Exhibit
10.27


INTERLINE BRANDS, INC.

2004 EQUITY INCENTIVE PLAN

Effective as of December ____, 2004


1.                            Purpose


The purpose of the Plan
is to provide a means through which the Company and its Affiliates may attract
able persons to enter and remain in the employ of the Company and its
Affiliates and to provide a means whereby employees, directors and consultants
of the Company and its Affiliates can acquire and maintain Common Stock
ownership, or be paid incentive compensation measured by reference to the value
of Common Stock, thereby strengthening their commitment to the welfare of the
Company and its Affiliates and promoting an identity of interest between
stockholders and these persons.


So that the appropriate
incentive can be provided, the Plan provides for granting Incentive Stock
Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock, Restricted Share Units and Stock Bonuses, or any combination of the
foregoing.


2.                            Definitions


The following definitions
shall be applicable throughout the Plan.


(a)           “Affiliate” means (i) any entity that
directly or indirectly is controlled by, controls or is under common control
with the Company and (ii) to the extent provided by the Committee, any entity
in which the Company has a significant equity interest.


(b)           “Award” means, individually or
collectively, any Incentive Stock Option, Nonqualified Stock Option, Stock
Appreciation Right, Restricted Stock, Restricted Share Unit Award or Stock
Bonus Award granted under the Plan.


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


(d)           “Cause” means the Company or an
Affiliate having “cause” to terminate a Participant’s employment or service, as
defined in any existing employment, consulting or any other agreement between
the Participant and the Company or an Affiliate or, in the absence of such an
employment, consulting or other agreement, upon (i) the determination by
the Committee that the Participant has ceased to perform his duties to the
Company or an Affiliate (other than as a result of his incapacity due to
physical or mental illness or injury), which failure amounts to an intentional
and extended neglect of his duties to such party, (ii) the Committee’s
determination that the Participant has engaged or is about to engage in conduct
materially injurious to the Company or an Affiliate, (iii) the Participant
having been convicted of, or plead guilty or no contest to, a felony or  any crime involving as a material element
fraud or dishonesty, (iv) the failure of the Participant to follow the
lawful instructions of the Board or his 


 


 

















 


direct superiors or (v) in the case of a
Participant who is a non-employee director, the Participant ceasing to be a
member of the Board in connection with the Participant engaging in any of the
activities described in clauses (i) through (iv) above.


(e)           “Change in Control” shall, unless in
the case of a particular Award the applicable Award agreement states otherwise
or contains a different definition of “Change in Control,” be deemed to occur
upon:


(i)            the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more (on a
fully diluted basis) of either (A) the then outstanding shares of Stock of
the Company, taking into account as outstanding for this purpose such Stock
issuable upon the exercise of options or warrants, the conversion of
convertible stock or debt, and the exercise of any similar right to acquire
such Stock (the “Outstanding Company Common Stock”) or (B) the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this Plan,
the following acquisitions shall not constitute a Change in Control:  (I) any acquisition by the Company or
any Affiliate, (II) any acquisition by any employee benefit plan sponsored
or maintained by the Company or any Affiliate, (III) any acquisition which
complies with clauses (A), (B) and (C) of subsection (v) of this Section 2(e),
or (IV) in respect of an Award held by a particular Participant, any
acquisition by the Participant or any group of persons including the
Participant (or any entity controlled by the Participant or any group of
persons including the Participant);


(ii)           after the expiration of twenty-four
months following the Effective Date, individuals who, on the date hereof,
constitute the Board (the “Incumbent Directors”) cease for any reason to
constitute at least a majority of the Board, provided that any person becoming
a director subsequent to the date hereof, whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected
or nominated as a director of the Company as a result of an actual or
threatened election contest, as such terms are used in Rule 14a-11 of
Regulation A promulgated under the Exchange Act, with respect to directors
or as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;


(iii)          the dissolution or liquidation of the
Company;


(iv)          the sale, transfer or other
disposition of all or substantially all of the business or assets of the
Company; or


 


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(v)           the consummation of a reorganization,
recapitalization, merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company that requires the approval
of the Company’s stockholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately
following such Business Combination: 
(A) more than 50% of the total voting power of (x) the entity resulting
from such Business Combination (the “Surviving Company”), or (y) if applicable,
the ultimate parent entity that directly or indirectly has beneficial ownership
of sufficient voting securities eligible to elect a majority of the directors
of the Surviving Company (the “Parent Company”), is represented by the
Outstanding Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, is represented by shares into
which the Outstanding Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of the Outstanding
Company Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no Person (other than any employee benefit plan
sponsored or maintained by the Surviving Company or the Parent Company), is or
becomes the beneficial owner, directly or indirectly, of 50% or more of the
total voting power of the outstanding voting securities eligible to elect
members of the board of directors of the Parent Company (or the analogous
governing body) (or, if there is no Parent Company, the Surviving Company) and
(C) at least a majority of the members of the board of directors (or the
analogous governing body) of the Parent Company (or, if there is no Parent Company,
the Surviving Company) following the consummation of the Business Combination
were Board members at the time of the Board’s approval of the execution of the
initial agreement providing for such Business Combination.


(f)            “Code” means the Internal Revenue
Code of 1986, as amended.  Reference in
the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to such section and any regulations under such section.


(g)           “Committee” means a committee of at
least two people as the Board may appoint to administer the Plan or, if no such
committee has been appointed by the Board, the Board.  Unless the Board is acting as the Committee or the Board
specifically determines otherwise, each member of the Committee shall, at the
time he takes any action with respect to an Award under the Plan, be an
Eligible Director. However, the fact that a Committee member shall fail to
qualify as an Eligible Director shall not invalidate any Award granted by the
Committee which Award is otherwise validly granted under the Plan.


(h)           “Common Stock” means the common
stock, par value $0.01 per share, of the Company and any stock into which such
common stock may be converted or into which it may be exchanged.


 


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(i)            “Company” means Interline Brands,
Inc. and any successor thereto.


(j)            “Date of Grant” means the date on
which the granting of an Award is authorized, or such other date as may be
specified in such authorization or, if there is no such date, the date
indicated on the applicable Award agreement.


(k)           “Disability” means, unless in the
case of a particular Award, the applicable Award agreement states otherwise,
the Company or an Affiliate having cause to terminate a Participant’s
employment or service on account of “disability,” as defined in any existing
employment, consulting or other similar agreement between the Participant and
the Company or an Affiliate, or in the absence of such an employment,
consulting or other agreement, a condition entitling a person to receive
benefits under the long-term disability plan of the Company or an Affiliate, as
may be applicable to the Participant in question, or, in the absence of such a
plan, the complete and permanent inability by reason of illness or accident to
perform the duties of the occupation at which a Participant was employed or
served when such disability commenced, as determined by the Committee based
upon medical evidence acceptable to it.


(l)            “Effective Date” means December _,
2004.


(m)          “Eligible Director” means a person who
is (i) a “non-employee director” within the meaning of Rule 16b-3 under the
Exchange Act, or a person meeting any similar requirement under any successor
rule or regulation and (ii) an “outside director” within the meaning of Section
162(m) of the Code, and the Treasury Regulations promulgated thereunder; provided,
however, that clause (ii) shall apply only with respect to grants of
Awards with respect to which the Company’s tax deduction could be limited by
Section 162(m) of the Code if such clause did not apply.


(n)           “Eligible Person” means any (i)
individual regularly employed by the Company or Affiliate who satisfies all of
the requirements of Section 6; provided, however, that no
such employee covered by a collective bargaining agreement shall be an Eligible
Person unless and to the extent that such eligibility is set forth in such
collective bargaining agreement or in an agreement or instrument relating
thereto; (ii) director of the Company or an Affiliate or (iii) consultant or
advisor to the Company or an Affiliate who may be offered securities pursuant
to Form S-8 (which, as of the Effective Date, includes those who (A) are
natural persons and (B) provide bona  fide services to the Company
other than in connection with the offer or sale of securities in a
capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Company’s securities).


(o)           “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


(p)           “Fair Market Value, on a given date
means (i) if the Stock is listed on a national securities exchange, the average
of the highest and lowest sale 


 


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prices reported as having occurred on the primary
exchange with which the Stock is listed and traded on the date prior to such
date, or, if there is no such sale on that date, then on the last preceding
date on which such a sale was reported; (ii) if the Stock is not listed on any
national securities exchange but is quoted in the National Market System of the
National Association of Securities Dealers Automated Quotation System (the
“Nasdaq”) on a last sale basis, the average between the high bid price and low
ask price reported on the date prior to that date, or, if there is no such sale
on such prior date, then on the last preceding date on which a sale was
reported; or (iii) if the Stock is not listed on a national securities exchange
nor quoted in the Nasdaq on a last sale basis, the amount determined by the
Committee to be the fair market value based upon a good faith attempt to value
the Stock accurately and computed in accordance with applicable regulations of
the Internal Revenue Service.


(q)           “Incentive Stock Option” means an
Option granted by the Committee to a Participant under the Plan which is
designated by the Committee as an incentive stock option as described in
Section 422 of the Code and otherwise meets the requirements set forth herein.


(r)            “Mature Shares” means shares of
Stock owned by a Participant which are not subject to any pledge or other
security interest and have either been held by the Participant for six months,
previously acquired by the Participant on the open market or meet such other
requirements as the Committee may determine are necessary in order to avoid an
accounting earnings charge on account of the use of such shares to pay the
Option Price or satisfy a withholding obligation in respect of an Option.


(s)           “Nonqualified Stock Option” means an
Option granted by the Committee to a Participant under the Plan which is not
designated by the Committee as an Incentive Stock Option.


(t)            “Option” means an Award granted
under Section 7.


(u)           “Option Period” means the period
described in Section 7(c).


(v)           “Option Price” means the exercise
price for an Option as described in Section 7(a).


(w)          “Parent” means any parent of the
Company as defined in Section 424(e) of the Code.


(x)            “Participant” means an Eligible
Person who has been selected by the Committee to participate in the Plan and to
receive an Award pursuant to Section 6.


(y)           “Performance Goals” means the
performance objectives of the Company or an Affiliate during a Restricted
Period established for the purpose of determining whether, and to what extent,
Awards will be earned for the Restricted Period.  To the extent an Award is intended to qualify as
“performance-based compensation” 


 


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under Section 162(m) of the Code, the Performance
Goals shall be established with reference to one or more of the following, either
on a Company-wide basis or, as relevant, in respect of one or more Affiliates,
divisions or operations of the Company:


(i)                                     earnings (gross, net, pre-tax, post-tax
or per share)


(ii)                                  stock price (absolute or relative to
other companies)


(iii)                               market share


(iv)                              gross or net profit margin


(v)                                 costs or expenses


(vi)                              return on equity


(vii)                           sales


(viii)                        earnings before interest and taxes
(“EBIT”)


(ix)                                earnings before interest, taxes,
depreciation and amortization (“EBITDA”)


(x)                                   return on capital or equity


(xi)                                net income


(xii)                             total shareholder return


(z)            “Plan” means this Interline Brands,
Inc. 2004 Equity Incentive Plan.


(aa)         “Restricted Period” means, with respect
to any Award, the period of time determined by the Committee during which such
Award is subject to the restrictions set forth in Section 9 or, as
applicable, the period of time within which performance is measured for
purposes of determining whether an Award has been earned.


(bb)         “Restricted Stock” means shares of
Stock issued or transferred to a Participant subject to forfeiture and the
other restrictions set forth in Section 9.


(cc)         “Restricted Stock Award” means an Award
of Restricted Stock granted under Section 9.


(dd)         “Restricted Share Unit” means a
hypothetical investment equivalent to one share of Stock granted in connection
with an Award made under Section 9.


 


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(ee)         “Securities Act” means the Securities
Act of 1933, as amended.


(ff)           “Stock” means the Common Stock or
such other authorized shares of stock of the Company as the Committee may from
time to time authorize for use under the Plan.


(gg)         “Stock Appreciation Right” or “SAR”
means an Award granted under Section 8 of the Plan.


(hh)         “Stock Bonus” means an Award granted
under Section 10.


(ii)           “Stock Option Agreement” means any
agreement between the Company and a Participant who has been granted an Option
pursuant to Section 7 which defines the rights and obligations of the parties
thereto.


(jj)           “Strike Price” means (i) in the case
of a SAR granted in tandem with an Option, the Option Price of the related
Option, or (ii) in the case of a SAR granted independent of an Option, the Fair
Market Value on the Date of Grant.


(kk)         “Subsidiary” means any subsidiary of
the Company as defined in Section 424(f) of the Code.


(ll)           “Vested Unit” shall have the meaning
ascribed thereto in Section 9(d).


3.                            Effective Date, Duration and Shareholder
Approval


The Plan is effective as
of the Effective Date; provided, that the validity and exercisabilty of
any and all Awards granted pursuant to the Plan is contingent upon approval of
the Plan by the shareholders of the Company in a manner intended to comply with
the shareholder approval requirements of Section 162(m) of the Code and any
applicable exchange.  No Option shall be
treated as an Incentive Stock Option unless the Plan has been approved by the
shareholders of the Company in a manner intended to comply with the shareholder
approval requirements of Section 422(b)(i) of the Code; provided, that
any Option intended to be an Incentive Stock Option shall not fail to be
effective solely on account of a failure to obtain such approval, but rather
such Option shall be treated as a Nonqualified Stock Option unless and until
such approval is obtained.


The expiration date of
the Plan, on and after which no Awards may be granted hereunder, shall be the
tenth anniversary of the Effective Date; provided, however, that
the administration of the Plan shall continue in effect until all matters
relating to Awards previously granted have been settled.


 


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4.                            Administration


(a)           The Committee shall administer the
Plan.  The majority of the members of
the Committee shall constitute a quorum. 
The acts of a majority of the members present at any meeting at which a
quorum is present or acts approved in writing by a majority of the Committee
shall be deemed the acts of the Committee.


(b)           Subject to the provisions of the Plan
and applicable law, the Committee shall have the power, and in addition to
other express powers and authorizations conferred on the Committee by the Plan,
to:  (i) designate Participants; (ii)
determine the type or types of Awards to be granted to a Participant; (iii) determine
the number of shares of Stock to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection with,
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, shares of Stock, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances the delivery of
cash, Stock, other securities, other Options, other property and other amounts
payable with respect to an Award shall be deferred either automatically or at
the election of the holder thereof or of the Committee; (vii) interpret,
administer, reconcile any inconsistency, correct any defect and/or supply any
omission in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; (viii) establish, amend, suspend, or waive such rules
and regulations, (ix) appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the administration
of the Plan.


(c)           Unless otherwise expressly provided
in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award or any documents
evidencing Awards granted pursuant to the Plan 
shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all parties, including,
without limitation, the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, and any shareholder.


(d)           No member of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Award hereunder.


5.                            Grant of Awards; Shares Subject to the
Plan


The Committee may, from
time to time, grant Awards of Options, Stock Appreciation Rights, Restricted
Stock, Restricted Share Units and/or Stock Bonuses to one or more Eligible
Persons; provided, however, that:


(a)           Subject to Section 12, the aggregate
number of shares of Stock in respect of which Awards may be granted under the
Plan is [10%] shares;


 


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(b)           Shares of Stock shall be deemed to
have been used in settlement of Awards whether they are actually delivered or
the Fair Market Value equivalent of such shares is paid in cash; provided,
however, that shares of Stock delivered (either directly or by means of
attestation) in full or partial payment of the Option Price in accordance with
Section 7(b) shall be deducted from the number of shares of Stock delivered to
the Participant pursuant to such Option for purposes of determining the number
of shares of Stock acquired pursuant to the Plan.  In accordance with (and without limitation upon) the preceding
sentence, if and to the extent an Award under the Plan expires, terminates or
is canceled for any reason whatsoever without the Participant having received
any benefit therefrom, the shares covered by such Award shall again become
available for future Awards under the Plan. 
For purposes of the foregoing sentence, a Participant shall not be
deemed to have received any “benefit” in the case of forfeited Restricted Stock
Awards by reason of having enjoyed voting rights and dividend rights prior to
the date of forfeiture;


(c)           Stock delivered by the Company in
settlement of Awards may be authorized and unissued Stock, Stock held in the
treasury of the Company, Stock purchased on the open market or by private
purchase, or a combination of the foregoing;


(d)           Subject to Section 12, no person may
be granted Options or SARs under the Plan during any calendar year with respect
to more than 600,000 shares of Stock; provided, that such number shall
be adjusted pursuant to Section 12, and shares otherwise counted against such
number, only in a manner which will not cause Options or SARs granted under the
Plan to fail to qualify as “performance-based compensation” under Section
162(m) of the Code; and


(e)           Subject to Section 12, with respect
to awards of Restricted Stock, Restricted Share Units or Stock Bonus Awards
intended to qualify as “performance-based compensation” under Section 162(m) of
the Code, no person may be granted Restricted Stock, Restricted Share Units or
a Stock Bonus Award under the Plan during any calendar year with respect to
more than 150,000 shares of Stock; provided, that such number shall be adjusted
pursuant to Section 12, and shares otherwise counted against such number, only
in a manner which will not cause such Restricted Stock, Restricted Share Units
or Stock Bonus Award granted under the Plan to fail to qualify as
“performance-based compensation” under Section 162(m) of the Code.


6.                            Eligibility


Participation shall be limited to Eligible Persons who
have entered into an Award agreement or who have received written notification
from the Committee, or from a person designated by the Committee, that they
have been selected to participate in the Plan.


7.                            Options


The Committee is
authorized to grant one or more Incentive Stock Options or Nonqualified Stock
Options to any Eligible Person; provided, however, that no 


 


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Incentive Stock Option
shall be granted to any Eligible Person who is not an employee of the
Company.  Each Option so granted shall
be subject to the conditions set forth under this Section 7, or to such
other conditions as may be reflected in the applicable Stock Option Agreement.


(a)           Option Price.  The
exercise price (“Option Price”) per share of Stock for each Option shall be set
by the Committee at the time of grant but shall not be less than the Fair
Market Value of a share of Stock at the Date of Grant.


(b)           Manner of Exercise and Form of Payment.  No shares of Stock shall be delivered
pursuant to any exercise of an Option until payment in full of the Option Price
therefor is received by the Company. 
Options which have become exercisable may be exercised by delivery of
written notice of exercise to the Committee accompanied by payment of the
Option Price.  The Option Price shall be
payable (i) in cash and/or shares of Stock valued at the Fair Market Value at
the time the Option is exercised (including by means of attestation of
ownership of a sufficient number of shares of Stock in lieu of actual delivery
of such shares to the Company); provided, that such shares of Stock are
Mature Shares, (ii) in the discretion of the Committee, either (A) in other
property having a fair market value on the date of exercise equal to the Option
Price or (B) by delivering to the Committee a copy of irrevocable instructions
to a stockbroker to deliver promptly to the Company an amount of loan proceeds,
or proceeds from the sale of the Stock subject to the Option, sufficient to pay
the Option Price or (iii) by such other method as the Committee may allow.  Notwithstanding the foregoing, in no event
shall a Participant be permitted to exercise an Option in the manner described
in clause (ii) of the preceding sentences if the Committee determines that
exercising an Option in such manner would violate the Sarbanes-Oxley Act of
2002 or any other applicable law or the applicable rules and regulations of the
Securities and Exchange Commission, the applicable rules and regulations of any
securities exchange or inter-dealer quotation system on which the securities of
the Company or any of its Affiliates are listed or traded.


(c)           Vesting, Option Period and Expiration.  Options shall vest and become
exercisable in such manner and on such date or dates determined by the
Committee and shall expire after such period, not to exceed ten years, as may
be determined by the Committee (the “Option Period”); provided, however,
that notwithstanding any vesting dates set by the Committee, the Committee may,
in its sole discretion, accelerate the exercisability of any Option, which
acceleration shall not affect the terms and conditions of such Option other
than with respect to exercisability.  If
an Option is exercisable in installments, such installments or portions thereof
which become exercisable shall remain exercisable until the Option expires.


(d)           Stock Option Agreement - Other Terms and
Conditions.   Each Option granted under the Plan shall be
evidenced by a Stock Option Agreement. 
Except as specifically provided otherwise in such Stock Option
Agreement, each Option granted under the Plan shall be subject to the following
terms and conditions:


 


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(i)            Each Option or portion thereof that
is exercisable shall be exercisable for the full amount or for any part
thereof.


(ii)           Each share of Stock purchased through
the exercise of an Option shall be paid for in full at the time of the
exercise.  Each Option shall cease to be
exercisable, as to any share of Stock, when the Participant purchases the share
or exercises a related SAR or when the Option expires.


(iii)          Subject to Section 11(k), Options
shall not be transferable by the Participant except by will or the laws of
descent and distribution and shall be exercisable during the Participant’s
lifetime only by him.


(iv)          Each Option shall vest and become
exercisable by the Participant in accordance with the vesting schedule
established by the Committee and set forth in the Stock Option Agreement.


(v)           At the time of any exercise of an
Option, the Committee may, in its sole discretion, require a Participant to
deliver to the Committee a written representation that the shares of Stock to
be acquired upon such exercise are to be acquired for investment and not for
resale or with a view to the distribution thereof and any other representation
deemed necessary by the Committee to ensure compliance with all applicable
federal and state securities laws.  Upon
such a request by the Committee, delivery of such representation prior to the
delivery of any shares issued upon exercise of an Option shall be a condition
precedent to the right of the Participant or such other person to purchase any
shares.  In the event certificates for
Stock are delivered under the Plan with respect to which such investment
representation has been obtained, the Committee may cause a legend or legends
to be placed on such certificates to make appropriate reference to such
representation and to restrict transfer in the absence of compliance with
applicable federal or state securities laws.


(vi)          Each Participant awarded an Incentive
Stock Option under the Plan shall notify the Company in writing immediately
after the date he or she makes a disqualifying disposition of any Stock
acquired pursuant to the exercise of such Incentive Stock Option.  A disqualifying disposition is any
disposition (including any sale) of such Stock before the later of (A) two
years after the Date of Grant of the Incentive Stock Option or (B) one year
after the date the Participant acquired the Stock by exercising the Incentive
Stock Option.  The Company may, if
determined by the Committee and in accordance with procedures established by
it, retain possession of any Stock acquired pursuant to the exercise of an
Incentive Stock Option as agent for the applicable Participant until the end of
the period described in the preceding sentence, subject to complying with any
instructions from such Participant as to the sale of such Stock.


(e)           Incentive Stock Option Grants to 10% Stockholders.  Notwithstanding anything to the contrary in
this Section 7, if an Incentive Stock Option is 


 


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granted to a Participant who owns stock representing
more than ten percent of the voting power of all classes of stock of the
Company or of a Subsidiary or a Parent, the Option Period shall not exceed five
years from the Date of Grant of such Option and the Option Price shall be at
least 110 percent of the Fair Market Value (on the Date of Grant) of the Stock
subject to the Option.


(f)            $100,000 Per Year Limitation for Incentive Stock
Options.  To the extent the
aggregate Fair Market Value (determined as of the Date of Grant) of Stock for
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company) exceeds
$100,000, such excess Incentive Stock Options shall be treated as Nonqualified
Stock Options.


8.                            Stock Appreciation Rights


Any Option granted under
the Plan may include SARs, either at the Date of Grant or, except in the case
of an Incentive Stock Option, by subsequent amendment.  The Committee also may award SARs to
Eligible Persons independent of any Option. 
A SAR shall be subject to such terms and conditions not inconsistent
with the Plan as the Committee shall impose, including, but not limited to, the
following:


(a)           Vesting, Transferability and Expiration.  A  SAR granted in connection
with an Option shall become exercisable, be transferable and shall expire
according to the same vesting schedule, transferability rules and expiration
provisions as the corresponding Option. 
A SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the Committee
and reflected in an Award agreement.


(b)           Automatic exercise. 
If on the last day of the Option Period (or in the case of a
SAR independent of an option, the period established by the Committee after
which the SAR shall expire), the Fair Market Value exceeds the Strike Price,
the Participant has not exercised the SAR or the corresponding Option, and
neither the SAR nor the corresponding Option has expired, such SAR shall be
deemed to have been exercised by the Participant on such last day and the
Company shall make the appropriate payment therefor.


(c)           Payment.  Upon
the exercise of a SAR, the Company shall pay to the Participant an amount equal
to the number of shares subject to the SAR multiplied by the excess, if any, of
the Fair Market Value of one share of Stock on the exercise date over the Strike
Price.  The Company shall pay such
excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee.  Fractional shares shall be settled in cash.


(d)           Method of Exercise. 
A Participant may exercise a SAR at such time or times as may
be determined by the Committee at the time of grant by filing 


 


12

















 


an irrevocable written notice with the Committee or
its designee, specifying the number of SARs to be exercised, and the date on
which such SARs were awarded.


(e)           Expiration.  Except
as otherwise provided in the case of SARs granted in connection with Options, a
SAR shall expire on a date designated by the Committee which is not later than
ten years after the Date of Grant of the SAR.


9.                            Restricted Stock Awards and Restricted
Share Unit Awards


(a)           Award of Restricted Stock and Restricted Share Units.


(i)            The Committee shall have the
authority (A) to grant Awards of Restricted Stock and Restricted Share
Unit Awards to Eligible Persons, (B) to issue or transfer Restricted Stock
to Participants, and (C) to establish terms, conditions and restrictions
applicable to such Restricted Stock and Restricted Share Units, including the
Restricted Period, as applicable, which may differ with respect to each
grantee, the time or times at which Restricted Stock or Restricted Share Units
shall be granted or become vested and the number of shares or units to be
covered by each grant.


(ii)           Each Participant who has been granted
an Award of Restricted Stock shall execute and deliver to the Company an Award
agreement with respect to the Restricted Stock setting forth the restrictions
and other terms and conditions applicable to such Restricted Stock.  If the Committee determines that the
Restricted Stock shall be held in escrow rather than delivered to the
Participant pending the release of the applicable restrictions, the Committee
may require the Participant to additionally execute and deliver to the Company
(A) an escrow agreement satisfactory to the Committee and (B) the appropriate
blank stock powers with respect to the Restricted Stock covered by such
agreement.  If a Participant shall fail
to execute an agreement evidencing an Award of Restricted Stock and, if
applicable, an escrow agreement and stock powers, the Award shall be null and
void.  Subject to the restrictions set
forth in Section 9(b), the Participant generally shall have the rights and
privileges of a stockholder as to such Restricted Stock, including the right to
vote such Restricted Stock.  At the
discretion of the Committee, cash dividends and stock dividends with respect to
the Restricted Stock may be either currently paid to the Participant or
withheld by the Company for the Participant’s account, and interest may be
credited on the amount of cash dividends withheld at a rate and subject to such
terms as determined by the Committee. 
The cash dividends or stock dividends so withheld by the Committee and
attributable to any particular share of Restricted Stock (and earnings thereon,
if applicable) shall be distributed to the Participant upon the release of
restrictions on such share and, if such share is forfeited, the Participant
shall have no right to such cash dividends, stock dividends or earnings.


(iii)          Upon the grant of an Award of
Restricted Stock, the Committee shall cause a stock certificate registered in
the name of the Participant to be issued and, if it so determines, deposited
together with the stock powers with 


 


13

















 


an escrow agent
designated by the Committee.  If an
escrow arrangement is used, the Committee may cause the escrow agent to issue
to the Participant a receipt evidencing any stock certificate held by it,
registered in the name of the Participant.


(iv)          The terms and conditions of a grant of
Restricted Share Units shall be reflected in a written Award agreement.  No shares of Stock shall be issued at the
time an Award of a Restricted Share Unit is granted, and the Company will not
be required to set aside a fund for the payment of any such Award.  At the discretion of the Committee, each
Restricted Share Unit (representing one share of Stock) awarded to a
Participant may be credited with cash and stock dividends paid by the Company
in respect of one share of Stock (“Dividend Equivalents”).  At the discretion of the Committee, Dividend
Equivalents may be either currently paid to the Participant or withheld by the
Company for the Participant’s account, and interest may be credited on the amount
of cash Dividend Equivalents withheld at a rate and subject to such terms as
determined by the Committee.  Dividend
Equivalents credited to a Participant’s account and attributable to any
particular Restricted Share Unit (and earnings thereon, if applicable) shall be
distributed to the Participant upon settlement of such Restricted Share Unit
and, if such Restricted Share Unit is forfeited, the Participant shall have no
right to such Dividends Equivalents.


(b)           Restrictions.


(i)            Restricted Stock awarded to a
Participant shall be subject to the following restrictions until the expiration
of the Restricted Period, and to such other terms and conditions as may be set
forth in the applicable Award agreement: (A) if an escrow arrangement is
used, the Participant shall not be entitled to delivery of the stock
certificate; (B) the shares shall be subject to the restrictions on
transferability set forth in the Award agreement, (C) the shares shall be
subject to forfeiture to the extent provided in Section 9(d) and the
applicable Award agreement and (D) to the extent such shares are
forfeited, the stock certificates shall be returned to the Company, and all
rights of the Participant to such shares and as a shareholder shall terminate
without further obligation on the part of the Company.


(ii)           Restricted Share Units awarded to any
Participant shall be subject to (A) forfeiture until the expiration of the
Restricted Period, and satisfaction of applicable Performance Goals during such
period, to the extent provided in the applicable Award agreement, and to the
extent such Restricted Share Units are forfeited, all rights of the Participant
to such Restricted Share Units shall terminate without further obligation on
the part of the Company and (B) such other terms and conditions as may be
set forth in the applicable Award agreement.


(iii)          The Committee shall have the authority
to remove any or all of the restrictions on the Restricted Stock and Restricted
Share Units 


 


14

















 


whenever it may determine
that, by reason of changes in applicable laws or other changes in circumstances
arising after the date of the Awards of Restricted Stock or Restricted Share
Units, such action is appropriate.


(c)           Restricted Period. 
The Restricted Period of Restricted Stock and Restricted
Share Units shall commence on the Date of Grant and shall expire from time to
time and, upon attainment of the Performance Goals, if any, set forth in the
applicable Award agreement, as to that part of the Restricted Stock and
Restricted Share Units indicated in a schedule established by the Committee in
the applicable Award agreement.


(d)           Delivery of Restricted Stock and Settlement of
Restricted Share Units.  Upon
the expiration of the Restricted Period with respect to any shares of Stock
covered by an Award of Restricted Stock, the restrictions set forth in Section
9(b) and the applicable Award agreement shall be of no further force or effect
with respect to shares of Restricted Stock which have not then been forfeited,
except as set forth in the applicable Award agreement.  If an escrow arrangement is used, upon such
expiration, the Company shall deliver to the Participant, or his beneficiary,
without charge, the stock certificate evidencing the shares of Restricted Stock
which have not then been forfeited and with respect to which the Restricted
Period has expired (to the nearest full share) and any cash dividends or stock
dividends credited to the Participant’s account with respect to such Restricted
Stock and the interest thereon, if any.


Upon the expiration of
the Restricted Period with respect to any Restricted Share Units covered by an
Award of Restricted Share Units, the Company shall deliver to the Participant,
or his beneficiary, without charge, one share of Stock for each Restricted
Share Unit, which has not then been forfeited and with respect to which the
Restricted Period has expired (“Vested Unit”) and cash equal to any Dividend
Equivalents credited with respect to each such Vested Unit in accordance with Section 9(a)(iv)
hereof, if any; provided, however, that, if so explicitly
provided in the applicable Award agreement, the Committee may, in its sole
discretion, elect to pay cash or part cash and part Stock in lieu of delivering
only shares of Stock for Vested Units. 
If a cash payment is made in lieu of delivering shares of Stock, the
amount of such payment shall be equal to the Fair Market Value of the Stock as
of the date on which the Restricted Period lapsed with respect to such Vested
Unit.  Notwithstanding the foregoing,
and only if so explicitly provided in the applicable Award agreement, a
Participant may elect in a manner and at a time established in such Award
agreement to defer receipt of such shares of Stock or cash, with respect to
such Vested Units, until a specified date or period.


(e)           Stock Restrictions. 
Each certificate representing Restricted Stock awarded under
the Plan shall bear a legend substantially in the form of the following until
the lapse of all restrictions with respect to such Stock, as well as any other
information the Company deems appropriate:


Transfer of this certificate and the shares
represented hereby is restricted pursuant to the terms of the Interline Brands,
Inc. 2004 Equity Incentive Plan and a Restricted Stock Purchase and Award
Agreement, 


 


15

















 


dated
as of _____________, between Interline Brands, Inc. and
__________________.  A copy of such Plan
and Agreement is on file at the offices of Interline Brands,
Inc.


Stop transfer orders shall be entered with the Company’s transfer agent
and registrar against the transfer of legended securities.


(f)            Adjustments of Performance Goals. 
The Committee may, during the Restricted Period and subject to Section
9, make such adjustments to the Performance Goals as it may deem appropriate to
compensate for, or reflect (x) extraordinary or non-recurring events
experienced during the Restricted Period by the Company or by any other
corporation whose performance is relevant to the determination of whether the
Performance Goals have been attained, (y) any significant changes that may have
occurred during such Restricted Period in the applicable accounting rules or
principles or changes in the Company’s method of accounting or in that of any other
corporation whose performance is relevant to the determination of the
Performance Goals or (z) any significant changes that may have occurred during
such Restricted Period in tax laws or other laws or regulations that alter or
affect the computation of the measures of the Performance Goals.


(g)           Applicability of Section 162(m).  To the extent a Restricted Stock Award or an
Award of Restricted Share Units is intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the (i) Performance Goals and
(ii) schedule relating to the attainment of the Performance Goals with respect
to such Award, shall be established in writing and administered by the
Committee prior to the Restricted Period or during such period permitted by
Section 162(m) of the Code as a condition to the lapse of the restrictions on
any Restricted Stock Award or the earning of any Restricted Stock Unit.  At the completion of such Restricted Period,
or at such other times during the Restricted Period as specified by the
Committee in the Award agreement, the Committee shall determine and certify the
extent to which the Performance Goals have been attained with respect to such
Award.  With respect to each Award of
Restricted Stock or Restricted Share Units intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, the
Committee shall establish and administer such Awards and Performance Goals
(including the timing of the establishment of the Performance Goals, adjustment
to the Performance Goals and the determination and certification of the extent
to which the Performance Goals have been attained) in a manner designed to
preserve such Awards as “performance-based compensation.”


10.                     Stock Bonus Awards


The Committee may issue
unrestricted Stock, or other Awards denominated in Stock, under the Plan to
Eligible Persons, alone or in tandem with other Awards, in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine.  A Stock
Bonus Award under the Plan shall be granted as, or in payment of, a bonus, or
to provide incentives or recognize special achievements or contributions.  With respect to a Stock Bonus Award intended
to 


 


16

















 


qualify as
“performance-based compensation” under Section 162(m) of the Code, the
Committee shall establish and administer Performance Goals in the manner
described in Section 9 as an additional condition to the vesting and payment of
such Stock Bonus Awards.


11.                     General


(a)           Additional Provisions of an Award.  Awards to a Participant under the
Plan also may be subject to such other provisions (whether or not applicable to
the Awards granted to any other Participant) as the Committee determines appropriate,
including, without limitation, provisions for the forfeiture of or restrictions
on resale or other disposition of shares of Stock acquired under any Award,
provisions giving the Company the right to repurchase shares of Stock acquired
under any Award in the event the Participant elects to dispose of such shares,
provisions allowing the Participant to elect to defer the receipt of payment in
respect of Awards for a specified period or until a specified event, and
provisions to comply with Federal and state securities laws and Federal and
state tax withholding requirements.  Any
such provisions shall be reflected in the applicable Award agreement.


(b)           Privileges of Stock Ownership.  Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.


(c)           Government and Other Regulations.  The obligation of the Company to
settle Awards in Stock shall be subject to all applicable laws, rules, and
regulations, and to such approvals by governmental agencies as may be
required.  Notwithstanding any terms or
conditions of any Award to the contrary, the Company shall be under no
obligation to offer to sell or to sell, and shall be prohibited from offering
to sell or selling, any shares of Stock pursuant to an Award unless such shares
have been properly registered for sale pursuant to the Securities Act with the
Securities and Exchange Commission or unless the Company has received an
opinion of counsel, satisfactory to the Company, that such shares may be
offered or sold without such registration pursuant to an available exemption
therefrom and the terms and conditions of such exemption have been fully
complied with.  The Company shall be
under no obligation to register for sale under the Securities Act any of the
shares of Stock to be offered or sold under the Plan.  If the shares of Stock offered for sale or sold under the Plan
are offered or sold pursuant to an exemption from registration under the
Securities Act, the Company may restrict the transfer of such shares and may
legend the Stock certificates representing such shares in such manner as it
deems advisable to ensure the availability of any such exemption.


(d)           Tax Withholding.


(i)            A Participant may be required to pay
to the Company or any Affiliate and the Company or any Affiliate shall have the
right and is hereby authorized to withhold from any shares of Stock or other
property 


 


17

















 


deliverable under any
Award or from any compensation or other amounts owing to a Participant, the
amount (in cash, Stock or other property) of any required tax withholding and
payroll taxes in respect of an Award, its exercise, or any payment or transfer
under an Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for the
payment of such taxes.


(ii)           Without limiting the generality of
clause (i) above, the Committee may, in its sole discretion, permit a
Participant to satisfy, in whole or in part, the foregoing withholding
liability (but no more than the minimum required withholding liability) by (A)
the delivery of Mature Shares owned by the Participant having a Fair Market
Value equal to such withholding liability or (B) having the Company withhold
from the number of shares of Stock otherwise issuable pursuant to the exercise
or settlement of the Award a number of shares with a Fair Market Value equal to
such withholding liability.


(e)           Claim to Awards and Employment Rights.  No employee of the Company or an
Affiliate, or other person, shall have any claim or right to be granted an
Award under the Plan or, having been selected for the grant of an Award, to be
selected for a grant of any other Award. 
Neither the Plan nor any action taken hereunder shall be construed as
giving any Participant any right to be retained in the employ or service of the
Company or an Affiliate.


(f)            Designation and Change of Beneficiary.  Each Participant shall file with
the Committee a written designation of one or more persons as the beneficiary
who shall be entitled to receive the amounts payable with respect to an Award,
if any, due under the Plan upon his death. 
A Participant may, from time to time, revoke or change his beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee.  The
last such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant’s death,
and in no event shall it be effective as of a date prior to such receipt.  If no beneficiary designation is filed by a
Participant, the beneficiary shall be deemed to be his or her spouse or, if the
Participant is unmarried at the time of death, his or her estate.


(g)           Payments to Persons Other Than Participants.  If the Committee shall find that
any person to whom any amount is payable under the Plan is unable to care for
his affairs because of illness or accident, or is a minor, or has died, then
any payment due to such person or his estate (unless a prior claim therefor has
been made by a duly appointed legal representative) may, if the Committee so
directs the Company, be paid to his spouse, child, relative, an institution
maintaining or having custody of such person, or any other person deemed by the
Committee to be a proper recipient on behalf of such person otherwise entitled
to payment.  Any such payment shall be a
complete discharge of the liability of the Committee and the Company therefor.


 


18

















 


(h)           No Liability of Committee Members.  No member of the Committee shall
be personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee, officer
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim) arising out of any act or omission to
act in connection with the Plan unless arising out of such person’s own fraud
or willful bad faith; provided, however, that approval of the
Board shall be required for the payment of any amount in settlement of a claim
against any such person.  The foregoing
right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any
power that the Company may have to indemnify them or hold them harmless.


(i)            Governing Law. 
The Plan shall be governed by and construed in accordance
with the internal laws of the State of New York applicable to contracts made
and performed wholly within the State of New York.


(j)            Funding. 
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes.  Participants shall have no rights under the Plan other than as
unsecured general creditors of the Company, except that insofar as they may
have become entitled to payment of additional compensation by performance of
services, they shall have the same rights as other employees under general law.


(k)           Nontransferability.


(i)            Each Award shall be exercisable only
by a Participant during the Participant’s lifetime, or, if permissible under
applicable law, by the Participant’s legal guardian or representative.  No Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant
other than by will or by the laws of descent and distribution and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or an
Affiliate; provided that the designation of a beneficiary shall not constitute
an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.


(ii)           Notwithstanding the foregoing, the
Committee may, in its sole discretion, permit Awards other than Incentive Stock
Options to be transferred by a Participant, without consideration, subject to
such rules as the 


 


19

















 


Committee may adopt
consistent with any applicable Award agreement to preserve the purposes of the
Plan, to:


(A)                              any person who is a “family member” of
the Participant, as such term is used in the instructions to Form S-8
(collectively, the “Immediate Family Members”);


(B)                                a trust solely for the benefit of the
Participant and his or her Immediate Family Members;


(C)                                a partnership or limited liability
company whose only partners or shareholders are the Participant and his or her
Immediate Family Members; or


(D)                               any other transferee as may be approved
either (a) by the Board or the Committee in its sole discretion, or
(b) as provided in the applicable Award agreement;


(each transferee described in clauses (A), (B), (C) and (D) above is
hereinafter referred to as a “Permitted Transferee”); provided that the
Participant gives the Committee advance written notice describing the terms and
conditions of the proposed transfer and the Committee notifies the Participant
in writing that such a transfer would comply with the requirements of the Plan.


(iii)          The terms of any Award transferred in
accordance with the immediately preceding sentence shall apply to the Permitted
Transferee and any reference in the Plan, or in any applicable Award agreement,
to a Participant shall be deemed to refer to the Permitted Transferee, except
that (A) Permitted Transferees shall not be entitled to transfer any Award,
other than by will or the laws of descent and distribution; (B) Permitted Transferees
shall not be entitled to exercise any transferred Option unless there shall be
in effect a registration statement on an appropriate form covering the shares
of Stock to be acquired pursuant to the exercise of such Option if the
Committee determines, consistent with any applicable Award agreement, that such
a registration statement is necessary or appropriate, (C) the Committee or the
Company shall not be required to provide any notice to a Permitted Transferee,
whether or not such notice is or would otherwise have been required to be given
to the Participant under the Plan or otherwise, and (D) the consequences of the
termination of the Participant’s employment by, or services to, the Company or
an Affiliate under the terms of the Plan and the applicable Award agreement
shall continue to be applied with respect to the Participant, including,
without limitation, that an Option shall be exercisable by the Permitted
Transferee only to the extent, and for the periods, specified in the Plan and
the applicable Award agreement.


 


20

















 


(l)            Reliance on Reports. 
Each member of the Committee and each member of the Board
shall be fully justified in acting or failing to act, as the case may be, and
shall not be liable for having so acted or failed to act in good faith, in
reliance upon any report made by the independent public accountant of the
Company and its Affiliates and/or upon any other information furnished in
connection with the Plan by any person or persons other than himself.


(m)          Relationship to Other Benefits.  No payment under the Plan shall
be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the
Company except as otherwise specifically provided in such other plan.


(n)           Expenses.  The
expenses of administering the Plan shall be borne by the Company and its
Affiliates.


(o)           Pronouns.  Masculine
pronouns and other words of masculine gender shall refer to both men and women.


(p)           Titles and Headings. 
The titles and headings of the sections in the Plan are for
convenience of reference only, and in the event of any conflict, the text of
the Plan, rather than such titles or headings shall control.


(q)           Termination of Employment.  Unless an applicable Award agreement provides
otherwise, for purposes of the Plan, a person who transfers from employment or
service with the Company to employment or service with an Affiliate or vice
versa shall not be deemed to have terminated employment or service with the
Company or an Affiliate.


(r)            Severability.  If any provision of the Plan or any Award agreement is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.


12.                     Changes in Capital Structure


Awards granted under the
Plan and any agreements evidencing such Awards, the maximum number of shares of
Stock subject to all Awards stated in Section 5(a) and the maximum number of
shares of Stock with respect to which any one person may be granted Awards during
any period stated in Sections 5(d) or 5(e) shall be subject to adjustment or
substitution, as determined by the Committee in its sole discretion, as to the
number, price or kind of a share of Stock or other consideration subject to
such Awards or as otherwise determined by the Committee to be equitable (i) in
the event of 


 


21

















 


changes in the
outstanding Stock or in the capital structure of the Company by reason of stock
or extraordinary cash dividends, stock splits, reverse stock splits,
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the Date
of Grant of any such Award or (ii) in the event of any change in applicable
laws or any change in circumstances which results in or would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Participants, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan.  Any adjustment in Incentive Stock Options under this Section 13
shall be made only to the extent not constituting a “modification” within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this Section
13 shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act.  Further, with respect to Awards intended to
qualify as “performance-based compensation” under Section 162(m) of the
Code, such adjustments or substitutions shall be made only to the extent that
the Committee determines that such adjustments or substitutions may be made
without causing the Company to be denied a tax deduction on account of Section
162(m) of the Code.  The Company shall
give each Participant notice of an adjustment hereunder and, upon notice, such
adjustment shall be conclusive and binding for all purposes.


Notwithstanding the
above, in the event of any of the following:


A.            The Company is merged or consolidated with another
corporation or entity and, in connection therewith, consideration is received
by shareholders of the Company in a form other than Stock or other equity
interests of the surviving entity;


B.            All or substantially all of the assets of the Company are
acquired by another person;


C.            The reorganization or liquidation of the Company; or


D.            The Company shall enter into a written agreement to
undergo an event described in clauses A, B or C above;


then the Committee may, in its discretion and upon at least 10 days
advance notice to the affected persons, (1) cancel any outstanding Awards and
cause the holders thereof to be paid, in cash or shares of Stock, or any
combination thereof, the value of such Awards based upon the price per share of
Stock received or to be received by other shareholders of the Company in the
event, and/or (2) if applicable, cause such Awards to be assumed by a successor
entity and substituted with awards involving the common stock or other
applicable equity unit of the successor entity with equivalent value and having
terms and conditions of the substituted Awards that are no less favorable than
the Awards granted by the Company.  The
terms of this Section 12 may be varied by the Committee in any particular Award
agreement.


13.                     Effect of Change in Control


Except to the extent
reflected in a particular Award agreement:


 


22

















 


(a)           In the event of a Change in Control,
notwithstanding any provision of the Plan to the contrary, all Options and SARs
shall become immediately exercisable with respect to 100 percent of the shares
subject to such Option or SAR, and the Restricted Period shall expire
immediately with respect to 100 percent of such shares of Restricted Stock or
Restricted Share Units (including a waiver of any applicable Performance Goals)
and, to the extent practicable, such acceleration of exercisability and
expiration of the Restricted Period (as applicable) shall occur in a manner and
at a time which allows affected Participants the ability to participate in the
Change in Control transaction with respect to the Stock subject to their
Awards.


(b)           In addition, in the event of a Change
in Control, the Committee may in its discretion and upon at least 10 days
advance notice to the affected persons, cancel any outstanding Awards and pay
to the holders thereof, in cash or stock, or any combination thereof, the value
of such Awards based upon the price per share of Stock received or to be
received by other shareholders of the Company in the event.


(c)           The obligations of the Company under
the Plan shall be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of the
Company, or upon any successor corporation or organization succeeding to
substantially all of the assets and business of the Company.  The Company agrees that it will make
appropriate provisions for the preservation of Participants’ rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.


14.                     Nonexclusivity of the Plan


Neither the adoption of
this Plan by the Board nor the submission of this Plan to the stockholders of
the Company for approval shall be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under this Plan, and such arrangements may be either applicable
generally or only in specific cases.


15.                     Amendments and Termination


(a)           Amendment and Termination of the Plan.  The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement applicable to the Plan (including
as necessary to comply with any applicable stock exchange listing requirement
or to prevent the Company from being denied a tax deduction on account of
Section 162(m) of the Code); and provided  further that any such
amendment, alteration, suspension, discontinuance or termination that would
impair the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the consent
of the affected Participant, holder or beneficiary.  The termination date of the Plan, following which no Awards may
be granted hereunder, is 


 


23

















 


__________, 2014; provided that such
termination shall not affect Awards then outstanding, and the terms and
conditions of the Plan shall continue to apply to such Awards.


(b)           Amendment of Award Agreements.  The Committee may, to the extent consistent
with the terms of any applicable Award agreement, waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Award theretofore granted or the associated Award agreement,
prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would impair the rights of any Participant or any holder or beneficiary of
any Option theretofore granted shall not to that extent be effective without
the consent of the affected Participant, holder or beneficiary; and provided
further that, without stockholder approval, (i) no amendment or modification
may reduce the Option Price of any Option, (ii) the Committee may not cancel
any outstanding Option and replace it with a new Option (with a lower Option
Price) in a manner which would either (A) be reportable on the Company’s proxy
statement as Options which have been “repriced” (as such term is used in Item
402 of Regulation S-K promulgated under the Exchange Act), or (B) result in any
Option being accounted for under the “variable” method for financial statement
reporting purposes and (iii) the Committee may not take any other action which
is considered a “repricing” for purposes of the shareholder approval rules of
any applicable stock exchange.


*      
*       *


As
adopted by the Board of Directors of


Interline Brands, Inc. at a meeting held on December__, 2004.


 


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