exv10w22



 







    Exhibit 10.22



 




    Employment
    Agreement



 



    Agreement made as of January 15, 2004, by and between
    Builders FirstSource, Inc., a Delaware corporation (the
    “Company”), and Morris E. Tolly (the
    “Executive”).



 



    Whereas, the
    Company desires that Executive serve as the President of the
    Southeast Group Division of the Company, and Executive desires
    to hold such positions under the terms and conditions of this
    Agreement; and



 



    Whereas, the Board
    of Directors of the Company (the “Company Board”) has
    approved and authorized the Company to enter into this Agreement
    with Executive.



 



    Now, therefore, in
    consideration of the mutual covenants and agreements set forth
    herein, and intending to be legally bound hereby, the parties
    agree as follows:



 



    1.  Employment.  The Company
    hereby employs Executive, and Executive hereby accepts
    employment with the Company, upon the terms and subject to the
    conditions set forth herein.



 



    2.  Term.



 



    (a) Subject to Section 2(b) hereof, the term of
    employment by the Company of Executive pursuant to this
    Agreement (as the same may be extended, the “Term”)
    shall commence on January 15, 2004 (the “Effective
    Date”), and terminate on the first anniversary thereof.



 



    (b) Commencing on the first anniversary of the Effective
    Date and on each subsequent anniversary thereof, the Term shall
    automatically be extended for one (1) additional year
    unless, not later than ninety days (90) prior to any such
    anniversary date, either party hereto shall have notified the
    other party hereto in writing that such extension shall not take
    effect.



 



    3.  Position.  During the
    Term, Executive shall serve as the President of the Southeast
    Group Division of the Company, supervising the conduct of the
    business and affairs of the Company and performing such other
    duties as the Company Board shall determine.



 



    4.  Duties.  During the Term,
    Executive shall devote his full time and attention during normal
    business hours to the business and affairs of the Company,
    except vacations in accordance with the Company’s policies
    and for illness or incapacity, in accordance with Section 6
    hereof.



 



    5.  Salary and Bonus.



 



    (a) During the Term, the Company shall pay to Executive a
    base salary at the rate of $320,000 per year (the “Base
    Salary”), subject to adjustments pursuant to the terms of
    Section 5(b) hereof.



 



    (b) On or prior to each anniversary hereof during the Term
    (assuming the Term of the Agreement is extended pursuant to
    Section 2(b) hereof), the Company Board or the Compensation
    Committee of the Company Board (the “Compensation
    Committee”) shall review the Base Salary and may, in its
    sole discretion, increase the Base Salary based upon performance
    and merit. Executive’s Base Salary shall not be decreased
    below the amount set forth in Section 5(a) hereof. The Base
    Salary shall be payable to Executive in substantially equal
    installments in accordance with the Company’s normal
    payroll practices, but in no event less often than semi-monthly.



 



    (c) For the Company’s fiscal year ending
    December 31, 2004, and for each fiscal year during the Term
    thereafter, Executive shall be eligible to receive an annual
    cash bonus equal to the amount provided for in the
    Company’s Annual Cash Incentive Plan (“Annual
    Incentive Plan”) (which currently provides for a target
    bonus percentage of 100% of Executive’s Base Salary), which
    Annual Incentive Plan is approved by the Company Board or the
    Compensation Committee thereof. Executive’s target bonus
    percentage under the Annual Incentive Plan shall not be reduced
    below 100% of his Base Salary.



 



    6.  Vacation, Holidays and Sick
    Leave.  During the Term, Executive shall be
    entitled to paid vacation, paid holidays and sick leave in
    accordance with the Company’s standard policies for its
    senior executive officers.













 






    7.  Business
    Expenses.  Executive shall be reimbursed for
    all reasonable and necessary business expenses incurred by him
    in connection with his employment, including, without
    limitation, expenses for travel and entertainment incurred in
    conducting or promoting business for the Company upon timely
    submission by Executive of receipts and other documentation as
    required by the Internal Revenue Code of 1986, as
    amended (the “Code”), and in accordance with the
    Company’s normal expense reimbursement policies.



 



    8.  Health, Welfare and Related
    Benefits.  During the Term, Executive and
    eligible members of his family shall be eligible to participate
    fully in all (a) health and dental benefits and insurance
    programs; (b) life and short- and long-term disability
    benefits and insurance programs; and (c) defined
    contribution and equity compensation programs, all as available
    to senior executive officers of the Company generally.



 



    9.  Confidentiality, Non-Competition.



 



    (a) Executive acknowledges that: (i) the Executive
    has, and his employment hereunder will require that Executive
    continue to have, access to and knowledge of Confidential
    Information (as hereinafter defined); (ii) the direct and
    indirect disclosure of any such Confidential Information to
    existing or potential competitors of the Company or its
    subsidiaries would place the Company at a competitive
    disadvantage and would do damage, monetary or otherwise, to the
    Company’s businesses; and (iii) the engaging by
    Executive in any of the activities prohibited by this
    Section 9 may constitute improper appropriation
    and/or use
    of such Confidential Information. Executive expressly
    acknowledges that the Confidential Information constitutes a
    protectable business interest of the Company. As used herein,
    the term “Confidential Information” shall mean
    information of any kind, nature or description which is
    disclosed to or otherwise known to the Executive as a direct or
    indirect consequence of his association with the Company, which
    information is not generally known to the public or in the
    businesses in which such entities are engaged or which
    information relates to specific investment opportunities within
    the scope of their business which were considered by the Company
    during the Term; provided, however, that
    “Confidential Information” shall not be deemed to
    include information which (i) is or becomes generally
    available to the public other than as a result of a disclosure
    by the Executive, (ii) becomes available to the Executive
    on a non-confidential basis from a source other than the
    Company, provided that such source is not bound by any
    contractual, legal or fiduciary obligation with respect to such
    information or (iii) was in the Executive’s possession
    prior to being furnished by the Company.



 



    (b) During the Term of this Agreement and for a period of
    one year after the termination of Executive’s employment
    hereunder (upon expiration of the Term or otherwise), Executive
    shall not, directly or indirectly, whether individually, as a
    director, stockholder, owner, manager, member, partner,
    employee, consultant, principal or agent of any business, or in
    any other capacity, use for his own account, utilize or make
    known, disclose, furnish or make available to any person, firm
    or corporation any of the Confidential Information, other than
    to authorized officers, directors and employees of the Company
    in the proper performance of the duties contemplated herein, or
    as required by a court of competent jurisdiction or other
    administrative or legislative body; provided that,
    prior to disclosing any of the Confidential Information to a
    court or other administrative or legislative body, Executive
    shall promptly notify the Company so that the Company may seek a
    protective order or other appropriate remedy. Executive agrees
    to return all Confidential Information, including all
    photocopies, extracts and summaries thereof, and any such
    information stored electronically on tapes, computer disks or in
    any other manner to the Company at any time upon request by the
    Company and upon the termination of his employment for any
    reason.



 



    (c) During the Term of this Agreement and for a period of
    one year after termination of Executive’s employment
    hereunder (upon expiration of the Term or otherwise), Executive
    shall not, directly or indirectly, own any interest in, operate,
    join, control or participate as a partner, member, director,
    manager, principal, officer, or agent of, enter into the
    employment of, act as a consultant or advisor to, or perform any
    services for, any entity (in those geographic areas in which the
    Company or any of its subsidiaries, as of the date of
    termination of the Executive’s employment hereunder, have
    material operations) which entity is engaged in competition with
    the Company or any of its subsidiaries. An entity shall be
    deemed to be engaged in competition with the Company or its
    subsidiaries if it engages in a business which is the same as or
    substantially similar to any business engaged in by the Company
    or such subsidiary during the Term.




    

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    (d) During the Term of this Agreement and for a period of
    two years after termination of Executive’s employment
    hereunder (upon expiration of the Term or otherwise), Executive
    shall not, directly or indirectly, hire, solicit or recruit for
    hire any employee of the Company or any of its subsidiaries or
    encourage any employee of the Company or any of its subsidiaries
    to terminate his or her employment in order to obtain employment
    by any other person, firm or corporation.



 



    (e) Executive acknowledges that(A) in connection with
    rendering the services to be rendered by Executive hereunder,
    Executive will have access to and knowledge of Confidential
    Information, the disclosure of which would place the Company or
    its subsidiaries at a competitive disadvantage, causing
    irreparable injury, and (B) the services to be rendered by
    Executive hereunder are of a special and unique character, which
    gives this Agreement a peculiar value to the Company, the loss
    of which may not be reasonably or adequately compensated for by
    damages in an action at law, and that a material breach or
    threatened breach by Executive of any of the provisions
    contained in this Section 9 will cause the Company
    irreparable injury. Executive, therefore, agrees that the
    Company shall be entitled, in addition to any other right or
    remedy, to a temporary, preliminary and permanent injunction,
    without the necessity of proving the inadequacy of monetary
    damages or the posting of any bond or security, enjoining or
    restraining Executive from any such violation or threatened
    violations.



 



    (f) Executive further acknowledges and agrees that due to
    the uniqueness of his services and confidential nature of the
    information he will possess, the covenants set forth herein are
    reasonable and necessary for the protection of the business and
    goodwill of the Company; and it is the intent of the parties
    hereto that if, in the opinion of any court of competent
    jurisdiction, any provision set forth in this Section 9 is
    not reasonable in any respect, such court shall have the right,
    power and authority to modify any and all such provisions in
    such a manner as to such court shall appear not unreasonable and
    to enforce the remainder of this Section 9 as so modified.



 



    10.  Termination of
    Agreement.  The employment by the Company of
    Executive pursuant to this Agreement shall not be terminated
    prior to the end of the Term, except as set forth in this
    Section 10.



 



    (a) By Mutual Consent.



 



    (i) The employment by the Company of Executive pursuant to
    this Agreement may be terminated at any time by the mutual
    written agreement of the Company and Executive.



 



    (ii) In the event that (i) Executive’s employment
    is terminated by mutual consent pursuant to this
    Section 10(a), and (ii) Executive and the Company
    determine at that time that it is in their mutual best interest
    for Executive to continue to be bound after his termination by
    the provisions of Section 9 of this Agreement for the
    periods set forth therein, then the parties may enter into an
    agreement to that effect, in exchange for which Executive would
    be entitled to the compensation provided for in
    Section 10(e) hereof.



 



    (b) Death.  The employment by the
    Company of Executive pursuant to this Agreement shall be
    terminated upon the death of Executive, in which event
    Executive’s spouse or heirs shall receive the following:
    (i) Executive’s Base Salary and benefits to be paid or
    provided to Executive under this Agreement through the Date of
    Termination and (ii) continuation of Executive’s Base
    Salary and the health and welfare benefits provided for pursuant
    to Sections 8(a) and 8(b) hereof (“Health
    Benefits”) for a period of one (1) year after the Date
    of Termination.



 



    (c)  Disability.  The
    employment by the Company of Executive pursuant to this
    Agreement may be terminated by written notice to Executive at
    the option of the Company in the event that as a result of the
    Executive’s incapacity due to physical or mental illness
    (which physical or mental illness shall be confirmed in writing
    by a physician or other medical expert acceptable to both
    parties), the Executive is unable to perform his duties,
    services and responsibilities hereunder or shall have been
    absent from his duties hereunder on a full-time basis for ninety
    (90) consecutive days or for an aggregate of ninety
    (90) days or more in any six (6) month period, and
    within thirty (30) days after notice is given by the
    Company (which notice may be delivered no earlier than thirty
    days prior to the expiration of such ninety
    (90) consecutive days or six month period, as the case may
    be), the Executive shall not have returned to the performance of
    his duties hereunder on a full-time basis. In the event the
    employment by the Company of Executive is terminated pursuant to
    this Section 10(c), Executive shall be entitled to receive
    the following: (i) all Base Salary and benefits to be paid
    or provided to Executive under this Agreement through the Date
    of Termination and (ii) continuation of his Base Salary and




    

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    Health Benefits for a period of one (1) year after the Date
    of Termination; provided, however, that amounts
    payable to Executive under this Section 10(c) shall be
    reduced by the proceeds of any short-
    and/or
    long-term disability payments under the Company plans referred
    to in Section 8 hereof to which Executive may be entitled
    during such period.



 



    (d) By the Company for Cause.  The
    employment of Executive pursuant to this Agreement may be
    terminated by the Company by written notice to Executive
    (“Notice of Termination”) for Cause (as hereafter
    defined). In the event the employment by the Company of
    Executive is terminated pursuant to this Section 10(d),
    Executive shall be entitled to receive all Base Salary and
    benefits to be paid or provided to Executive under this
    Agreement through the Date of Termination and no more.



 



    (e) By the Company Without
    Cause.  The employment by the Company of
    Executive pursuant to this Agreement may be terminated by the
    Company at any time without Cause by delivery of a Notice of
    Termination to Executive. In the event the employment by the
    Company of Executive is terminated pursuant to this
    Section 10(e), Executive shall be entitled to receive the
    following: (i) all Base Salary and benefits to be paid or
    provided to Executive under this Agreement through the Date of
    Termination, (ii) continuation of his Base Salary and
    Health Benefits for a period of one (1) year after the Date
    of Termination, and (iii) an amount equal to his Average
    Bonus Compensation (as hereafter defined).



 



    (f) By Executive.  The employment
    of Executive by the Company pursuant to this Agreement may be
    terminated by Executive by written notice to the Company of his
    resignation (a “Notice of Resignation”) at any time.
    In the event the employment by the Company of Executive is
    terminated pursuant to this Section 10(f), Executive shall
    be entitled to receive all Base Salary and benefits to be paid
    or provided to Executive under this Agreement through the Date
    of Termination and no more; provided, however, that if Executive
    terminates his employment due to (i) a material adverse
    diminution of Executive’s job title or responsibilities
    from those currently in effect; or (ii) a relocation of
    Executive’s principal place of employment more than
    100 miles from its current location without his consent,
    then Executive shall instead be entitled to the compensation
    provided for in Section 10(e) hereof.



 



    (g)  Non-Renewal.  In the event
    that at any time during the Term (as it may be extended) the
    Company notifies Executive of its intent not to renew this
    Agreement pursuant to Section 2(b) hereof, and Executive
    then delivers a Notice of Resignation to the Company within
    ninety (90) days of receipt of such notice of non-renewal,
    Executive shall be entitled to receive the following:
    (i) all Base Salary and benefits to be paid or provided to
    Executive under this Agreement through the Date of Termination,
    (ii) continuation of his Base Salary and Health Benefits
    for a period of one (1) year after the Date of Termination,
    and (iii) an amount equal to his Average Bonus Compensation.



 



    (h) Previously Earned
    Bonus.  Notwithstanding any other provision of
    this Section 10, in the event that Executive’s
    employment pursuant to this Agreement is terminated at a time
    when Executive shall have earned a bonus under the Annual
    Incentive Plan for performance during the prior fiscal year
    which has not yet been paid, Executive shall be paid such bonus
    in addition to the amounts otherwise provided for in this
    Section 10. Such bonus shall be paid in accordance with the
    Company’s normal practices.



 



    (i) Date of
    Termination.  Executive’s Date of
    Termination shall be: (i) if the parties hereto mutually
    agree to terminate this Agreement pursuant to Section 10(a)
    hereof, the date designated by the parties in such agreement;
    (ii) if Executive’s employment by the Company is
    terminated pursuant to Section 10(b), the date of
    Executive’s death; (iii) if Executive’s
    employment by the Company is terminated pursuant to
    Section 10(c), the last day of the applicable period
    referred to in Section 10(c) hereof; (iv) if
    Executive’s employment by the Company is terminated
    pursuant to Section 10(d), the date on which a Notice of
    Termination is given; and (v) if Executive’s
    employment by the Company is terminated pursuant to
    Sections 10(e), 10(f) or 10(g), the date the Notice of
    Termination or Notice of Resignation, as the case may be, is
    given.



 



    (j) Payment of Post-Termination
    Compensation.  After Executive’s Date of
    Termination, all payments of Base Salary and Average Bonus
    Compensation to Executive pursuant to this Section 10 shall
    be paid in accordance with the Company’s normal payroll
    practices, but in no event less often than semi-monthly. In the
    event of a breach by Executive of Section 9 of this
    Agreement during the applicable period following his Date




    

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    of Termination, Executive agrees (i) that the Company shall
    have no further obligation to make any payments to Executive
    under Section 10 of the Agreement and (ii) that any
    payments of Base Salary or Average Bonus Compensation previously
    made to Executive after his Date of Termination shall be
    returned to the Company.



 



    11.  Representations.



 



    (a) The Company represents and warrants that this Agreement
    has been authorized by all necessary corporate action of the
    Company and is a valid and binding agreement of the Company
    enforceable against the Company in accordance with its terms.



 



    (b) Executive represents and warrants that he is not a
    party to any agreement or instrument which would prevent him
    from entering into or performing his duties in any way under
    this Agreement and that this Agreement is a valid and binding
    agreement of Executive enforceable against Executive in
    accordance with its terms.



 



    12.  Successors.  This
    Agreement is a personal contract and the rights and interests of
    Executive hereunder may not be sold, transferred, assigned,
    pledged, encumbered, or hypothecated by him, except as otherwise
    expressly permitted by the provisions of this Agreement. This
    Agreement shall inure to the benefit of and be enforceable by
    Executive and his personal or legal representatives, executors,
    administrators, successors, heirs, distributees, devisees and
    legatees. If Executive should die while any amount would still
    be payable to him hereunder had Executive continued to live, all
    such amounts, unless otherwise provided herein, shall be paid in
    accordance with the terms of this Agreement to his devisee,
    legatee or other designee or, if there is no such designee, to
    his estate.



 



    13.  Entire Agreement.  This
    Agreement contains all the understandings between the parties
    hereto pertaining to the matters referred to herein, and
    supersedes any other undertakings and agreements (other than any
    stock option agreement between Executive and the Company),
    whether oral or in writing, previously entered into by them with
    respect thereto. Executive represents that, in executing this
    Agreement, he does not rely and has not relied upon any
    representation or statement made by the Company not set forth
    herein with regard to the subject matter or effect of this
    Agreement or otherwise.



 



    14.  Termination; Amendment or Modification;
    Waiver.



 



    (a) This Agreement may be terminated at any time by mutual
    written consent of the Company and Executive.



 



    (b) No provision of this Agreement may be amended or waived
    unless such amendment or waiver is agreed to in writing, signed
    by Executive and by a duly authorized officer of the Company. No
    waiver by any party hereto of any breach by another party hereto
    of any condition or provision of this Agreement to be performed
    by such other party shall be deemed a waiver of a similar or
    dissimilar condition or provision at the same time, any prior
    time or any subsequent time.



 



    15.  Notices.  All notices and
    other communications required or permitted to be given hereunder
    shall be in writing and shall be (i) delivered by hand,
    (ii) delivered by a nationally recognized commercial
    overnight delivery service, (iii) mailed postage prepaid by
    first class mail or (iv) transmitted by facsimile
    transmitted to the party concerned at the address or telecopier
    number set forth below:



 



    To Executive at:



 



    Morris E. Tolly




    205 King Charles Circle




    Summerville, SC 29483



 



    To the Company at:



 



    Builders FirstSource, Inc.




    2001 Bryan Street, Suite 1600




    Dallas, Texas 75201




    Attention: General Counsel




    

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    with copies to:



 



    JLL Partners




    450 Lexington Avenue




    New York, New York 10017




    Facsimile:
    (212) 286-8626




    Attention: Ramsey Frank



 



    and



 



    Skadden, Arps, Slate, Meagher & Flom LLP




    One Rodney Square




    P.O. Box 636




    Wilmington, Delaware 19899




    Facsimile:
    (302) 651-3001




    Attention: Robert B. Pincus



 



    Such notices shall be effective: (i) in the case of hand
    deliveries when received; (ii) in the case of an overnight
    delivery service, on the next business day after being placed in
    the possession of such delivery service, with delivery charges
    prepaid; (iii) in the case of mail, seven (7) days
    after deposit in the postal system, first class mail, postage
    prepaid; and (iv) in the case of facsimile notices, when
    electronic confirmation of receipt is received by the sender.
    Any party may change its address and telecopy number by written
    notice to the other given in accordance with this
    Section 15; provided, however, that such
    change shall be effective when received.



 



    16.  Severability.  If any
    provision or clause of this Agreement or the application of any
    such provision or clause to any party or circumstances shall be
    determined by any court of competent jurisdiction to be invalid
    and unenforceable to any extent, the remainder of this Agreement
    or the application of such provision or clause to such person or
    circumstances other than those to which it is so determined to
    be invalid and unenforceable, shall not be affected thereby, and
    each provision or clause hereof shall be validated and shall be
    enforced to the fullest extent permitted by law.



 



    17.  Survivorship.  The
    respective rights and obligations of the parties hereunder shall
    survive any termination of this Agreement to the extent
    necessary to the intended preservation of such rights and
    obligations.



 



    18.  Governing Law.  This
    Agreement will be governed by and construed in accordance with
    the laws of the State of Delaware, without regard to its
    conflicts of law principles.



 



    19.  Headings.  All
    descriptive headings of sections and paragraphs in this
    Agreement are intended solely for convenience, and no provision
    of this Agreement is to be construed by reference to the heading
    of any section or paragraph.



 



    20.  Withholding.  All
    payments to Executive under this Agreement shall be reduced by
    all applicable withholding required by federal, state or local
    law.



 



    21.  Specific
    Performance.  Each party hereto acknowledges
    that money damages would be both incalculable and an
    insufficient remedy for any breach of this Agreement by such
    party and that any such breach would cause the other parties,
    irreparable harm. Accordingly, each party hereto also agrees
    that, in the event of any breach or threatened breach of the
    provisions of this Agreement by such party, the other parties
    shall be entitled to equitable relief without the requirement of
    posting a bond or other security, including in the form of
    injunctions and orders for specific performance, in addition to
    all other remedies available to such other parties at law or in
    equity.



 



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




    

    6








 






    23.  Definitions.



 



    (a) “Cause” means the determination, in
    good faith, by the Company Board, after notice to Executive that
    one or more of the following events has occurred: (i) any
    act of gross negligence, fraud, willful misconduct or moral
    turpitude by Executive materially injuring the interest,
    business or reputation of the Company, or any of its parents,
    subsidiaries or affiliates; (ii) Executive’s
    conviction of any felony; (iii) violation by Executive of
    the Company’s Drug Policy; (iv) any misappropriation
    or embezzlement of the property of the Company, or any of its
    parents, subsidiaries or affiliates; or (v) any material
    breach by Executive of this Agreement, including, without
    limitation, a material breach of Section 9 hereof, which
    breach, to the extent it is capable of being cured, remains
    uncorrected for a period of thirty (30) days after receipt
    by Executive of written notice from the Company setting forth
    such breach.



 



    (b) “Average Bonus Compensation”
    shall mean an amount equal to the average of the annual
    bonus amounts earned by Executive under the Company’s
    Annual Incentive Plan during the two most recent fiscal years
    ended prior to Executive’s Date of Termination.



 



    [Signature
    Page Follows]
    




    

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    In witness whereof, the parties hereto have executed and
    delivered this Employment Agreement as of the date first above
    written.



 



    Builders FirstSource,
    Inc.



 


			
	 	    By: 
	
        









    Floyd Sherman




    Chief Executive Officer



 



    Executive



 


 











    Morris E. Tolly




    

    8