutual Dependence of Covenants and Condition Subsequent.  Executive covenants and agrees to be bound by the restrictive covenants and agreements contained in this Section 8 to the maximum extent permitted by Florida law, it being the intent and spirit of the parties that the restrictive covenants and agreements

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contained in this Agreement shall be valid and enforceable in all respects, and, subject to the terms and conditions of this Agreement, Executive’s compliance with the covenants contained in Section 8(a) is mutually dependent upon and a condition subsequent to the Company’s obligation to make the payments described in Section 3 of this Agreement and such payments shall immediately cease upon any breach of Section 8(a).  Likewise, if Executive commences any action in court or in arbitration challenging the validity of, seeking to invalidate or otherwise seeking some sort of declaration that the covenants and agreements in Section 8(a) are void, voidable or invalid, the Company’s obligations to make the payments described in Section 3 of this Agreement shall immediately cease as of the time of the commencement of such action or proceeding.  If the Company does not discover Executive’s breach of Section 8(a) or the commencement of any such action or arbitration proceedings until after one or more payments under Section 3 have been made to Executive, Executive shall be obligated to immediately return all such payments to the Company that were paid and received after the breach of Section 8(a).

(e)                                  Remedies Upon Breach.  If Executive breaches the provisions of Sections 8 (a), (b) or (c), the Company shall have the right to have such restrictive covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach of such restrictive covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy for such injury.  Accordingly, the Company shall be entitled to injunctive relief to enforce the terms of such restrictive covenants and to restrain Executive from any violation thereof.  The rights and remedies set forth in this Section 8(e) shall be independent of all other others rights and remedies available to the Company for a breach of such restrictive covenants, and shall be severally enforceable from, in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

9.                                       Survival.  The respective obligations and benefits afforded to the Company and Executive as provided in Sections 3 (to the extent that payments or benefits are owed as a result of a termination of employment that occurs during the term of this Agreement), 4 (to the extent that Payments are made to Executive as a result of a Change in Control that occurs during the term of this Agreement), 5, 6, 12(c) and 10 shall survive the termination of this Agreement.

10.                                 Full Settlement; Resolution of Disputes.  The Company’s obligation to make any payments and provide any benefits pursuant to this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to Executive under any other severance or employment agreement between Executive and the Company, and any severance plan of the Company; provided, however, that if any such other agreement or plan would provide Executive with a greater payment or more or longer benefits in respect of any particular item described hereunder (e.g., severance, welfare benefits), then Executive shall receive such particular item of payment and/or benefit pursuant to such other agreement or plan, in lieu of receiving that particular item pursuant to this Agreement.  The Company’s 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 Executive or others.  In no event shall Executive be obligated to seek other employment or take other

13

 



action by way of mitigation of the amounts payable and benefits provided to Executive under any of the provisions of this Agreement and, except as provided in Section 3(b), such amounts shall not be reduced whether or not Executive obtains other employment.  The parties agree that any controversy or claim of either party hereto arising out of or in any way relating to this Agreement, or breach thereof, shall be settled by final and binding arbitration in Jacksonville, Florida by three arbitrators in accordance with the rules of the American Arbitration Association applicable to the resolution of employment disputes, and that judgment upon any award rendered may be entered by the prevailing party in any court having jurisdiction thereof.  The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section.

11.                                 Scope of Agreement.  Nothing in this Agreement shall be deemed to entitle Executive to continued employment with the Company or its Subsidiaries, and if Executive’s employment with the Company or its Subsidiaries shall terminate prior to a Change in Control, Executive shall have no further rights under this Agreement (except as otherwise provided hereunder); provided, however, that any termination of Executive’s employment with the Company or its Subsidiaries during the Termination Period shall be subject to all of the provisions of this Agreement.

12.                                 Successors; Binding Agreement.

(a)                                  This Agreement shall not be terminated by any Change in Control or other merger, consolidation, statutory share exchange, sale of substantially all the assets or similar form of corporate transaction involving the Company (a “Business Combination”).  In the event of any Business Combination, the provisions of this Agreement shall be binding upon the surviving corporation, and such surviving corporation shall be treated as the Company hereunder.

(b)                                 The Company agrees that in connection with any Business Combination, it will cause any successor entity to the Company unconditionally to assume (and for any parent entity in such Business Combination to guarantee), by written instrument delivered to Executive (or Executive’s beneficiary or estate), all of the obligations of the Company hereunder.

(c)                                  This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If Executive shall die while any amounts would be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no person is so appointed, to Executive’s estate.

13.                                 Notice.  (a)  For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be by hand delivery or by registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight courier service, addressed as follows:

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If to Executive, to Executive’s principal residence as reflected in the records of the Company.

If to the Company:

Interline Brands, Inc.
801 West Bay Street
Jacksonville, Florida 32204
Attn.:  Chief Executive Officer

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

14.                                 A written notice of Executive’s Date of Termination by the Company or Executive, as the case may be, to the other, shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) specify the termination date (which date shall be not less than fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than sixty (60) days after the giving of such notice).  The failure by Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or the Company hereunder or preclude Executive or the Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights hereunder.

15.                                 GOVERNING LAW; VALIDITY.  THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF, OF SUCH PRINCIPLES OF ANY OTHER JURISDICTION WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF FLORIDA.  THE INVALIDITY OR UNENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF ANY OTHER PROVISION OF THIS AGREEMENT, WHICH OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

16.                                 Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

17.                                 Miscellaneous.  No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by Executive and by a duly authorized officer of the Company.  No waiver by either party

15

 



hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  Failure by Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right Executive or the Company may have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.  Except as otherwise specifically provided herein, the rights of, and benefits payable to, Executive, Executive’s estate or Executive’s beneficiaries pursuant to this Agreement are in addition to any rights of, or benefits payable to, Executive, Executive’s estate or Executive’s beneficiaries under any other employee benefit plan or compensation program of the Company.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer of the Company and Executive has executed this Agreement as of the day and year first above written.

 

 

INTERLINE BRANDS, INC.

 

 

 

 

 

By:

 

 

Title:

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

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EX-10.45 20 a2190929zex-10_45.htm EXHIBIT 10.45

EXHIBIT 10.45

 

AMENDMENT TO
CHANGE IN CONTROL SEVERANCE AGREEMENT

 

This AMENDMENT (this “Amendment”) to the Change in Control Severance Agreement (the “CIC Agreement”), dated as of                        between Interline Brands, Inc., a Delaware corporation (the “Company”), and                          (“Executive”) is dated as of December          , 2008.

 

WHEREAS, the Company and Executive wish to amend the CIC Agreement as provided herein to reflect certain changes required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

 

NOW, THEREFORE, in consideration of the mutual agreements and understandings set forth herein, the parties hereby agree as follows:

 

1.             Except as defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the CIC Agreement.

 

2.             The definition of “Change in Control” is hereby amended by adding the following language at the end thereof to read as follows:

 

“Moreover, in the event that payments hereunder would otherwise be considered “deferred compensation” subject to Section 409A, a Change in Control shall not be deemed to occur unless the event giving rise to the Change in Control satisfies the definition of a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation pursuant to Section 409A of the Code and any Treasury Regulations promulgated thereunder.”

 

3.             The definition of Good Reason is amended by deleting footnote 1.

 

4.             Section 3(c) of the CIC Agreement is hereby amended by deleting the phrase “Sections 4(a)(i)(B), 4(a)(ii) and 4(b)” contained therein and replacing it with “Sections 3(a)(i)(B), 3(a)(ii) and 3(b)”.  Section 3(c) of the CIC Agreement is further amended by adding the following language at the end thereof to read as follows:

 

“Executive shall execute and deliver such release the Company within 60 days following the date of Executive’s termination of employment.  Notwithstanding anything to the contrary in this Agreement, in the event that such payments hereunder would otherwise be considered “deferred compensation” subject to Section 409A, any such payments shall not commence until the 61st day following the Date of Termination.”

 

5.             A new Section 18 of the CIC Agreement is hereby added to read as follows:

 



 

“18.         Section 409A.

 

(i)            For purposes of this Agreement, “Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder (and such other Treasury or Internal Revenue Service guidance) as in effect from time to time.   The parties intend that any amounts payable hereunder that could constitute “deferred compensation” within the meaning of Section 409A will comply with Section 409A, and this Agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes, penalties or interest under Section 409A.  In this regard, the provisions of this Section 18 shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A.   Notwithstanding the foregoing, the Company does not guarantee any particular tax effect, and Executive shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on or for the account of Executive in connection with this Agreement (including any taxes, penalties and interest under Section 409A), and neither the Company nor any affiliate shall have any obligation to indemnify or otherwise hold Executive (or any beneficiary) harmless from any or all of such taxes, penalties or interest.  With respect to the time of payments of any amounts under this Agreement that are “deferred compensation” subject to Section 409A, references in this Agreement to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A.  For purposes of Section 409A, each of the payments that may be made under this Agreement are designated as separate payments.

 

(ii)  Notwithstanding anything in this Agreement to the contrary, if Executive is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and is not “disabled” within the meaning of Section 409A(a)(2)(C) of the Code, no payments under this Agreement that are “deferred compensation” subject to Section 409A shall be made to Executive prior to the date that is six months after the date of Executive’s “separation from service” (as defined in Section 409A) or, if earlier, Executive’s date of death.  Following any applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a business day.

 

(iii)          In addition, for a period of six months following the date of separation from service, to the extent that the Company reasonably determines that any of the benefit plan coverages are described in Section 3(b) are “deferred compensation” and may not be exempt from U.S. federal income tax, Executive shall in advance pay to the Company an amount equal to the stated taxable cost of such coverages for six months (and at the end of such six-month period, Executive shall be entitled to receive from the Company a reimbursement of the amounts paid by Executive for such coverages), and any payments, benefits or reimbursements paid or provided to Executive under Section 3(b) of this Agreement shall be paid or provided as promptly as practicable, and in all events not later than the last day of the third taxable year following the taxable year in which the Executive’s separation from service occurs.

 

(iv)          For the avoidance of doubt, it is intended that any expense reimbursement made hereunder shall be exempt from Section 409A.  Notwithstanding the foregoing, if any expense reimbursement made hereunder shall be determined to be “deferred

 

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compensation” within the meaning of Section 409A, then (i) the amount of the expense reimbursement during one taxable year shall not affect the amount of the expense reimbursement during any other taxable year, (ii) the expense reimbursement shall be made on or before the last day of Executive’s taxable year following the year in which the expense was incurred, and (iii) the right to expense reimbursement hereunder shall not be subject to liquidation or exchange for another benefit.

 

(v)           Any payment by the Company of any Gross-Up Payment provided in Section 4 of this Agreement will be paid as provided therein but in all events not later than the end of Executive’s taxable year next following Executive’s taxable year in which Executive remits the related taxes, and any other indemnification payment provided in Section 4 of this Agreement shall be paid to Executive as provided therein but in all events on or before the last day of Executive’s taxable year following the taxable year in which the taxes that are the subject of the claim are remitted to the taxing authority or where, as a result of such claim, no taxes are remitted, by the end of Executive’s taxable year following Executive’s taxable year in which the claim is completed (if an audit) or there is a final and nonappealable settlement or other resolution of the claim.

 

(vi)          If the provisions of this Agreement would cause any amounts payable under Executive’s employment agreement with the Company to be treated as “deferred compensation” subject to Section 409A, any such payments that are conditioned on Executive’s delivery of a release of claims under the terms of the Employment Agreement shall not commence until the 61st day following Executive’s termination of employment thereunder.

 

6.             Continuing Effect of CIC Agreement.  Except as expressly modified hereby, the provisions of the CIC Agreement are and shall remain in full force and effect.

 

7.             Governing Law.  This Amendment shall be governed by, construed under, and interpreted in accordance with the laws of the State of Florida applicable to agreements made and to be wholly performed within that State, without regard to its conflict of laws provisions or any conflict of laws provisions of any other jurisdiction which would cause the application of any law other than that of the State of Florida.

 

8.             Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Amendment on the date first written above.

 

 

 

INTERLINE BRANDS, INC.

 

 

 

 

 

 

 

By: Michael J. Grebe

 

Its: President and Chief Executive Officer

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

[Signature page to amendment to
CIC Agreement between the Company and Executive]

 

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