EXHIBIT 10.2

 

Beacon Roofing Supply, Inc.

 

July 17, 2012

 

Mr. David R. Grace

 

34 Holly Street

 

Gloucester, MA 01930

 

Re: Severance Agreement and General Release

 

Dear Dave:

 

This letter when signed by you, will constitute the full agreement between you
and Beacon Roofing Supply, Inc. and Beacon Sales Acquisition, Inc. (together,
“the Company”) on the terms of your continued employment with, and eventual
retirement because of disability from, the Company (the “Agreement”).

 

1.Your employment with the Company will continue until the close of business on
December 31, 2012 (the “Separation Date”). Through your Separation Date, you
will continue to devote your best efforts to faithfully discharge your duties to
the Company as its Chief Financial Officer, and you will take reasonable and
appropriate actions to cooperatively and smoothly transition the duties of Chief
Financial Officer to your successor.

 

(a)Through September 30, 2012, you will continue to be provided with your
current base salary and management cash bonus opportunity pursuant to your
compensation letter signed by Paul Isabella on March 21, 2012, and you will
continue to participate in the Company’s employee benefits plans in accordance
with their terms. Notwithstanding anything to the contrary in the management
cash bonus plan, if you die before the bonus payment is paid, the payment will
be made to your spouse or, if she is not alive at such time, to your estate.

 

(b)From October 1, 2012 through the Separation Date, you will be paid a base
salary equal to 70% of your current base salary, and you will continue to
participate in the Company’s employee benefit plans (including the short-term
and long-term disability plans) in accordance with their terms; provided,
however, that you will not be entitled to participate in the management cash
bonus plan for the fiscal year beginning October 1, 2012, and you will not be
entitled to any future equity grants under the Company’s Stock Plan. If you die
at any time prior to the Separation Date, the Company will continue to pay your
salary to your spouse or, if she is not alive at such time, to your estate.

 

2.Your employment with the Company will terminate on the Separation Date. Your
final paycheck will include any unpaid base salary earned through the Separation
Date, any accrued but unused vacation in accordance with the Company’s paid time
off policy and expense reimbursements in accordance with Company policy.

 

3.In consideration of your acceptance of this Agreement and the execution and
non-revocation of the Release of Claims (“Release”) at Exhibit A within the time
specified in the Release, you will be entitled to the following payments and
benefits after the Separation Date:

 

(a)The Company will provide you with continued pay for 25 months of $41,075 per
month, paid on regularly scheduled pay dates beginning January 1, 2013, and less
ordinary and necessary payroll deductions (“Continued Pay”); provided, however,
because you are considered a “Key Employee” under Treas. Reg. §1.409A-1(i),
payments of Continued Pay will be deferred for six months, with payments for
January 1, 2013 through June 30, 2103 being included with the July, 2013
payment. If you die before or during the Continued Pay period, the Company will
continue to make the monthly payments of Continued Pay to your spouse or, if she
is not alive at such time, to your estate (and if you die prior to July 1, 2013,
payments of Continued Pay, including any deferred payments, will resume).

 

 

 

 

(b)The Company will continue to provide group medical, dental and vision
benefits (collectively the “Benefits”) to you and, if applicable, your spouse
and covered dependents, at the same cost it charges its active employees.
Assuming you continue to pay the required premiums at the rate required for the
Company’s active employees, the continued Benefits will cease on the date you
become eligible for Medicare because of age or if earlier, the date you become
eligible for coverage under another employer-provided group health plan that
provides medical, dental and vision coverage. The Company reserves the right to
change the Benefits provided or your portion of the premium amount, consistent
with changes applicable to the Company’s employees generally. The Company will
reflect the Company-paid portion of the premiums on a Form W-2 provided to you
each year. If you die while Benefits are being provided, the date of your death
will be considered a “qualifying event” for purposes of COBRA, entitling your
spouse and covered dependents to elect continued Benefits for up to 36 months
from the date of your death, in accordance with the terms of the applicable
plans and COBRA, and if COBRA is elected, your spouse and covered dependents
will continue to be charged premiums at the rate required for the Company’s
active employees. You acknowledge that the provision of these Benefits pursuant
to this Paragraph 3(b) is in lieu of any COBRA coverage to which you and your
spouse and dependents would otherwise be entitled upon your Separation Date.

 

(c)Your termination is considered a termination due to “disability” as defined
in your Stock Option, Restricted Stock and Restricted Stock Unit Agreements and
affirmed by the Company’s Board of Directors. Accordingly, as of the date the
revocation period for the Release expires: (i) all of your outstanding stock
options that are not yet vested on such date will be fully vested on such date,
and all outstanding stock options will expire on the first anniversary of such
date; and (ii) all restrictions on your Restricted Stock and Restricted Unit
Awards will lapse on such date, and the target number of shares of common stock
subject to the Awards will be distributed to you after such date in accordance
with the Award Agreements.

 

(d)Except as stated above, all other benefits and compensation end on the
Separation Date. However, this Agreement does not affect any existing rights
that you may have under the Company’s retirement plans and welfare plans. You
will receive, under separate cover, information regarding your rights and
options, if any, under any such plans.

 

(e)You acknowledge that no other payments outside this Agreement are due and
owing to you.

 

4.Beginning January 1, 2013 and continuing until February 28, 2015, you will
make yourself reasonably available to the Company to provide consulting advice,
for no additional compensation, from time to time if and as needed by the
Company upon reasonable notice by Paul Isabella, CEO. During this period, you
will be an independent contractor and not an employee of the Company.

 

5.You agree that as the Company’s Chief Financial Officer, you have gained
competitive, confidential, trade secret and proprietary information relating to
the Company and its business in all 50 states. You further agree that disclosure
or use of this information by you or by any other entity would lead to
irreparable harm to the Company. Accordingly:

 

(a)You agree that except in your capacity as an employee of the Company, you
will not, without the prior written consent of the Company (which may be
withheld in its sole discretion), until December 31, 2017:

 

(i)engage or participate in, anywhere in the United States, as an employee,
owner, partner, shareholder, officer, director, member, manager, advisor,
consultant, lender, lessor, agent or otherwise, or permit your name to be used
by or render services of any type for, any business that is in whole or in part,
directly or indirectly, competitive with the business of the Company as
conducted as of the Separation Date; provided, however, that nothing in this
Agreement shall prevent you from acquiring or owning, but solely as a passive
investment, up to five percent of any class of voting securities registered
under the Securities Exchange Act of 1934, as amended, of any issuer engaged in
a competing business;

 

(ii)take any action which could reasonably be expected to divert from the
Company any opportunity which would be within the scope of the Company’s
business;

 

 

 

 

(iii)solicit or attempt to solicit any person or entity who is or has been (A) a
customer of the Company at any time within one year prior to the Separation Date
to purchase any product or service which may be provided by the Company, or (B)
a customer, supplier, licensor, licensee or other business relation conducting
business with the Company at any time within one year prior to the Separation
Date, to cease doing business with, or to alter or limit its business
relationship with, the Company; or

 

(iv)solicit attempt to solicit, or assist anyone else to solicit any employee,
representative, consultant or agent of the Company to terminate his, her or its
association with the Company or recruit, solicit, hire or otherwise retain the
services of any such person, whether on a full-time basis, part-time basis or
otherwise and whether as an employee, independent contractor, consultant,
advisor or in another capacity.

 

(b)You hereby acknowledge and agree that:

 

(i)the restrictions provided in this section are reasonable in time and scope in
light of the necessity for the protection of the business and good will of the
Company and the consideration provided to you under this Agreement; and

 

(ii)your ability to work and earn a living will not be unreasonably restrained
by the application of these restrictions.

 

(c)You acknowledge that should you fail to comply and do not cure such failure
within 30 days’ written notice by the Company of such failure, with the
restrictions set forth above, (i) all cash payments under this Agreement shall
cease immediately; (ii) all then unexercised stock options whose vesting was
accelerated as a result of your termination of employment due to disability
shall expire immediately; (iii) you will be obligated to remit to the Company,
within 30 days of written demand, all Continued Pay previously paid to you and,
in the event you have exercised any stock options whose vesting was accelerated
as a result of your termination of employment due to disability, an amount equal
to the difference between the exercise price of such stock options and the fair
market value of the stock of the Company at the time of such exercise,
multiplied by the number of options exercised; and (iv) the Benefits will cease.
You also agree that the Company will be entitled, in addition to any other
rights or remedies available to it, to seek injunctive relief.

 

(d)In the event the enforceability of any of the covenants in this Paragraph are
challenged in court, the applicable time period as to such covenant shall be
deemed tolled upon the filing of the lawsuit challenging such enforceability
until the dispute is finally resolved and all periods of appeal have expired.

 

6.You agree to not make any disparaging or negative statements about the Company
or its affiliated companies and its and their officers, directors and employees.
The Company agrees not to make any disparaging or negative statements about you.

 

7.You agree to return to the Company all of the Company’s property, including,
without limit, any electronic or paper documents and records and copies thereof
that you received or acquired during your employment regarding the Company’s
practices, procedures, trade secrets, customer lists, or product marketing, and
that you will not use the same for your own purpose.

 

8.You acknowledge and agree that this Agreement, including the Release set forth
in Exhibit A and the applicable stock and option agreements and plans, sets
forth the entire understanding between the parties concerning the matters
discussed herein, that no promise or inducement has been offered to you to enter
into this Agreement except as expressly set forth herein, and that the
provisions of this Agreement are severable such that if any part of the
Agreement is found to be unenforceable, the other parts shall remain fully valid
and enforceable.

 

9.Until December 31, 2017 you agree to notify the Company no later than four
business days after accepting new employment, and thereafter you agree to notify
the Company no later than four business days after accepting new employment that
provides group medical, dental and vision benefits.

 

10.Except to the extent preempted by federal law, this Agreement is made and
entered into in the State of Massachusetts and the rights and obligations of the
parties will be interpreted, enforced, and governed in accordance with the laws
of the State of Massachusetts which are applicable to contracts made and to be
performed in that state and without regard to the principles of conflict of
laws. Any legal actions or proceedings against either party arising out of this
Agreement or your employment with the Company will be brought in any court of
appropriate jurisdiction sitting in the State of Massachusetts. Each party
submits to and accepts the exclusive jurisdiction of such courts for the purpose
of legal actions or proceedings and waives any objection to this choice of
venue.

 

 

 

 

11.Each monthly payment described in Paragraph 3(a) will be considered a
separate payment for purposes of Section 409A of the Internal Revenue Code. You
and the Company agree that all payments and Benefits to be made or provided to
you under this Agreement either will be exempt from, or will be paid or provided
in compliance with, all applicable requirements of Section 409A of the Internal
Revenue Code of 1986, as amended, the regulations issued thereunder and all
notices, rulings and other guidance issued by the Internal Revenue Service
interpreting the same and that the provisions of this Agreement shall be
construed and administered in accordance with such intent.

 

12.You warrant, after conferring with counsel, that as of the date of this
Agreement, you are not a Medicare beneficiary, and no conditional payments have
been made by Medicare on your behalf.

 

13.Notwithstanding any of the foregoing, in no event will any payment or
benefits be provided pursuant to this Agreement if, and only if, your employment
is terminated by the Company prior to the Separation Date for cause (cause
means, as determined by the Compensation Committee of the Board of Directors in
its reasonable judgment, your gross negligence or willful misconduct in the
performance of your duties or your commission of any act of fraud, embezzlement
or material dishonesty against the Company or of any felony; provided, however,
that cause will not include your inability to perform your duties for the
Company due to health issues).

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the 17th day
of July, 2012.

 

  BEACON ROOFING SUPPLY, INC.       By: /s/ Ross D. Cooper       Its: SVP &
General Counsel       EMPLOYEE       /s/ David R. Grace

 

 

 

 

Exhibit A

 

In consideration of the payments and benefits provided to you above, to which
you are not otherwise entitled and the sufficiency of which you acknowledge, you
do, on behalf of yourself and your heirs, administrators, executors and assigns,
hereby fully, finally and unconditionally release and forever discharge the
Company and its parent, subsidiary and affiliated entities and all their former
and present officers, directors, shareholders, employees, trustees, fiduciaries,
administrators, attorneys, consultants, agents, and other representatives, and
all their respective predecessors, successors and assigns (collectively
“Released Parties”), in their corporate, personal and representative capacities,
from any and all obligations, rights, claims, damages, costs, attorneys’ fees,
suits and demands, of any and every kind, nature and character, known or
unknown, liquidated or unliquidated, absolute or contingent, in law and in
equity, enforceable under any local, state or federal common law, constitution,
statute or ordinance, which arise from or relate to your past employment with
the Company or the termination thereof, or any past actions or omissions of the
Company or any of the Released Parties, including without limitation, rights and
claims arising under the Family and Medical Leave Act, Title VII of the Civil
Rights Act, the Americans with Disabilities Act of 1990, the Age Discrimination
in Employment Act, the Older Worker Benefits Protection Act, the Worker’s
Adjustment and Retraining Notification Act, the Employee Retirement Income
Security Act, or any other federal, state or local law or regulation. Subject to
applicable law, you also warrant that you have not filed or sued and will not
sue or file any actions against the Company or any of the Released Parties with
respect to claims covered by this release.

 

You recognize and understand that the foregoing is a general release by which
you are giving up the opportunity to obtain compensation, damages, and other
forms of relief for yourself. This Agreement, however, is not intended to and
does not interfere with the right of any governmental agency to enforce laws or
to seek relief that may benefit the general public, or your right to assist with
or participate in that process. By signing this Agreement, however, you waive
any right to personally recover against the Released Parties, and you give up
the opportunity to obtain compensation, damages or other forms of relief for you
other than that provided in this Agreement.

 

You represent that you are not aware of any facts on which a claim under the
Fair Labor Standards Act, the Attorney Fees in Wage Action Act, or under
applicable state minimum wage, wage payment or leave laws, could be brought.

 

Notwithstanding the foregoing, this release does not include and will not
preclude: (a) non-termination related claims under the Massachusetts Workers
Compensation Act (M.G.L. c. 152) or any disability insurance plans; (b) rights
to vested benefits under the Company’s benefit plans; (c) rights to defense and
indemnification, if any, from the Company for actions or inactions taken by you
in the course and scope of your employment with the Company; and (d) claims,
actions or rights arising under or to enforce the terms of the Severance
Agreement.

 

If you accept the terms of this Release, please date and sign below and return
it to Ross Cooper on December 31, 2012. Once you execute this Release, you have
seven (7) days in which to revoke in writing your acceptance by providing the
same to me, and such revocation will render this Release null and void. If you
do not revoke your acceptance in writing and provide it to me by midnight on the
seventh day, this Release shall be effective the day after the seven-day
revocation period has elapsed.

 

Sincerely,

 

BEACON ROOFING SUPPLY, INC.       By:     Name:   Title:  

 

By signing this letter, I represent and warrant that I have not been the victim
of age or other discrimination or wrongful treatment in my employment and the
termination thereof. I further acknowledge that the Company advised me in
writing to consult with an attorney, that I had at least twenty-one (21) days to
consider this Release, that I received all information necessary to make an
informed decision and I had the opportunity to request and receive additional
information, that I understand and agree to the terms of this Release, that I
have seven (7) days in which to revoke my acceptance of this Release, and that I
am signing this Release voluntarily with full knowledge and understanding of its
contents.

 

Dated:     Signature:         David R. Grace