EXHIBIT 10.3
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INTERLINE BRANDS, INC.
2004 EQUITY INCENTIVE PLAN
RESTRICTED SHARE UNIT AGREEMENT
THIS RESTRICTED SHARE UNIT AGREEMENT (the "AGREEMENT"), is made,
effective as of the ____ day of _____________ (hereinafter the "DATE OF
GRANT"), between Interline Brands, Inc., (the "COMPANY"), and __________ (the
"PARTICIPANT").
R E C I T A L S:
WHEREAS, the Company has adopted the Interline Brands, Inc. 2004
Equity Incentive Plan (the "PLAN"), pursuant to which awards of Restricted
Share Units may be granted; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "COMMITTEE") has determined that it is in the best interests of
the Company and its stockholders to grant to the Participant an award of
Restricted Share Units as provided herein and subject to the terms set forth
herein.
NOW THEREFORE, for and in consideration of the premises and the
covenants of the parties contained in this Agreement, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto, for themselves, their successors and assigns, hereby agree as
follows:
1. GRANT OF RESTRICTED SHARE UNITS. The Company hereby grants
on the Date of Grant, to the Participant a total of ________ Restricted Share
Units (the "AWARD"), with a target award equal to [two-thirds] of the Award,
or ___________ Restricted Share Units (the "TARGET AWARD") on the terms and
conditions set forth in this Agreement and as otherwise provided in the Plan.
Such Restricted Share Units shall be credited to a separate account maintained
for the Participant on the books of the Company (the "ACCOUNT"). On any given
date, the value of each Restricted Share Unit comprising the Award shall equal
the Fair Market Value of one share of Common Stock. The Award shall vest and
settle in accordance with Section 3 hereof.
2. INCORPORATION BY REFERENCE, ETC. The provisions of the Plan
are hereby incorporated herein by reference. Except as otherwise expressly set
forth herein, this Agreement shall be construed in accordance with the
provisions of the Plan and any capitalized terms not otherwise defined in this
Agreement shall have the definitions set forth in the Plan. The Committee
shall have final authority to interpret and construe the Plan and this
Agreement and to make any and all determinations under them, and its decision
shall be binding and conclusive upon the Participant and his legal
representative in respect of any questions arising under the Plan or this
Agreement.
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3. TERMS AND CONDITIONS.
(a) VESTING, SETTLEMENT AND FORFEITURE. Except as
otherwise provided in the Plan and this Agreement, and contingent upon the
Participant's continued service to the Company, the Award shall vest and
become non-forfeitable as follows:
(i) PERFORMANCE-BASED VESTING. The Award shall
become vested to the extent provided in the table set forth on
EXHIBIT A attached hereto if, and to the extent that, the Committee
certifies that the Company has achieved or exceeded the threshold
percentage (as set forth on such table) of the "TARGET" (as defined
in EXHIBIT A) necessary for any Restricted Share Units to vest upon
the completion of the period commencing on [INSERT APPLICABLE
TWO-YEAR PERIOD START DATE] and ending on [INSERT APPLICABLE TWO-YEAR
PERIOD END DATE] (the "PERFORMANCE PERIOD").
As soon as is administratively practicable
following the last day of the Performance Period (the
"PERFORMANCE-BASED VESTING DATE"), the Company shall settle the
portion of the Participant's Award that is vested as of the
Performance-Based Vesting Date (the "PERFORMANCE AWARD") and shall
therefore (i) issue and deliver to the Participant one share of
Common Stock for each Restricted Share Unit subject to the
Performance Award (the "RSU SHARES"), with any fractional shares paid
out in cash (and, upon such settlement, the Restricted Share Units
shall cease to be credited to the Account) and (ii) enter the
Participant's name as a stockholder of record with respect to the RSU
Shares on the books of the Company.
(ii) SERVICE-BASED VESTING. Subject to the
Participant's continued employment with the Company, the vested
percentage of a Participant's Award shall be doubled on the first
anniversary of the Performance-Based Vesting Date (the "SERVICE-BASED
VESTING DATE"). On the Service-Based Vesting Date, the Company shall
settle the portion of the Award that is vested on such date (the
"SERVICE AWARD") and shall therefore (i) issue and deliver to the
Participant one RSU Share for each Restricted Share Unit subject to
the Service Award, with any fractional shares paid out in cash (and,
upon such settlement, the Restricted Share Units shall cease to be
credited to the Account) and (ii) enter the Participant's name as a
stockholder of record with respect to the RSU Shares on the books of
the Company.
(iii) FORFEITURE OF PORTION OF UNVESTED AWARD ON
PERFORMANCE-BASED VESTING DATE. Upon settlement of the Performance
Award, those Restricted Share Units that did not vest on the
Performance-Based Vesting Date and cannot become vested on the
Service-Based Vesting Date shall be irrevocably forfeited without
consideration and the shares of Common Stock representing such
unvested amount may be used for other Awards under the Plan.
(b) RESTRICTIONS. The Award granted hereunder may not
be sold, pledged or otherwise transferred (other than by will or the laws of
decent and distribution) and
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may not be subject to lien, garnishment, attachment or other legal process.
The Participant acknowledges and agrees that, with respect to each Restricted
Share Unit credited to his Account, he has no voting rights with respect to
the Company unless and until each such Restricted Share Unit is settled in RSU
Shares pursuant to Section 3(a) hereof.
(c) EFFECT OF TERMINATION OF EMPLOYMENT.
(i) Except as provided in subsections (ii) and
(iii) of this Section 3(c), if the Participant's employment with the Company
terminates prior to the Performance-Based Vesting Date or the Service-Based
Vesting Date for any reason, any unvested Restricted Share Units shall be
forfeited without consideration to the Participant.
(ii) Upon the termination of Participant's
employment with the Company due to his death or by the Company due to his
Disability occurring:
(1) Prior to the Performance-Based
Vesting Date, then at number of Restricted Share Units shall vest
that is equal to the number of Restricted Share Units subject to the
Target Award multiplied by a fraction, the numerator of which is the
number of months during the performance period through and including
the month in which the date of termination occurs and the denominator
of which is 24 and such Restricted Share Units shall be settled in
shares of Common Stock as soon as reasonably practicable following
the date of termination. Any Restricted Share Units that do not vest
on the date of termination will be automatically forfeited.
(2) On and after the Performance-Based
Vesting Date but prior to the Service-Based Vesting Date, all
unvested Restricted Share Units shall vest and be settled in shares
of Common Stock as soon as reasonably practicable following the date
of termination.
(iii) Upon (x) the termination of the
Participant's employment without Cause or (y) the Participant's voluntary
termination for "Good Reason" (as that term is defined in a written employment
agreement between the Participant and the Company in effect at the date of
termination, it being understood that if there is no such employment
agreement, or if the employment agreement does not contain a definition of
Good Reason, then Good Reason shall be inapplicable for purposes of this
Agreement), in either case within 24 months following a Change in Control, any
unvested Restricted Share Units outstanding on the date of termination
(subsequent to the conversion described in Section 3(e) of the Agreement)
shall vest and be settled in shares of Common Stock as soon as reasonably
practicable following the date of termination.
(d) DIVIDENDS. If on any date dividends are paid on
shares of Common Stock ("SHARES") underlying the Award (the "DIVIDEND PAYMENT
DATE"), then the number of Restricted Share Units credited to the Account
shall, as of the Dividend Payment Date, be increased by that number of
Restricted Share Units equal to: (a) the product of (i) the number of
Restricted Share Units in the Account as of the Dividend Payment Date and (ii)
the
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per Share cash amount of such dividend (or, in the case of a dividend payable
in Shares or other property, the per Share equivalent cash value of such
dividend as determined in good faith by the Committee) divided by (b) the Fair
Market Value of a Share on the Dividend Payment Date. Such additional
Restricted Share Units shall also be subject to the restrictions in Section
3(b) and the other terms and conditions of this Agreement.
(e) CHANGE IN CONTROL. Notwithstanding anything in the
Plan to the contrary, in the event the Award is assumed or replaced by an
award of equivalent value upon a Change in Control which occurs:
(i) Prior to the first anniversary of the Date
of Grant, then that number of Restricted Share Units exceeding the
Target Award will be automatically forfeited upon the Change in
Control and the Restricted Share Units subject to the Target Award
shall vest with respect to 50% of such Restricted Share Units on the
second anniversary of the Date of Grant and with respect to the
remaining 50% on the third anniversary of the Date of Grant, in each
case subject only to the Participant's continued employment through
such anniversary, and such Restricted Share Units shall be settled in
shares of Common Stock as soon as reasonably practicable following
the applicable anniversary.
(ii) On and after the first anniversary of the
Date of Grant but prior to the second anniversary of the Date of
Grant, (x) the Committee shall (1) terminate the Performance Period
immediately prior to the Change in Control and (2) determine the
percentage, if any, by which Target has been achieved or exceeded,
after making appropriate adjustments, as determined by the Committee
in its sole discretion, to reflect the early termination of the
Performance Period, and (y) with respect to all of the Restricted
Share Units subject to the Award, the Restricted Share Units
representing the percentage by which Target, as so adjusted, has been
achieved or exceeded (the "ACHIEVED RESTRICTED SHARE UNITS") shall
vest with respect to 50% of such Achieved Restricted Share Units on
the second anniversary of the Date of Grant and with respect to the
remaining 50% of the Achieved Restricted Share Units on the third
anniversary of the Date of Grant, in each case subject only to the
Participant's continued employment through such anniversary, and such
Achieved Restricted Share Units shall be settled in shares of Common
Stock as soon as reasonably practicable following the applicable
anniversary. Any Restricted Share Units that are not Achieved
Restricted Share Units shall be automatically forfeited immediately
prior to the Change in Control.
If the Award is not assumed or replaced upon a Change in Control, then upon
the Change in Control:
(i) Prior to the first anniversary of the Date
of Grant, then that number of Restricted Share Units exceeding the
Target Award will be automatically forfeited upon the Change in
Control, all of the Restricted Share Units subject to the Target
Award shall vest immediately prior to the Change in Control, and such
Restricted Share Units shall be settled in shares of Common
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Stock (or the cash equivalent thereof) as soon as reasonably
practicable following the Change in Control.
(ii) On and after the first anniversary of the
Date of Grant but prior to the second anniversary of the Date of
Grant, (x) the Committee shall (1) terminate the Performance Period
as of the Change in Control and (2) determine the percentage, if any,
by which Target has been achieved or exceeded, after making
appropriate adjustments, as determined by the Committee in its sole
discretion, to reflect the early termination of the Performance
Period, and (y) with respect to all of the Restricted Share Units
subject to the Award, the Restricted Share Units representing the
percentage by which Target, as so adjusted, has been achieved or
exceeded, shall vest immediately prior to the Change in Control, and
such Restricted Share Units shall be settled in shares of Common
Stock (or the cash equivalent thereof) as soon as reasonably
practicable following the Change in Control. Any Restricted Share
Units that do not so vest shall be automatically forfeited
immediately prior to the Change in Control.
(f) TAXES AND WITHHOLDING. Upon the settlement of the
Award in accordance with Section 3(a) hereof, the Participant shall recognize
taxable income in respect of the Award and the Company shall report such
taxable income to the appropriate taxing authorities in respect of the Award
as it determines to be necessary and appropriate. Upon the settlement of the
Award in RSU Shares, the Participant shall be required as a condition of such
settlement to pay to the Company by check or wire transfer the amount of any
income, payroll, or social tax withholding that the Company determines is
required; PROVIDED that the Participant may elect to satisfy such tax
withholding obligation by having the Company withhold from the settlement that
number of RSU Shares having a Fair Market Value equal to the amount of such
withholding; PROVIDED, FURTHER, that the number of RSU Shares that may be so
withheld by the Company shall be limited to that number of RSU Shares having
an aggregate Fair Market Value on the date of such withholding equal to the
aggregate amount of the Participant's income, payroll and social tax
liabilities based upon the applicable minimum withholding rates.
(g) RIGHTS AS A STOCKHOLDER. Upon and following the
Performance-Based Vesting Date or the Service-Based Vesting Date, as
applicable, the Participant shall be the record owner of the RSU Shares
settled upon such date unless and until such shares are sold or otherwise
disposed of, and as record owner shall be entitled to all rights of a common
stockholder of the Company, including, without limitation, voting rights, if
any, with respect to the shares. Prior to the Performance-Based Vesting Date,
the Participant shall not be deemed for any purpose to be the owner of shares
of Common Stock underlying the Restricted Share Units.
4. MISCELLANEOUS.
(a) GENERAL ASSETS. All amounts credited to the Account
under this Agreement shall continue for all purposes to be part of the general
assets of the Company, Participant's interest in the Account shall make the
Participant only a general, unsecured creditor of the Company.
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(b) NOTICES. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing
and shall be by registered or certified first-class mail, return receipt
requested, telecopier, courier service or personal delivery:
if to the Company:
Interline Brands, Inc.
000 X. Xxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
if to the Participant, at the Participant's last known
address on file with the Company.
All such notices, demands and other communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five
business days after being deposited in the mail, postage prepaid, if mailed;
and when receipt is mechanically acknowledged, if telecopied.
(c) 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, and each other
provision of this Agreement shall be severable and enforceable to the extent
permitted by law.
(d) NO RIGHTS TO SERVICE. Nothing contained in this
Agreement shall be construed as giving the Participant any right to be
retained, in any position, as a consultant or director of the Company or its
Affiliates or shall interfere with or restrict in any way the right of the
Company or its Affiliates, which are hereby expressly reserved, to remove,
terminate or discharge the Participant at any time for any reason whatsoever.
(e) BOUND BY PLAN. By signing this Agreement, the
Participant acknowledges that he has received a copy of the Plan and has had
an opportunity to review the Plan and agrees to be bound by all the terms and
provisions of the Plan.
(f) BENEFICIARY. The Participant may file with the
Committee a written designation of a beneficiary on such form as may be
prescribed by the Committee and may, from time to time, amend or revoke such
designation. If no designated beneficiary survives the Participant, the
executor or administrator of the Participant's estate shall be deemed to be
the Participant's beneficiary.
(g) SUCCESSORS. The terms of this Agreement shall be
binding upon and inure to the benefit of the Company, its successors and
assigns, and of the Participant and the beneficiaries, executors,
administrators, heirs and successors of the Participant.
(h) ENTIRE AGREEMENT. This Agreement and the Plan
contain the entire agreement and understanding of the parties hereto with
respect to the subject matter contained herein and supersede all prior
communications, representations and negotiations in respect
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thereto. No change, modification or waiver of any provision of this Agreement
shall be valid unless the same be in writing and signed by the parties hereto.
(i) GOVERNING LAW. This Agreement shall be construed
and interpreted in accordance with the laws of the State of New York without
regard to principles of conflicts of law thereof, or principals of conflicts
of laws of any other jurisdiction which could cause the application of the
laws of any jurisdiction other than the State of New York.
(j) HEADINGS. The headings of the Sections hereof are
provided for convenience only and are not to serve as a basis for
interpretation or construction, and shall not constitute a part, of this
Agreement.
(k) SIGNATURE IN COUNTERPARTS. This Agreement 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
Interline Brands, Inc.
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By:
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Title:
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[Name of Participant]
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EXHIBIT A
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TARGET ATTAINED PERCENTAGE OF TARGET AWARD PERCENTAGE OF TARGET
VESTED ON LAST DAY OF AWARD VESTED ONE YEAR
PERFORMANCE PERIOD AFTER END OF PERFORMANCE
PERIOD
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Less than 80% 0% 0%
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80% 25% 50%
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100% 50% 100%
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120% or greater 75% 150%
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If during the Performance Period more than 80% but less than 100% of Target is
attained, the percentage of the Target Award that is vested on the
Performance-Based Vesting Date shall be between 25% and 50%, determined by the
Committee using straight line interpolation. If during the Performance Period,
more than 100% but less than 120% of Target is attained, the percentage of the
Target Award that is vested shall be between 50% and 75% on the
"Performance-Based Vesting Date", determined by the Committee using straight
line interpolation.
For purposes of the Agreement to which this EXHIBIT A is attached, "TARGET"
shall mean EPS Growth of 15% in the first year of the Performance Period plus
EPS Growth of 15% in the second year of the Performance Period and "EPS
GROWTH" shall refer to the increase in adjusted pro forma net income per
share, as such term is defined in the Company's earnings releases furnished to
or filed with the Securities and Exchange Commission, or in any other earnings
per share metric that the Company uses as its main earnings per share
measurement, as determined by the Committee in its sole discretion within the
first 90 days of the Performance Period.
VESTING EXAMPLE. For purposes of illustration only, assume the Participant is
awarded a Target Award of 100 Restricted Share Units. At the end of the
Performance Period, the Committee determines that 80% of Target was achieved.
25 Restricted Share Units from the Participant's Award would become vested,
and the Participant would receive 25 shares of Common Stock of the Company. As
long as the Participant remains employed for one more year, the Participant
would become vested in another 25 Restricted Share Units, and the Participant
would receive an additional 25 shares of Common Stock of the Company (for a
total of 50 shares). The remaining 50 Restricted Share Units of the Target
Award, together with the 50 additional Restricted Share Units subject to the
Award (which would have vested if maximum performance had been attained) will
be automatically forfeited on the Performance-Based Vesting Date (and
therefore cannot vest on the Service-Based Vesting Date).
