Floyd Sherman-
EMPLOYMENT AGREEMENT

1st AMENDMENT TO EMPLOYMENT AGREEMENT
2nd AMENDMENT TO EMPLOYMENT AGREEMENT
 
 
Exhibit 10.9
 
                                                                  EXECUTION COPY
 
 
                              EMPLOYMENT AGREEMENT
 
 
            AGREEMENT made as of September 1, 2001, by and between Builders
FirstSource, Inc., a Delaware corporation (the "Company"), and Floyd Sherman
(the "Executive").
 
            WHEREAS, the Company desires that Executive serve as the Chairman of
the Board of Directors ("Chairman") and Chief Executive Officer ("CEO") of the
Company, and Executive desires to hold such positions under the terms and
conditions of this Agreement; and
 
            WHEREAS, the Board of Directors of the Company (the "Company Board")
has approved and authorized the Company to enter into this Agreement with
Executive.
 
            NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and intending to be legally bound hereby, the
parties agree as follows:
 
            1. Employment. The Company hereby employs Executive, and Executive
hereby accepts employment with the Company, upon the terms and subject to the
conditions set forth herein.
 
            2. Term.
 
                  (a) Subject to Section 14 hereof, the term of the employment
by the Company of Executive pursuant to this Agreement (as the same may be
extended, the "Term") shall commence on September 1, 2001 (the "Effective
Date"), and terminate on the second anniversary thereof.
 
                  (b) Commencing on the first anniversary of the Effective Date
and on each subsequent anniversary thereof, the Term shall automatically be
extended for one (1) additional year unless, not later than ninety days (90)
prior to any such anniversary date, either party hereto shall have notified the
other party hereto in writing that such extension shall not take effect.
<PAGE>
            3. Position. During the Term, Executive shall serve as the Chairman
and CEO of the Company, supervising the conduct of the business and affairs of
the Company and performing such other duties as the Company Board shall
determine.
 
            4. Duties. During the Term, Executive shall devote his full time and
attention during normal business hours to the business and affairs of the
Company, except vacations in accordance with the Company's policies and for
illness or incapacity, in accordance with Section 7 hereof.
 
            5. Salary and Bonus.
 
                  (a) During the Term, the Company shall pay to Executive a base
salary at the rate of $600,000 per year (the "Base Salary"), subject to
adjustments pursuant to the terms of Section 5(b) hereof.
 
                  (b) Commencing on the first anniversary hereof and on or prior
to each anniversary hereof during the Term, the Company Board or the
Compensation Committee of the Company Board (the "Compensation Committee") shall
review the Base Salary and may increase the Base Salary based upon performance
and merit. The Base Salary shall be payable to Executive in substantially equal
installments in accordance with the Company's normal payroll practices, but in
no event less often than semi-monthly.
 
                  (c) For the Company's fiscal year ending December 31, 2002,
and for each fiscal year during the Term thereafter, Executive shall be eligible
to receive an annual cash bonus equal to up to one hundred and thirty-three
percent (133%) of his Base Salary, as determined by the Company Board or the
Compensation Committee thereof.
 
            6. Stock Option. Pursuant to the Builders FirstSource, Inc.
Management Stock Option Plan (the "Plan") and subject to the terms of the stock
option agreement to be entered into between Executive and the Company, attached
hereto as Exhibit A, within 90 days following the date hereof (the "Grant
Date"), the Company shall grant Executive options, with an exercise price of
$1.00 per share, to purchase an aggregate of four percent (4%) of the
outstanding shares of common stock of the Company on the Grant Date on a fully
diluted basis (the "Options"). Twenty-five percent of the Options will vest and
become exercisable on each anniversary of the Effective Date, commencing on
September 1, 2002; provided, that, all of the Options shall automatically vest
and become exercisable upon a Change of Control of the Company.
 
 
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<PAGE>
            7. Vacation, Holidays and Sick Leave. During the Term, Executive
shall be entitled to paid vacation, paid holidays and sick leave in accordance
with the Company's standard policies for its senior executive officers.
 
            8. Business Expenses. Executive shall be reimbursed for all
reasonable and necessary business expenses incurred by him in connection with
his employment, including, without limitation, expenses for travel and
entertainment incurred in conducting or promoting business for the Company upon
timely submission by Executive of receipts and other documentation as required
by the Internal Revenue Code of 1986, as amended (the "Code"), and in accordance
with the Company's normal expense reimbursement policies.
 
            9. Health, Welfare and Pension Benefits.
 
                  During the Term, Executive and eligible members of his family
shall be eligible to participate fully in all (a) health and dental benefits and
insurance programs; (b) life and short- and long-term disability benefits and
insurance programs; and (c) pension and retirement benefits, all as available to
senior executive officers of the Company generally.
 
            10. Confidentiality, Non-Competition.
 
                  (a) Executive acknowledges that: (I) the Executive has, and
his employment hereunder will require that Executive continue to have, access to
and knowledge of Confidential Information (as hereinafter defined) ; (ii) the
direct and indirect disclosure of any such Confidential Information to existing
or potential competitors of the Company or its subsidiaries would place the
Company at a competitive disadvantage and would do damage, monetary or
otherwise, to the Company's businesses; and (iii) the engaging by Executive in
any of the activities prohibited by this Section 10 may constitute improper
appropriation and/or use of such Confidential Information. Executive expressly
acknowledges that the Confidential Information constitutes a protectable
business interest of the Company. As used herein, the term "Confidential
Information" shall mean information of any kind, nature or description which is
disclosed to or otherwise known to the Executive as a direct or indirect
consequence of his association with the Company, which information is not
generally known to the public or in the businesses in which such entities are
engaged or which information relates to specific investment opportunities within
the scope of their business which were considered by the Company during the
Term; provided, however, that "Confidential Information" shall not be deemed to
include information which (i) is or becomes generally available to the public
other than as a result of a disclosure by the Executive, (ii) becomes available
to the Executive on a non-confidential basis from a source other than the
Company, provided that such source is not bound by any contractual, legal or
fiduciary obligation with respect to
 
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<PAGE>
such information or (iii) was in the Executive's possession prior to being
furnished by the Company.
 
                  (b) During the Term of this Agreement and for a period of one
year after the termination of Executive's employment hereunder (upon expiration
of the Term or otherwise), Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, manager, member, partner,
employee, principal or agent of any business, or in any other capacity, use for
his own account, utilize or make known, disclose, furnish or make available to
any person, firm or corporation any of the Confidential Information, other than
to authorized officers, directors and employees of the Company in the proper
performance of the duties contemplated herein, or as required by a court of
competent jurisdiction or other administrative or legislative body; provided
that, prior to disclosing any of the Confidential Information to a court or
other administrative or legislative body, Executive shall promptly notify the
Company so that the Company may seek a protective order or other appropriate
remedy. Executive agrees to return all Confidential Information, including all
photocopies, extracts and summaries thereof, and any such information stored
electronically on tapes, computer disks or in any other manner to the Company at
any time upon request by the Company and upon the termination of his employment
for any reason.
 
                  (c) During the Term of this Agreement and for a period of one
year after termination of Executive's employment hereunder (upon expiration of
the Term or otherwise), Executive shall not, directly or indirectly, own any
interest in, operate, join, control or participate as a partner, member,
director, manager, principal, officer, or agent of, enter into the employment
of, act as a consultant to, or perform any services for, any entity (in those
geographic areas in which the Company or any of its subsidiaries, as of the date
of termination of the Executive's employment hereunder, have material
operations) which entity is engaged in competition with the Company or any of
its subsidiaries.
 
                  (d) During the Term of this Agreement and for a period of two
years after termination of Executive's employment hereunder (upon expiration of
the Term or otherwise), Executive shall not, directly or indirectly, solicit or
encourage any employee of the Company or any of its subsidiaries to terminate
his or her employment in order to obtain employment by any other person, firm or
corporation.
 
                  (e) Executive acknowledges that(A) in connection with
rendering the services to be rendered by Executive hereunder, Executive will
have access to and knowledge of Confidential Information, the disclosure of
which would place the Company or its subsidiaries at a competitive disadvantage,
causing irreparable injury, and (B) the services to be rendered by Executive
hereunder are of
 
 
                                       4
<PAGE>
a special and unique character, which gives this Agreement a peculiar value to
the Company, the loss of which may not be reasonably or adequately compensated
for by damages in an action at law, and that a material breach or threatened
breach by Executive of any of the provisions contained in this Section 10 will
cause the Company irreparable injury. Executive, therefore, agrees that the
Company shall be entitled, in addition to any other right or remedy, to a
temporary, preliminary and permanent injunction, without the necessity of
proving the inadequacy of monetary damages or the posting of any bond or
security, enjoining or restraining Executive from any such violation or
threatened violations.
 
                  (f) Executive further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of the Company; and it is the intent of
the parties hereto that if, in the opinion of any court of competent
jurisdiction, any provision set forth in this Section 10 is not reasonable in
any respect, such court shall have the right, power and authority to modify any
and all such provisions in such a manner as to such court shall appear not
unreasonable and to enforce the remainder of this Section 10 as so modified.
 
            11. Termination of Agreement. The employment by the Company of
Executive pursuant to this Agreement shall not be terminated prior to the end of
the Term, except as set forth in this Section 11.
 
                  (a) By Mutual Consent. The employment by the Company of
Executive pursuant to this Agreement may be terminated at any time by the mutual
written agreement of the Company and Executive.
 
                  (b) Death. The employment by the Company of Executive pursuant
to this Agreement shall be terminated upon the death of Executive, in which
event Executive's spouse or heirs shall receive the (i) Executive's Base Salary
and benefits to be paid or provided to Executive under this Agreement through
the Date of Termination and, (ii) the Base Salary and health and welfare
benefits pursuant to Section 9(a) hereof to be paid or provided to Executive
under this Agreement for one (1) year after the Date of Termination.
 
                  (c) Disability. The employment by the Company of Executive
pursuant to this Agreement may be terminated by written notice to Executive at
the option of the Company in the event that as a result of the Executive's
incapacity due to physical or mental illness, the Executive is unable to perform
his duties, services and responsibilities hereunder or shall have been absent
from his duties hereunder on a full-time basis for 90 consecutive days or for an
aggregate of 90 days or more in any six-month period, and within thirty days
after
 
 
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<PAGE>
notice is given by the Company (which notice may be delivered no earlier than
thirty days prior to the expiration of such 90 consecutive days or six month
period, as the case may be), the Executive shall not have returned to the
performance of his duties hereunder on a full-time basis. In the event the
employment by the Company of Executive is terminated pursuant to this Section
11(c), Executive shall be entitled to receive (i) all Base Salary and benefits
to be paid or provided to Executive under this Agreement through the Date of
Termination and (ii) the Base Salary and health and welfare benefits pursuant to
Section 9 hereof to be paid or provided to Executive for one (1) year after the
Date of Termination; provided, however, that amounts payable to Executive under
this Section 11(c) shall be reduced by the proceeds of any short- and/or
long-term disability payments under the Company plans referred to in Section 9
hereof to which Executive may be entitled during such period.
 
                  (d) By the Company for Cause. The employment of Executive
pursuant to this Agreement may be terminated by the Company by written notice to
Executive ("Notice of Termination") for Cause. In the event the employment by
the Company of Executive is terminated pursuant to this Section 11(d), Executive
shall be entitled to receive all Base Salary and benefits to be paid or provided
to Executive under this Agreement through the Date of Termination and no more.
 
                  (e) By the Company Without Cause. The employment by the
Company of Executive pursuant to this Agreement may be terminated by the Company
at any time without Cause by delivery of a Notice of Termination to Executive.
In the event the employment by the Company of Executive is terminated pursuant
to this Section 11(e), Executive shall be entitled to receive (i) all Base
Salary and benefits to be paid or provided to Executive under this Agreement
through the Date of Termination, and (ii) the Base Salary and health and welfare
benefits pursuant to Section 9 hereof to be paid or provided to Executive under
this Agreement for the remainder of the Term.
 
                  (f) By Executive. The employment of Executive by the Company
pursuant to this Agreement may be terminated by Executive by written notice to
the Company of his resignation (a "Notice of Resignation") at any time. In the
event the employment by the Company of Executive is terminated pursuant to this
Section 11(f), Executive shall be entitled to receive all Base Salary and
benefits to be paid or provided to Executive under this Agreement through the
Date of Termination and no more.
 
                  (g) Date of Termination. Executive's Date of Termination shall
be: (i) if the parties hereto mutually agree to terminate this Agreement
pursuant to Section 11(a) hereof, the date designated by the parties in such
agreement; (ii) if Executive's employment by the Company is terminated pursuant
to Section 11(b),
 
 
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<PAGE>
the date of Executive's death; (iii) if Executive's employment by the Company is
terminated pursuant to Section 11(c), the last day of the applicable period
referred to in Section 11(c) hereof; (iv) if Executive's employment by the
Company is terminated pursuant to Section 11(d), the date on which a Notice of
Termination is given; and (v) if Executive's employment by the Company is
terminated pursuant to Section 11(e) or 11(f), the date the Notice of
Termination or Notice of Resignation, as the case may be, is given (provided,
that the Company, in its sole discretion may waive all or any part of such
60-day period).
 
            12. Representations.
 
                  (a) The Company represents and warrants that this Agreement
has been authorized by all necessary corporate action of the Company and is a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms.
 
                  (b) Executive represents and warrants that he is not a party
to any agreement or instrument which would prevent him from entering into or
performing his duties in any way under this Agreement and that this Agreement is
a valid and binding agreement of Executive enforceable against Executive in
accordance with its terms.
 
            13. Successors. This Agreement is a personal contract and the rights
and interests of Executive hereunder may not be sold, transferred, assigned,
pledged, encumbered, or hypothecated by him, except as otherwise expressly
permitted by the provisions of this Agreement. This Agreement shall inure to the
benefit of and be enforceable by Executive and his personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amount would still be
payable to him 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 his devisee, legatee or other designee or, if there is no such
designee, to his estate.
 
            14. Entire Agreement. This Agreement contains all the understandings
between the parties hereto pertaining to the matters referred to herein, and
supersedes any other undertakings and agreements, whether oral or in writing,
previously entered into by them with respect thereto. Executive represents that,
in executing this Agreement, he does not rely and has not relied upon any
representation or statement made by the Company not set forth herein with regard
to the subject matter or effect of this Agreement or otherwise.
 
            15. Amendment or Modification; Waiver. No provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed
 
 
                                       7
<PAGE>
to in writing, signed by Executive and by a duly authorized officer of the
Company. No waiver by any party hereto of any breach by another party hereto of
any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
 
            16. Notices. All notices and other communications required or
permitted to be given hereunder shall be in writing and shall be (i) delivered
by hand, (ii) delivered by a nationally recognized commercial overnight delivery
service, (iii) mailed postage prepaid by first class mail or (iv) transmitted by
facsimile transmitted to the party concerned at the address or telecopier number
set forth below:
 
            To Executive at:
 
                  Builders FirstSource, Inc.
                  2200 Ross Avenue
                  Suite 4900 West
                  Dallas, Texas  75201
                  Attention:  Floyd Sherman
 
            To the Company at:
 
                  Builders FirstSource, Inc.
                  2200 Ross Avenue
                  Suite 4900 West
                  Dallas, Texas  75201
                  Attention:  General Counsel
 
            with copies to:
 
                  Joseph Littlejohn & Levy
                  450 Lexington Avenue
                  New York, New York  10017
                  Facsimile (212) 286-8626
                  Attention: Ramsey Frank
                  and
                  Skadden, Arps, Slate, Meagher & Flom LLP
                  One Rodney Square
                  P.O. Box 636
                  Wilmington, Delaware  19899
                  Facsimile (302) 651-3001
                  Attention:  Robert B.  Pincus
 
 
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<PAGE>
            Such notices shall be effective: (i) in the case of hand deliveries
when received; (ii) in the case of an overnight delivery service, on the next
business day after being placed in the possession of such delivery service, with
delivery charges prepaid; (iii) in the case of mail, seven (7) days after
deposit in the postal system, first class mail, postage prepaid; and (iv) in the
case of facsimile notices, when electronic confirmation of receipt is received
by the sender. Any party may change its address and telecopy number by written
notice to the other given in accordance with this Section 16; provided, however,
that such change shall be effective when received.
 
            17. Severability. If any provision or clause of this Agreement or
the application of any such provision or clause to any party or circumstances
shall be determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision or clause to such person or circumstances other than those to
which it is so determined to be invalid and unenforceable, shall not be affected
thereby, and each provision or clause hereof shall be validated and shall be
enforced to the fullest extent permitted by law.
 
            18. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
 
 
            19. Governing Law. This Agreement will be governed by and construed
in accordance with the laws of the State of Delaware, without regard to it
conflicts of law principles.
 
            20. Headings. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
 
            21. Withholding. All payments to Executive under this Agreement
shall be reduced by all applicable withholding required by federal, state or
local law.
 
            22. Specific Performance. Each party hereto acknowledges that money
damages would be both incalculable and an insufficient remedy for any breach of
this Agreement by such party and that any such breach would cause the other
parties, irreparable harm. Accordingly, each party hereto also agrees that, in
 
 
                                       9
<PAGE>
the event of any breach or threatened breach of the provisions of this Agreement
by such party, the other parties shall be entitled to equitable relief without
the requirement of posting a bond or other security, including in the form of
injunctions and orders for specific performance, in addition to all other
remedies available to such other parties at law or in equity.
 
            23. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
            24. Definitions.
 
                  (a) "Cause" means the determination, in good faith, by the
Company Board, after notice to Executive that one or more of the following
events has occurred: (i) any act of gross negligence, fraud or willful
misconduct by Executive materially injuring the interest, business or reputation
of the Company, or any of its parents, subsidiaries or affiliates; (ii)
Executive's commission of any felony; (iii) any misappropriation or embezzlement
of the property of the Company, or any of its parents, subsidiaries or
affiliates; or (iv) any material breach by Executive of this Agreement,
including, without limitation, a material breach of Section 10 hereof, which
breach, to the extent it is capable of being cured, remains uncorrected for a
period of thirty (30) days after receipt by Executive of written notice from the
Company setting forth such breach.
 
                  (b) "Change of Control" includes the occurrence of any of the
following events: (i) any "Person" (within the meaning of Section 12(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), other than Joseph Littlejohn & Levy Fund II, L.P. or Joseph Littlejohn &
Levy Fund III, L.P., or any of their respective affiliates, becomes a Beneficial
Owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors; (ii) there is consummated a merger or consolidation of
the Company or any direct or indirect subsidiary of the Company with any other
Company, other than a merger or consolidation that would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least fifty percent (50%) of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation; (iii) the
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets;
or (iv) the following individuals
 
 
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<PAGE>
cease for any reason to constitute a majority of the number of directors then
serving: individuals who, as of the Effective Date, constitute the Company Board
and any new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Company Board or nomination
for election by the Company's stockholders was approved or recommended by a vote
of at least a majority of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination for
election was previously so approved or recommended.
 
 
 
 
 
                            [SIGNATURE PAGE FOLLOWS]
 
 
                                       11
<PAGE>
            IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Employment Agreement as of the date first above written.
 
 
                              BUILDERS FIRSTSOURCE, INC.
 
 
 
                              By:  /s/ Donald F. McAleenan
                                 -------------------------
                                   Name: Donald F. McAleenan
                                   Title: Senior Vice President
 
 
 
                              EXECUTIVE
 
 
                              /s/ Floyd Sherman
                              -----------------
                              Floyd Sherman

 

 

 
 
                                                                   Exhibit 10.15
 
 
                                  AMENDMENT TO
                              EMPLOYMENT AGREEMENT
 
     This Amendment to the Employment Agreement (this "Amendment"), dated as of
June 1, 2005, is made by and between Builders FirstSource, Inc., a Delaware
corporation (the "Company") and Floyd Sherman (the "Executive").
 
     WHEREAS, the Company and the Executive have entered into the Employment
Agreement, dated as of September 1, 2001 (the "Employment Agreement"); and
 
     WHEREAS, the parties desire to make certain amendments to the Employment
Agreement.
 
     NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
 
1.   Capitalized Terms. Capitalized terms used herein without definition shall
     have the meanings assigned to such terms in the Employment Agreement.
 
2.   The Employment Agreement is hereby amended by deleting Section 3 in its
     entirety and replacing Section 3 with the following:
 
     "3. Position. During the Term, Executive shall serve as President and CEO
     of the Company, supervising the conduct of the business and affairs of the
     Company and performing such other duties as the Company Board shall
     determine."
 
3.   Limited Effect. This Amendment is limited precisely as written and shall
     not be deemed to be an amendment to any other term or condition of the
     Employment Agreement or any of the documents referred to therein. Wherever
     the Employment Agreement is referred to in the Employment Agreement or in
     any other agreements, documents, instruments, or certificates, such
     reference shall be to the Employment Agreement as amended hereby. Except as
     expressly amended hereby, the terms and conditions of the Employment
     Agreement shall continue in full force and effect.
 
4.   Counterparts. This Amendment may be executed in one or more counterparts,
     and by different parties hereto in separate counterparts, each of which
     when executed shall be deemed to be an original but all of which taken
     together shall constitute one and the same agreement and may be executed in
     the original but transmitted by facsimile to all parties with the same
     force and effect as if an original, executed copy thereof had been
     delivered to all parties.
 
5.   Governing Law. This Amendment will be governed by and construed in
     accordance with the laws of the State of Delaware, without regard to its
     conflicts of law principles.
 
                            [SIGNATURE PAGE FOLLOWS]
<PAGE>
 
 
     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
 
 
                           BUILDERS FIRSTSOURCE, INC.
 
 
                                          By: /s/ Donald F. McAleenan
                                              ----------------------------
                                              Name:  Donald F. McAleenan
                                              Title: Senior Vice President
 
 
                                          EXECUTIVE
 
                                          /s/ Floyd Sherman
                                          -----------------
                                          Floyd Sherman
 
 
                                       2
 

 

EX-10.27 6 d66600exv10w27.htm EX-10.27

Exhibit 10.27

BUILDERS FIRSTSOURCE, INC.

Second Amendment to the Employment Agreement
with Floyd Sherman

          This Second Amendment to the Employment Agreement dated as of September 1, 2001, as amended by a First Amendment to the Employment Agreement dated June 1, 2005, (the “Agreement”) between Builders FirstSource, Inc. (the “Company”) and Floyd Sherman (“Executive”) is made this 29th day of October, 2008.

          The Board of Directors of the Company and Executive have determined that it is in their best interests to amend the Agreement to include special provisions intended to ensure compliance with Internal Revenue Code Section 409A relating to deferred compensation. In consideration of the mutual covenants contained herein and the continued employment of Executive by the Company, the parties agree as follows:

 

1.

 

The Agreement is hereby amended by adding the following sentence to the end of Section 5(c):

 

 

 

 

“Annual cash bonuses shall be paid in the calendar year following the year to which the bonus relates, and not later than March 15 of such year.”

 

 

2.

 

Section 8 of the Agreement is hereby amended by adding the words “During the Term,” to the beginning of the first sentence of Section 8, and by adding the following sentence to the end of Section 8:

 

 

 

 

“With respect to Executive’s rights under this Section 8, (i) the amount reimbursable in any one calendar year shall not affect the amount reimbursable in any other calendar year, (ii) the reimbursement of an eligible business expense must be made no later than December 31 of the year after the year in which the business expense was incurred, and (iii) such rights shall not be subject to liquidation or exchange for another benefit.”

 

 

3.

 

The Agreement is hereby amended by deleting Section 11(b) in its entirety and replacing with the following:

 

 

 

 

“(b) Death. The employment by the Company of Executive pursuant to this Agreement shall be terminated upon the death of Executive, in which event Executive’s spouse or heirs shall receive the following: (i) Executive’s Base Salary and benefits to be paid or provided to Executive under this Agreement through the Date of Termination (“Accrued Obligations”), payable no later than thirty (30) days after the Date of Termination, (ii) continuation of Executive’s Base Salary for a period of one (1) year after the Date of Termination, and (iii) continuation of the health benefits provided for pursuant to Section 9(a) hereof (“Health Benefits”) and welfare benefits provided for pursuant to Section 9(b) hereof (“Welfare Benefits”) for a period of one (1) year after the Date of Termination.”

 

 

4.

 

The Agreement is hereby amended by deleting the second sentence of Section 11(c) in its entirety and replacing with the following:

 


 

 

 

 

“In the event the employment by the Company of Executive is terminated pursuant to this Section 11(c), Executive shall be entitled to receive the following: (i) the Accrued Obligations, payable no later than thirty (30) days after the Date of Termination, (ii) subject to Section 25 hereof, continuation of his Base Salary for a period of one (1) year after the Date of Termination, (iii) continuation of Health Benefits for a period of one (1) year after the Date of Termination, and (iv) subject to Section 25 hereof, continuation of Welfare Benefits for a period of one (1) year after the Date of Termination; provided, however, that amounts payable to Executive under this Section 11(c) shall be reduced by the proceeds of any short- and/or long-term disability payments under the Company plans referred to in Section 9 hereof to which Executive may be entitled during such period.”

 

 

5.

 

The Agreement is hereby amended by deleting the second sentence of Section 11(e) in its entirety and replacing it with the following:

 

 

 

 

“In the event the employment by the Company of Executive is terminated pursuant to this Section 11(e), Executive shall be entitled to receive the following: (i) the Accrued Obligations, payable no later than thirty (30) days after the Date of Termination, (ii) subject to Section 25 hereof, continuation of his Base Salary for the remainder of the Term, (iii) continuation of Health Benefits for the remainder of the Term, and (iv) subject to Section 25 hereof, continuation of Welfare Benefits for the remainder of the Term.”

 

 

6.

 

The Agreement is hereby amended by adding a new Section 10(h) to read as follows::

 

 

 

 

“(k) Continuation of Welfare Benefits. With respect to Executive’s rights to continuation of Welfare Benefits provided for in Sections 11(b), (c), and (e), (i) the benefits provided in any one calendar year shall not affect the benefits provided in any other calendar year, (ii) the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the business expense was incurred, and (iii) such rights shall not be subject to liquidation or exchange for another benefit.”

 

 

7.

 

The Agreement is hereby amended by adding the following new Section 25:

 

 

 

 

“25. Code Section 409A.

     (a) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable hereunder by reason of the occurrence of Executive’s separation from service, such amount or benefit will not be payable or distributable to Executive by reason of such separation from service unless (i) the circumstances giving rise to such separation from service meet any description or definition of “separation from service” in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition), or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. This provision does not prohibit the vesting of any amount upon a separation from service, however defined. If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “separation from service.”

 


 

     (b) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit specified herein as “subject to Section 25 hereof,” or any other amount or benefit that would otherwise constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of the Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

          (i) if the payment or distribution is payable in a lump sum, Executive’s right to receive payment or distribution of such non-exempt deferred compensation will be delayed until the earlier of Executive’s death or the first day of the seventh month following Executive’s separation from service (the “Delay Period”); and

          (ii) if the payment or distribution is payable over time, the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service will be accumulated and Executive’s right to receive payment or distribution of such accumulated amount will be delayed until the earlier of Executive’s death or the end of the Delay Period, whereupon the accumulated amount will be paid or distributed to Executive and the normal payment or distribution schedule for any remaining payments or distributions will resume; and

          (iii) to the extent that this Section 25(b) applies to the provision of Welfare Benefits, Executive shall be entitled to pay the full cost of premiums to maintain the Welfare Benefits during the Delay Period, and the Company shall pay to Executive an amount equal to the amount of such premiums promptly following the end of the Delay Period.

 

 

 

For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Code Section 409A and the final regulations thereunder.”

 

 

8.

 

Except as expressly amended hereby, the terms of the Agreement shall be and remain unchanged and the Agreement as amended hereby shall remain in full force and effect.

                IN WITNESS WHEREOF, the Company and Executive have caused this Amendment to be executed on the day and year first above written.

 

 

 

 

 

 

 

 

 

BUILDERS FIRSTSOURCE, INC.

 

 

 

 

 

 

 

 

 

 

 

By:

 

/s/ Donald F. McAleenan

 

Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

 

 

 

 

          /s/ Floyd Sherman

 

 

 

 

 

 

 

 

 

Floyd Sherman