Document:

exv10w14w2

 

Exhibit 10.14.2

WAIVER AND CONSENT AGREEMENT

     This WAIVER AND CONSENT AGREEMENT (the “Agreement”) dated this 18th day of April,
2007 is made with respect to the Second Amended and Restated Loan and Security Agreement (the “Loan
Agreement”) between

     BANK OF AMERICA, N.A., successor-by-merger to Fleet Retail Finance Inc. (the “Lender”), a
national banking association, having a place of business at 100 Federal Street, 9th Floor,
4MA5-100-09-09, Boston, MA 02110,

     and

     BAKERS FOOTWEAR GROUP, INC. (the “Borrower”), a Missouri corporation with its principal
executive offices at 2815 Scott Avenue, Suite C, St. Louis,
Missouri 63103,

      in consideration of the mutual covenants contained herein and benefits to be derived herefrom.

RECITALS:

     The Borrower has requested that the Lender waive the covenant in Exhibit 5.11(a) which
requires that the Borrower maintain Availability of not less than the greater of (i) $1,500,000 and
(ii) six percent (6%) of the Borrowing Base. Lender is willing to waive such covenant on the terms
and conditions set forth below

     Accordingly, the Borrower and Lender agree as follows:

1. Definitions. Terms defined in the Recitals shall be incorporated herein as therein
defined. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Loan Agreement.

2. Waiver and Consent. Subject to satisfaction of the conditions to effectiveness set
forth in Section 5 below, the Lender hereby agrees that solely for the period from April
20, 2007 through and including May 18th, 2007, the Borrower shall be required to maintain
Availability at all times of not less than $250,000.00. On and after May 19th, 2007, the Borrower
shall be required to comply with Exhibit 5.11(a) as in effect prior to this
Agreement.

3. Additional Acknowledgments and Representations. As an inducement for the Lender to
execute this Agreement, the Borrower hereby represents and warrants that as of the date hereof no
Suspension Event has occurred and is continuing.

4. Ratification of Loan Documents; No Claims Against Lender. Except as provided herein,
all terms and conditions of the Loan Agreement and of the other Loan Documents remain in full force
and effect. The Borrower hereby ratifies, confirms, and re-affirms all and singular the terms and
conditions, including execution and delivery, of the Loan Documents. There is no basis nor set of
facts on which any amount (or any portion thereof) owed by the Borrower to the Lender could be
reduced, offset, waived, or forgiven, by rescission or otherwise; nor is there any claim,
counterclaim, off set, or defense (or other right, remedy, or basis having a similar effect)
available to the Borrower with regard to the respective

 

 

 

Liabilities of the Borrower to the Lender;
nor is there any basis on which the terms and conditions of any of the respective Liabilities of
the Borrower to the Lender could be claimed to be other than as stated on
the written instruments which evidence such Liabilities. To the extent that the Borrower has (or
ever had) any such claims against the Lender, each hereby affirmatively WAIVES and RELEASES same.

5. Conditions To Effectiveness. This Agreement shall not be effective until each of the
following conditions precedent have been fulfilled to the satisfaction of the Lender:

     (a) No Suspension Event shall have occurred and be continuing;

     (b) This Agreement shall have been duly executed and delivered by the respective parties
hereto and shall be in full force and effect;

     (c) All action on the part of the Borrower necessary for the valid execution, delivery and
performance by the Borrower of this Agreement shall have been duly and effectively taken and
evidence thereof satisfactory to the Lender shall have been provided to the Lender; and

     (d) The Borrower shall have paid to the Lender a waiver fee in the amount of $75,000.00 and
all other fees and expenses then due and owing pursuant to the Loan Agreement;

6. Miscellaneous.

     (a) This Agreement may be executed in several counterparts and by each party on a separate
counterpart, each of which when so executed and delivered shall be an original, and all of which
together shall constitute one instrument.

     (b) This Agreement expresses the entire understanding of the parties with respect to the
transactions contemplated hereby. No prior negotiations or discussions shall limit, modify, or
otherwise affect the provisions hereof.

     (c) Any determination that any provision of this Agreement or any application hereof is
invalid, illegal, or unenforceable in any respect and in any instance shall not affect the
validity, legality, or enforceability of such provision in any other instance, or the validity,
legality, or enforceability of any other provisions of this Agreement .

     (d) The Borrower shall pay on demand all reasonable costs and expenses of the Lender,
including, without limitation, reasonable attorneys’ fees in connection with the preparation,
negotiation, execution, and delivery of this Agreement .

     (e) THIS AGREEMENT SHALL BE CONSTRUED, GOVERNED, AND ENFORCED PURSUANT TO THE INTERNAL LAWS OF
THE COMMONWEALTH OF MASSACHUSETTS AND SHALL TAKE EFFECT AS SEALED INSTRUMENT.

[Signature page follows]

 - 2 -

 

     IN WITNESS WHEREOF, the parties have hereunto caused this Agreement to be executed and their
seals to be hereto affixed as of the date first above written.

BAKERS FOOTWEAR GROUP, INC.

(“BORROWER”)

By:
/s/ Lawrence L. Spanley, Jr.

Print Name: Lawrence L. Spanley, Jr.

Title:
Executive Vice President, Chief Financial Officer

BANK OF AMERICA, N.A.

(“LENDER”)

By: /s/ David C. Storer

Print Name: David C. Storer

Title: Vice President

 

S/1EX-10.9 IDG 2007 STOCK INCENTIVE PLAN

 

    Exhibit
    10.9

 

 

    INDUSTRIAL
    DISTRIBUTION GROUP, INC.

    2007 STOCK INCENTIVE PLAN

 

    Effective as of May 1, 2007

 

 

    TABLE OF
    CONTENTS

 

	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
 
	

    Page

	
 

	 

	
    ARTICLE 1 — GENERAL
    PROVISIONS
    
	
 
	
 
	
    1
	
 

	
 
	
    1.1
	
 
	
 
	
    Establishment of Plan
    
	
 
	
 
	
    1
	
 

	
 
	
    1.2
	
 
	
 
	
    Purpose of Plan
    
	
 
	
 
	
    1
	
 

	
 
	
    1.3
	
 
	
 
	
    Types of Awards
    
	
 
	
 
	
    1
	
 

	
 
	
    1.4
	
 
	
 
	
    Effective Date
    
	
 
	
 
	
    1
	
 

	
 
	
    1.5
	
 
	
 
	
    Duration of the Plan
    
	
 
	
 
	
    1
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 2 —
    DEFINITIONS
    
	
 
	
 
	
    1
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 3 —
    ADMINISTRATION
    
	
 
	
 
	
    5
	
 

	
 
	
    3.1
	
 
	
 
	
    General
    
	
 
	
 
	
    5
	
 

	
 
	
    3.2
	
 
	
 
	
    Authority of the Committee
    
	
 
	
 
	
    5
	
 

	
 
	
    3.3
	
 
	
 
	
    Participation Outside of the
    United States
    
	
 
	
 
	
    5
	
 

	
 
	
    3.4
	
 
	
 
	
    Delegation of Authority
    
	
 
	
 
	
    5
	
 

	
 
	
    3.5
	
 
	
 
	
    Award Agreements
    
	
 
	
 
	
    5
	
 

	
 
	
    3.6
	
 
	
 
	
    Indemnification
    
	
 
	
 
	
    5
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 4 —
    SHARES SUBJECT TO THE PLAN
    
	
 
	
 
	
    6
	
 

	
 
	
    4.1
	
 
	
 
	
    Number of Shares
    
	
 
	
 
	
    6
	
 

	
 
	
    4.2
	
 
	
 
	
    Individual Limits
    
	
 
	
 
	
    7
	
 

	
 
	
    4.3
	
 
	
 
	
    Adjustment of Shares
    
	
 
	
 
	
    7
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 5 — STOCK
    OPTIONS
    
	
 
	
 
	
    7
	
 

	
 
	
    5.1
	
 
	
 
	
    Grant of Options
    
	
 
	
 
	
    7
	
 

	
 
	
    5.2
	
 
	
 
	
    Agreement
    
	
 
	
 
	
    8
	
 

	
 
	
    5.3
	
 
	
 
	
    Option Exercise Price
    
	
 
	
 
	
    8
	
 

	
 
	
    5.4
	
 
	
 
	
    Duration of Options
    
	
 
	
 
	
    8
	
 

	
 
	
    5.5
	
 
	
 
	
    Exercise of Options
    
	
 
	
 
	
    8
	
 

	
 
	
    5.6
	
 
	
 
	
    Payment
    
	
 
	
 
	
    8
	
 

	
 
	
    5.7
	
 
	
 
	
    Nontransferability of Options
    
	
 
	
 
	
    8
	
 

	
 
	
    5.8
	
 
	
 
	
    Special Rules for ISOs
    
	
 
	
 
	
    8
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 6 — STOCK
    APPRECIATION RIGHTS
    
	
 
	
 
	
    9
	
 

	
 
	
    6.1
	
 
	
 
	
    Grant of SARs
    
	
 
	
 
	
    9
	
 

	
 
	
    6.2
	
 
	
 
	
    Agreement
    
	
 
	
 
	
    9
	
 

	
 
	
    6.3
	
 
	
 
	
    Tandem SARs
    
	
 
	
 
	
    9
	
 

	
 
	
    6.4
	
 
	
 
	
    Payment
    
	
 
	
 
	
    9
	
 

	
 
	
    6.5
	
 
	
 
	
    Exercise of SARs
    
	
 
	
 
	
    9
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 7 —
    RESTRICTED STOCK AND RESTRICTED STOCK UNITS
    
	
 
	
 
	
    9
	
 

	
 
	
    7.1
	
 
	
 
	
    Grant of Restricted Stock and
    Restricted Stock Units
    
	
 
	
 
	
    9
	
 

	
 
	
    7.2
	
 
	
 
	
    Restricted Stock Agreement
    
	
 
	
 
	
    10
	
 

	
 
	
    7.3
	
 
	
 
	
    Restricted Stock Units Agreement
    
	
 
	
 
	
    10
	
 

	
 
	
    7.4
	
 
	
 
	
    Nontransferability
    
	
 
	
 
	
    10
	
 

	
 
	
    7.5
	
 
	
 
	
    Certificates
    
	
 
	
 
	
    10
	
 

	
 
	
    7.6
	
 
	
 
	
    Dividends and Other Distributions
    
	
 
	
 
	
    10
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

    

    -i-

 

	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
 
	

    Page

	
 

	 

	
    ARTICLE 8 —
    PERFORMANCE SHARES AND UNITS
    
	
 
	
 
	
    10
	
 

	
 
	
    8.1
	
 
	
 
	
    Grant of Performance Shares/Units
    
	
 
	
 
	
    10
	
 

	
 
	
    8.2
	
 
	
 
	
    Value of Performance Shares/Units
    
	
 
	
 
	
    11
	
 

	
 
	
    8.3
	
 
	
 
	
    Earning of Performance Shares/Units
    
	
 
	
 
	
    11
	
 

	
 
	
    8.4
	
 
	
 
	
    Form and Timing of Payment of
    Performance Shares/Units
    
	
 
	
 
	
    11
	
 

	
 
	
    8.5
	
 
	
 
	
    Nontransferability
    
	
 
	
 
	
    11
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 9 —
    PERFORMANCE MEASURES
    
	
 
	
 
	
    11
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 10 —
    BENEFICIARY DESIGNATION
    
	
 
	
 
	
    12
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 11 —
    DEFERRALS
    
	
 
	
 
	
    12
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 12 —
    WITHHOLDING
    
	
 
	
 
	
    12
	
 

	
 
	
    12.1
	
 
	
 
	
    Tax Withholding
    
	
 
	
 
	
    12
	
 

	
 
	
    12.2
	
 
	
 
	
    Share Withholding
    
	
 
	
 
	
    12
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 13 —
    AMENDMENT AND TERMINATION
    
	
 
	
 
	
    12
	
 

	
 
	
    13.1
	
 
	
 
	
    Amendment of Plan
    
	
 
	
 
	
    12
	
 

	
 
	
    13.2
	
 
	
 
	
    Amendment of Award Agreement
    
	
 
	
 
	
    13
	
 

	
 
	
    13.3
	
 
	
 
	
    Termination of Plan
    
	
 
	
 
	
    13
	
 

	
 
	
    13.4
	
 
	
 
	
    Cancellation of Awards for
    Detrimental Activity
    
	
 
	
 
	
    13
	
 

	
 
	
    13.5
	
 
	
 
	
    Assumption or Cancellation of
    Awards Upon a Corporate Transaction
    
	
 
	
 
	
    13
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 

	
    ARTICLE 14 —
    MISCELLANEOUS PROVISIONS
    
	
 
	
 
	
    14
	
 

	
 
	
    14.1
	
 
	
 
	
    Restrictions on Shares
    
	
 
	
 
	
    14
	
 

	
 
	
    14.2
	
 
	
 
	
    Rights of a Stockholder
    
	
 
	
 
	
    14
	
 

	
 
	
    14.3
	
 
	
 
	
    No Implied Rights
    
	
 
	
 
	
    14
	
 

	
 
	
    14.4
	
 
	
 
	
    Compliance with Laws
    
	
 
	
 
	
    14
	
 

	
 
	
    14.5
	
 
	
 
	
    Successors
    
	
 
	
 
	
    14
	
 

	
 
	
    14.6
	
 
	
 
	
    Tax Elections
    
	
 
	
 
	
    14
	
 

	
 
	
    14.7
	
 
	
 
	
    Compliance With Code
    Section 409A
    
	
 
	
 
	
    15
	
 

	
 
	
    14.8
	
 
	
 
	
    Legal Construction
    
	
 
	
 
	
    15
	
 

    -ii-

 

    INDUSTRIAL
    DISTRIBUTION GROUP, INC.

    2007 STOCK INCENTIVE PLAN

 

    ARTICLE 1 —
    GENERAL PROVISIONS

 

    1.1  Establishment of
    Plan.  Industrial Distribution Group, Inc., a
    Delaware corporation (the “Company”), hereby
    establishes an incentive compensation plan to be known as the
    “Industrial Distribution Group, Inc. 2007 Stock Incentive
    Plan” (the “Plan”), as set forth in this document.

 

    1.2  Purpose of Plan.  The objectives
    of the Plan are to (i) attract and retain employees,
    directors, consultants, advisors and other persons who perform
    services for the Company by providing compensation opportunities
    that are competitive with other companies; (ii) provide
    incentives to those individuals who contribute significantly to
    the long-term performance and growth of the Company and its
    affiliates; and (iii) align the long-term financial
    interests of employees and other Eligible Participants (as
    defined below) with those of the Company’s stockholders.

 

    1.3  Types of Awards.  Awards under
    the Plan may be made to Eligible Participants in the form of
    Incentive Stock Options, Nonqualified Stock Options, Stock
    Appreciation Rights, Restricted Stock, Restricted Stock Units,
    Performance Shares, Performance Units or any combination of
    these.

 

    1.4  Effective Date.  The Plan was
    approved by the Board of Directors of the Company on
    February 21, 2007, contingent upon approval by the
    Company’s stockholders, and revised April 23, 2007.
    The Plan is effective as of May 1, 2007 (the
    “Effective Date”), the date the stockholders approved
    the Plan.

 

    1.5  Duration of the Plan.  The Plan
    shall commence on the Effective Date, and shall remain in
    effect, subject to the right of the Committee (as defined below)
    to amend or terminate the Plan at any time pursuant to
    Article 13, until the day prior to the tenth (10th)
    anniversary of the Effective Date.

 

    ARTICLE 2 —
    DEFINITIONS

 

    Except where the context otherwise indicates, the following
    definitions apply:

 

    2.1  “Act” means the Securities
    Exchange Act of 1934, as now in effect or as hereafter amended.
    All citations to sections of the Act or rules thereunder are to
    such sections or rules as they may from time to time be amended
    or renumbered.

 

    2.2  “Agreement” means the written
    agreement evidencing an Award granted to the Participant under
    the Plan.

 

    2.3  “Award” means an award granted
    to a Participant under the Plan that is an Option, Stock
    Appreciation Right, Restricted Stock, Restricted Stock Unit,
    Performance Share, Performance Unit or combination of these.

 

    2.4  “Board” means the Board of
    Directors of the Company.

 

    2.5  “Cause” means, unless provided
    otherwise in the Agreement: any conduct amounting to fraud,
    dishonesty, willful misconduct, or negligence; significant
    activities materially harmful to the reputation of the Company
    or an Employer; insubordination; or conviction or indictment of,
    confession to, or entering a plea of guilty or no contest to, a
    felony or a crime involving moral turpitude, all as determined
    in the exercise of good faith by the Board of Directors of the
    Company. Without limiting the foregoing, the following shall
    constitute Cause: (i) Participant’s breach of this
    Plan or any material agreement between Participant and the
    Employer, (ii) negligence in Participant’s attention
    to the business or affairs of the Employer or intentionally
    failing to perform a reasonably requested directive or
    assignment or failure to perform his duties with the Employer
    substantially in accordance with the Employer’s operating
    and personnel policies and procedures generally applicable to
    all of its employees, (iii) the misappropriation (or
    attempted misappropriation) of any of the Employer’s funds
    or property. “Cause” under (i), (ii) and
    (iii) above shall be determined by the Committee.
    Notwithstanding the foregoing, if the Participant has entered
    into an employment agreement with the Employer that is binding
    as of the date of employment termination, and if such employment
    agreement defines “Cause,” then the definition of
    “Cause” in such agreement shall apply to the
    Participant for purposes of this Plan.

    

    1

 

 

    2.6  “Change in Control” means:

 

    (a) The acquisition (other than from the Company) by any
    Person of beneficial ownership (within the meaning of
    Rule 13d-3
    promulgated under the Act (but without regard to any time period
    specified in
    Rule 13d-3(d)(1)(i))),
    of 25 percent or more of either (i) the then
    outstanding Shares or (ii) the combined voting power of
    then outstanding securities of the Company entitled to vote
    generally in the election of directors (the “Outstanding
    Company Voting Securities”); excluding, however,
    (1) any acquisition by the Company or (2) any
    acquisition by an employee benefit plan (or related trust)
    sponsored or maintained by the Company or any corporation
    controlled by the Company;

 

    (b) Individuals who, as of the Effective Date, constitute
    the Board (the “Incumbent Board”) cease for any reason
    to constitute at least a majority of such Board; provided that
    any individual who becomes a director of the Company subsequent
    to the Effective Date whose election, or nomination for election
    by the Company’s stockholders, was approved by the vote of
    at least a majority of the directors then comprising the
    Incumbent Board shall be deemed a member of the Incumbent Board;
    and provided further, that any individual who was initially
    elected 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 14A promulgated under the Act, or any other
    actual or threatened solicitation of proxies or consents by or
    on behalf of any Person other then the Board shall not be deemed
    a member of the Incumbent Board;

 

    (c) Consummation by the Company of a reorganization,
    merger, or consolidation or sale of all or substantially all of
    the assets of the Company (a “Corporate Transaction”);
    excluding, however, a Corporate Transaction pursuant to which
    (i) all or substantially all of the individuals or entities
    who are the beneficial owners, respectively, of the Outstanding
    Shares and the Outstanding Company Voting Securities immediately
    prior to such Corporate Transaction will beneficially own,
    directly or indirectly, more than 50 percent of,
    respectively, the outstanding shares of common stock, and the
    combined voting power of the outstanding securities of such
    corporation entitled to vote generally in the election of
    directors, as the case may be, of the corporation resulting from
    such Corporate Transaction (including, without limitation, a
    corporation which as a result of such transaction owns the
    Company or all or substantially all of the Company’s assets
    either directly or indirectly) in substantially the same
    proportions relative to each other as their ownership,
    immediately prior to such Corporate Transaction, of the
    outstanding Shares and the Outstanding Company Voting
    Securities, as the case may be; or

 

    (d) Approval by the stockholders of the Company of a plan
    of complete liquidation or dissolution of the Company.

 

    2.7  “Code” means the Internal
    Revenue Code of 1986, as now in effect or as hereafter amended.
    All citations to sections of the Code are to such sections as
    they may from time to time be amended or renumbered.

 

    2.8  “Committee” means the
    Compensation Committee of the Board or such other committee
    consisting of two or more members as may be appointed by the
    Board to administer this Plan pursuant to Article 3. All
    members shall be independent directors within the meaning of the
    Listing Standards and any other standards as the Board or the
    Committee may prescribe from time to time; provided,
    however, that, (a) if the Committee is comprised of
    at least three directors, and (b) the Listing Standards
    permit one member of the Committee not to be independent within
    the meaning of the Listing Standards, then the Board may appoint
    a member who is not so independent, provided,
    further, that such appointment otherwise complies with
    the Listing Standards. If any member of the Committee does not
    qualify as (i) a “Non-Employee Director” within
    the meaning of
    Rule 16b-3
    under the Exchange Act, and (ii) an “outside
    director” within the meaning of Section 162(m) of the
    Code, a subcommittee of the Committee shall be appointed to
    grant Awards to Named Executive Officers and to officers who are
    subject to Section 16 of the Act, and each member of such
    subcommittee shall satisfy the requirements of (i) and
    (ii) above. References to the Committee in the Plan shall
    include and, as appropriate, apply to any such subcommittee.

 

    2.9  “Company” means Industrial
    Distribution Group, Inc., a Delaware corporation, and its
    successors and assigns.

 

    2.10  “Director” means any individual
    who is a member of the Board of Directors of the Company;
    provided, however, that any Director who is employed by the
    Company or any Employer shall not be considered a Director for

    

    2

 

    purposes of grants of Awards under the Plan, but instead shall
    be considered an employee for purposes of grants of Awards under
    the Plan.

 

    2.11  “Disability” means, unless
    provided otherwise in an Award Agreement (in which case such
    definition shall apply for purposes of the Plan with respect to
    that particular Award): (i) with respect to any Incentive
    Stock Option, disability as determined under Code
    Section 22(e)(3), and (ii) with respect to any other
    Award, that the Participant is “disabled” as
    determined under Code Section 409A(a)(2)(C) and any
    regulations promulgated thereunder. All determinations of
    Disability shall be made by the Committee or its designee.

 

    2.12  “Effective Date” shall have the
    meaning ascribed to such term in Section 1.4 hereof.

 

    2.13  “Eligible Participant” means an
    employee of the Employer (including an officer) as well as any
    other natural person, including a Director or proposed Director
    and a consultant or advisor who provides bona fide services to
    the Employer not in connection with the offer or sale of
    securities in a capital-raising transaction, subject to
    limitations as may be provided by the Code, the Act or the
    Committee, as shall be determined by the Committee.

 

    2.14  “Employer” means the Company
    and any entity controlled by the Company, controlling the
    Company or under common control with the Company, including any
    entity during any period that it is a “parent
    corporation” or a “subsidiary corporation” with
    respect to the Company within the meaning of Code
    Sections 424(e) and 424(f). With respect to all purposes of
    the Plan, including but not limited to, the establishment,
    amendment, termination, operation and administration of the
    Plan, the Company shall be authorized to act on behalf of all
    other entities included within the definition of
    “Employer.”

 

    2.15  “Fair Market Value” means the
    fair market value of a Share, as determined in good faith by the
    Committee; provided, however, that

 

    (a) if the Shares are traded on a national or regional
    securities exchange on a given date, Fair Market Value on such
    date shall be the closing sales price for a Share on the
    securities exchange on such date (or, if no sales of
    Shares were made on such exchange on such date, on the next
    preceding day on which sales were made on such exchange), all as
    reported in The Wall Street Journal or such other source
    as the Committee deems reliable; and

 

    (b) if the Shares are not listed on any securities
    exchange, but nevertheless are publicly traded and reported
    (through the OTC Bulletin Board or otherwise), Fair Market Value
    on such date shall be the closing sales price on such date (or,
    if there are no sales on such date, on the next preceding day).

 

    For purposes of subsection (a) above, if Shares are
    traded on more than one securities exchange then the largest
    U.S. exchange on which Shares are traded shall be
    referenced to determine Fair Market Value.

 

    2.16  “Incentive Stock Option” or
    “ISO” means an Option granted to an Eligible
    Participant under Article 5 of the Plan which is intended
    to meet the requirements of Section 422 of the Code.

 

    2.17  “Insider” shall mean an
    individual who is, on the relevant date, subject to the
    reporting requirements of Section 16(a) of the Act.

 

    2.18  “Listing Standards” means the
    listing standards of any exchange or self-regulatory
    organization which lists or quotes the securities of the Company.

 

    2.19  “Named Executive Officer” means
    a Participant who is one of the group of “covered
    employees” as defined in the regulations promulgated or
    other guidance issued under Section 162(m) of the Code, as
    determined by the Committee.

 

    2.20  “Nonqualified Stock Option” or
    “NQSO” means an Option granted to an Eligible
    Participant under Article 5 of the Plan which is not
    intended to meet the requirements of Section 422 of the
    Code.

 

    2.21  “Option” means an Incentive
    Stock Option or a Nonqualified Stock Option. An Option shall be
    designated as either an Incentive Stock Option or a Nonqualified
    Stock Option, and in the absence of such designation, shall be
    treated as a Nonqualified Stock Option.

    

    3

 

 

    2.22  “Option Exercise Price” means
    the price at which a Share may be purchased by a Participant
    pursuant to an Option.

 

    2.23  “Participant” means an Eligible
    Participant to whom an Award has been granted.

 

    2.24  “Performance Measures” means
    the performance measures set forth in Article 9 which are
    used for performance-based Awards to Named Executive Officers.

 

    2.25  “Performance Share” means an
    Award under Article 8 of the Plan that is valued by
    reference to a Share, which value may be paid to the Participant
    by delivery of such property as the Committee shall determine,
    including without limitation, cash or Shares, or any combination
    thereof, upon achievement of such performance objectives during
    the relevant performance period as the Committee shall establish
    at the time of such Award or thereafter, but not later than the
    time permitted by Section 162(m) of the Code in the case of
    a Named Executive Officer, unless the Committee determines not
    to comply with Section 162(m) of the Code.

 

    2.26 “Performance Unit” means an Award under
    Article 8 of the Plan that has a value set by the
    Committee, which value may be paid to the Participant by
    delivery of such property as the Committee shall determine,
    including without limitation, cash or Shares, or any combination
    thereof, upon achievement of such performance objectives during
    the relevant performance period as the Committee shall establish
    at the time of such Award or thereafter, but not later than the
    time permitted by Section 162(m) of the Code in the case of
    a Named Executive Officer, unless the Committee determines not
    to comply with Section 162(m) of the Code.

 

    2.27 “Permitted Transferee” means any members
    of the immediate family of the Participant (i.e., spouse,
    children, and grandchildren), any trusts for the benefit of such
    family members or any partnerships whose only partners are such
    family members.

 

    2.28 “Person” means an individual, a sole
    proprietorship, a partnership, a corporation, an association, an
    institution, a limited liability company, a trust, or any other
    legal entity.

 

    2.29 “Plan” means this Industrial Distribution
    Group, Inc. 2007 Stock Incentive Plan, as amended from time to
    time.

 

    2.30 “Prior Plan” means the Industrial
    Distribution Group, Inc. Stock Incentive Plan, which was
    effective July 10, 1997.

 

    2.31 “Restricted Stock” means an Award of
    Shares under Article 7 of the Plan, which Shares are issued
    with such restriction(s) as the Committee, in its sole
    discretion, may impose, including without limitation, any
    restriction on the right to retain such Shares, to sell,
    transfer, pledge or assign such Shares, to vote such Shares,
    and/or to
    receive any cash dividends with respect to such Shares, which
    restrictions may lapse separately or in combination at such time
    or times, in installments or otherwise, as the Committee may
    deem appropriate.

 

    2.32 “Restricted Stock Unit” or
    “RSU” means a right granted under
    Article 7 of the Plan to receive a number of Shares, or a
    cash payment for each such Share equal to the Fair Market Value
    of a Share, on a specified date.

 

    2.33 “Restriction Period” means the period
    commencing on the date an Award of Restricted Stock or an RSU is
    granted and ending on such date as the Committee shall determine.

 

    2.34 “Retirement” means termination of
    employment with the Company and all Employers other than for
    Cause after a Participant has reached the age of 65 years.

 

    2.35 “Share” means one share of common stock of
    the Company (as such Share may be adjusted pursuant to the
    provisions of Section 4.3 of the Plan).

 

    2.36 “Stock Appreciation Right” or
    “SAR” means an Award granted under
    Article 6 which provides for an amount payable in Shares
    and/or cash,
    as determined by the Committee, equal to the excess of the Fair
    Market Value of a Share on the day the Stock Appreciation Right
    is exercised over the specified purchase price.

    

    4

 

 

    ARTICLE 3 —
    ADMINISTRATION

 

    3.1  General.  This Plan shall
    be administered by the Committee. The Committee, in its
    discretion, may delegate to one or more of its members such of
    its powers as it deems appropriate.

 

    3.2  Authority of the Committee.

 

    (a) The Committee shall have the exclusive right to
    interpret, construe and administer the Plan, to select the
    persons who are eligible to receive an Award, and to act in all
    matters pertaining to the granting of an Award and the contents
    of the Agreement evidencing the Award, including without
    limitation, the determination of the number of Options, Stock
    Appreciation Rights, RSUs, Shares of Restricted Stock,
    Performance Shares or Performance Units subject to an Award and
    the form, terms, conditions and duration of each Award, and any
    amendment thereof consistent with the provisions of the Plan.
    The Committee may adopt such rules, regulations and procedures
    of general application for the administration of this Plan, as
    it deems appropriate.

 

    (b) The Committee may correct any defect, supply any
    omission or reconcile any inconsistency in the Plan or any
    Agreement in the manner and to the extent it shall deem
    desirable to carry it into effect.

 

    (c) In the event the Company shall assume outstanding
    employee benefit awards or the right or obligation to make
    future such awards in connection with the acquisition of another
    corporation or business entity, the Committee may, in its
    discretion, make such adjustments in the terms of Awards under
    the Plan as it shall deem appropriate.

 

    (d) All acts, determinations and decisions of the Committee
    made or taken pursuant to grants of authority under the Plan or
    with respect to any questions arising in connection with the
    administration and interpretation of the Plan, including the
    severability of any and all of the provisions thereof, shall be
    conclusive, final and binding upon all parties, including the
    Company, its stockholders, Participants, Eligible Participants
    and their estates, beneficiaries and successors.

 

    3.3  Participation Outside of the United
    States. The Committee or its designee shall have the
    authority to amend the Plan (including by the adoption of
    appendices or subplans)
    and/or the
    terms and conditions relating to an Award to the extent
    necessary to permit participation in the Plan by eligible
    individuals who are located outside of the United States on
    terms and conditions comparable to those afforded to eligible
    individuals located within the United States.

 

    3.4  Delegation of Authority. Except with
    respect to Named Executive Officers and Insiders, the Committee
    may, at any time and from time to time, delegate to one or more
    persons any or all of its authority under Section 3.2, to
    the full extent permitted by law.

 

    3.5  Award Agreements. Each Award granted under
    the Plan shall be evidenced by a written Agreement. Each
    Agreement shall be subject to and incorporate, by reference or
    otherwise, the applicable terms and conditions of the Plan, and
    any other terms and conditions, not inconsistent with the Plan,
    as may be imposed by the Committee, including without
    limitation, provisions related to the consequences of
    termination of employment. A copy of such document shall be
    provided to the Participant, and the Committee may, but need
    not, require that the Participant sign a copy of the Agreement.

 

    3.6  Indemnification. In addition to such other
    rights of indemnification as they may have as directors or as
    members of the Committee, the members of the Committee shall be
    indemnified by the Company against reasonable expenses,
    including attorney’s fees, actually and necessarily
    incurred in connection with the defense of any action, suit or
    proceeding, or in connection with any appeal therein, to which
    they or any of them may be a party by reason of any action taken
    or failure to act under or in connection with the Plan or any
    Award granted thereunder, and against all amounts paid by them
    in settlement thereof, provided such settlement is approved by
    independent legal counsel selected by the Company, or paid by
    them in satisfaction of a judgment or settlement in any such
    action, suit or proceeding, except as to matters as to which the
    Committee member has been negligent or engaged in misconduct in
    the performance of his duties; provided, that within
    60 days after institution of any such action, suit or
    proceeding, a Committee member shall in writing offer the
    Company the opportunity, at its own expense, to handle and
    defend the same.

    

    5

 

 

    ARTICLE 4 —
    SHARES SUBJECT TO THE PLAN

 

    4.1  Number of Shares.

 

    (a) Subject to adjustment as provided in (b) below and
    in Section 4.3, the aggregate number of Shares which are
    available for issuance pursuant to Awards under the Plan is
    (i) one million one hundred twenty two thousand and one
    hundred and eighty (1,122,180) Shares, plus (ii) any
    Shares that are subject to outstanding grants under the
    Company’s Prior Plan, which expire, are forfeited or
    otherwise terminate without delivery of Shares (the “Share
    Pool”). All of the Shares available for issuance under the
    Plan (but in no event more than one million one hundred twenty
    two thousand and one hundred and eighty (1,122,180)
    Shares) may be issued pursuant to Incentive Stock Options.
    If Options, Restricted Stock or Restricted Stock Units are
    issued in respect of options, restricted stock, or restricted
    stock units of an entity acquired, by merger or otherwise, by
    the Company (or any subsidiary of the Company or any Employer),
    to the extent such issuance shall not be inconsistent with the
    terms, limitations and conditions of Code Section 422 or
    Exchange Act
    Rule 16b-3,
    the aggregate number of Shares for which Awards may be made
    hereunder shall automatically be increased by the number of
    Shares subject to Awards so issued. Such Shares shall be made
    available from Shares currently authorized but unissued or
    Shares currently held (or subsequently acquired) by the Company
    as treasury shares, including Shares purchased in the open
    market or in private transactions. Upon approval of this Plan by
    the stockholders of the Company, no further grants shall be made
    under the Company’s Prior Plan.

 

    (b) The following rules shall apply for purposes of the
    determination of the number of Shares available for grant under
    the Plan:

 

    (i) Each Option awarded shall be counted as one Share
    subject to an Award and deducted from the Share Pool.

 

    (ii) Each Share of Restricted Stock or Restricted Stock
    Unit, and each Performance Award that may be settled in Shares,
    shall be counted as 1.778 Shares subject to an Award (the
    “Share Count Ratio”) and deducted from the Share Pool,
    subject to possible adjustment pursuant to clause (v)
    below. Performance Awards that may not be settled in Shares
    shall not result in a reduction from the Share Pool.

 

    (iii) Each Stock Appreciation Right that may be settled in
    Shares shall be counted as one Share subject to an Award and
    deducted from the Share Pool. Stock Appreciation Rights that may
    not be settled in Shares shall not result in a reduction from
    the Share Pool. In addition, if a Stock Appreciation Right is
    granted in connection with an Option and the exercise of the
    Stock Appreciation Right results in the loss of the Option
    right, the Shares that otherwise would have been issued upon the
    exercise of such related Option shall not result in a reduction
    in the Share Pool.

 

    (iv) If, for any reason, any Shares awarded or subject to
    purchase under the Plan or the Company’s Prior Plan are not
    delivered or purchased, or are reacquired by the Company, for
    reasons including, but not limited to, a forfeiture of
    Restricted Stock or a Restricted Stock Unit, or the termination,
    expiration or cancellation of an Option, Stock Appreciation
    Right, Restricted Stock Unit, or Performance Award, or
    settlement of any Award in cash rather than Shares, such Shares
    (the “Returned Shares”) shall again be available
    for issuance pursuant to an Award under the Plan and shall be
    added to the Share Pool, provided that any addition to the Share
    Pool shall be adjusted by whatever factor or factors were
    applied (or would have been applied if granted under this Plan)
    to determine the number of Shares originally deducted from the
    Share Pool.

 

    (v) The Share Count Ratio may be adjusted by the Committee
    in the future if, and only if, at the time of any such
    adjustment (an “Adjustment Time”), (1) the
    shareholder value transfer calculation with respect to the Plan
    and other equity compensation plans of the Company, expressed as
    a percentage of the average aggregate market value of the Common
    Stock for the 200-day period preceding the Adjustment Time
    (“SVT”), will not exceed 15%, based on the SVT
    calculation formula used as of the date hereof (the
    “Current Formula”) by Institutional Shareholder
    Services, Inc. (“ISS”), (2) ISS changes its
    cost-based analysis of equity compensation plans in the future
    from

    

    6

 

    the Current Formula to a new formula (a “Future
    Formula”) and the SVT or its equivalent will not exceed 15%
    under any such Future Formula, or (3) ISS changes its
    allowable cap for the Company under the Current Formula or any
    applicable Future Formula and the SVT or its equivalent will not
    exceed such different allowable cap.

 

    4.2  Individual Limits. Except to the extent
    the Committee determines that an Award to a Named Executive
    Officer shall not comply with the performance-based compensation
    provisions of Section 162(m) of the Code, the following
    rules shall apply to Awards under the Plan:

 

    (a) Options and SARs. The maximum number of Options
    and Stock Appreciation Rights that, in the aggregate, may be
    granted in any one calendar year to any one Participant shall be
    two hundred thousand (200,000).

 

    (b) Restricted Stock and RSUs. The maximum aggregate
    number of Shares of Restricted Stock, and Restricted Stock Units
    that may be granted in any one calendar year to any one
    Participant shall be two hundred thousand (200,000) Shares.

 

    (c) Performance Awards. With respect to Performance
    Awards that have a specific dollar-value target or are
    performance units, the maximum aggregate payout (determined as
    of the end of the applicable performance cycle) with respect to
    Performance Awards granted in any one calendar year to any one
    Participant shall be $2,000,000. With respect to Performance
    Awards that are payable in Shares, the maximum aggregate payout
    (determined as of the end of the applicable performance cycle)
    with respect to Performance Awards granted in any calendar year
    to any one Participant shall be two hundred thousand (200,000)
    Shares.

 

    4.3  Adjustment of Shares. If any change in
    corporate capitalization, such as a stock split, reverse stock
    split, stock dividend, or any corporate transaction such as a
    reorganization, reclassification, merger or consolidation or
    separation, including a spin-off, of the Company or sale or
    other disposition by the Company of all or a portion of its
    assets, any other change in the Company’s corporate
    structure, or any distribution to stockholders (other than a
    cash dividend) results in the outstanding Shares, or any
    securities exchanged therefor or received in their place, being
    exchanged for a different number or class of shares or other
    securities of the Company, or for shares of stock or other
    securities of any other corporation; or new, different or
    additional shares or other securities of the Company or of any
    other corporation being received by the holders of outstanding
    Shares; then equitable adjustments shall be made by the
    Committee, as it determines are necessary and appropriate, in:

 

    (a) the limitations on the aggregate number of Shares that
    may be awarded as set forth in Section 4.1, including,
    without limitation, with respect to Incentive Stock Options;

 

    (b) the limitations on the aggregate number of Shares that
    may be awarded to any one single Participant as set forth in
    Section 4.2;

 

    (c) the number and class of Shares that may be subject to
    an Award, and which have not been issued or transferred under an
    outstanding Award;

 

    (d) the Option Price under outstanding Options and the
    number of Shares to be transferred in settlement of outstanding
    Stock Appreciation Rights; and

 

    (e) the terms, conditions or restrictions of any Award and
    Agreement, including the price payable for the acquisition of
    Shares; provided, however, that all such adjustments made in
    respect of each ISO shall be accomplished so that such Option
    shall continue to be an incentive stock option within the
    meaning of Section 422 of the Code.

 

    ARTICLE 5 —
    STOCK OPTIONS

 

    5.1  Grant of Options. Subject to the terms and
    provisions of the Plan, Options may be granted to Eligible
    Participants at any time and from time to time as shall be
    determined by the Committee. The Committee shall have sole
    discretion in determining the number of Shares subject to
    Options granted to each Participant. The Committee

    

    7

 

    may grant a Participant ISOs, NQSOs or a combination thereof,
    and may vary such Awards among Participants; provided that only
    an employee of the Employer may be granted ISOs.

 

    5.2  Agreement. Each Option grant shall be
    evidenced by an Agreement that shall specify the Option Exercise
    Price, the duration of the Option, the number of Shares to which
    the Option pertains and such other provisions as the Committee
    shall determine. The Option Agreement shall further specify
    whether the Award is intended to be an ISO or an NQSO. Any
    portion of an Option that is not designated in the Agreement as
    an ISO or otherwise fails or is not qualified as an ISO (even if
    designated as an ISO) shall be an NQSO.

 

    5.3  Option Exercise Price. The Option Exercise
    Price for each grant of an Option shall not be less than one
    hundred percent (100%) of the Fair Market Value of a Share on
    the date the Option is granted.

 

    5.4  Duration of Options. Each Option shall
    expire at such time as the Committee shall determine at the time
    of grant; provided, however, that no Option shall be exercisable
    later than the tenth (10th) anniversary of its grant date.

 

    5.5  Exercise of Options.  Options
    granted under the Plan shall be exercisable at such times and be
    subject to such restrictions and conditions as the Committee
    shall in each instance approve, including conditions related to
    the employment of or provision of services by the Participant
    with the Company or any Employer, which need not be the same for
    each grant or for each Participant. The Committee may provide in
    the Agreement for automatic accelerated vesting and other rights
    upon the occurrence of a Change in Control of the Company or
    upon the occurrence of other events as specified in the
    Agreement.

 

    5.6  Payment.  Options shall be
    exercised by the delivery of a written notice of exercise to the
    Company, setting forth the number of Shares with respect to
    which the Option is to be exercised, accompanied by full payment
    for the Shares (less any amount previously paid by the
    Participant to acquire the Option). The Option Exercise Price
    upon exercise of any Option shall be payable to the Company in
    full, in any of the following manners: (a) in cash,
    (b) in cash equivalent approved by the Committee,
    (c) unless not permitted by the Committee, by tendering
    previously acquired Shares (or delivering a certification or
    attestation of ownership of such Shares) having an aggregate
    Fair Market Value at the time of exercise equal to the total
    Option Exercise Price (provided that the tendered Shares must
    have been held by the Participant for six months or such other
    period required by the Committee), or (d) by a combination
    of (a), (b) and/or (c). The Committee also may allow
    cashless exercises as permitted under Federal Reserve
    Board’s Regulation T, subject to applicable securities
    law restrictions, or by any other means which the Committee
    determines to be consistent with the Plan’s purpose and
    applicable law.

 

    5.7  Nontransferability of Options.

 

    (a) Incentive Stock Options.  No ISO
    granted under the Plan may be sold, transferred, pledged,
    assigned, or otherwise alienated or hypothecated, other than by
    will or by the laws of descent and distribution. Further, all
    ISOs granted to a Participant under the Plan shall be
    exercisable during his or her lifetime only by such Participant.

 

    (b) Nonqualified Stock Options.  Except as
    otherwise provided in a Participant’s Award Agreement
    consistent with securities and other applicable laws, rules and
    regulations, no NQSO granted under this Article 5 may be
    sold, transferred, pledged, assigned, or otherwise alienated or
    hypothecated, other than by will or by the laws of descent and
    distribution. Further, except as otherwise provided in a
    Participant’s Award Agreement, all NQSOs granted to a
    Participant under this Article 5 shall be exercisable
    during his or her lifetime only by such Participant. In the
    event of a transfer permitted by the Agreement, appropriate
    evidence of any transfer to the Permitted Transferees shall be
    delivered to the Company at its principal executive office. If
    all or part of an Option is transferred to a Permitted
    Transferee, the Permitted Transferee’s rights thereunder
    shall be subject to the same restrictions and limitations with
    respect to the Option as the Participant.

 

    5.8  Special Rules for
    ISOs.  Notwithstanding the above, in no event
    shall any Participant who owns (within the meaning of
    Section 424(d) of the Code) stock of the Company possessing
    more than ten percent (10%) of the total combined voting power
    of all classes of stock of the Company be eligible to receive an
    ISO at an Option Exercise Price less than one hundred ten
    percent (110%) of the Fair Market Value of a Share on the date
    the ISO is

    

    8

 

    granted or be eligible to receive an ISO that is exercisable
    later than the fifth (5th) anniversary date of its grant. No
    Participant may be granted ISOs (under the Plan and all other
    incentive stock option plans of the Employer) which are first
    exercisable in any calendar year for Shares having an aggregate
    Fair Market Value (determined as of the date an Option is
    granted) that exceeds One Hundred Thousand Dollars ($100,000).
    Any such excess shall instead automatically be treated as a NQSO.

 

    ARTICLE 6 —
    STOCK APPRECIATION RIGHTS

 

    6.1  Grant of Stock Appreciation Rights (or
    SARs).  A Stock Appreciation Right may be granted
    to an Eligible Participant in connection with an Option granted
    under Article 5 of this Plan or may be granted
    independently of any Option. A Stock Appreciation Right shall
    entitle the holder, within the specified period (which may not
    exceed 10 years), to exercise the SAR and receive in
    exchange therefor a payment having an aggregate value equal to
    the amount by which the Fair Market Value of a Share on the
    exercise date exceeds the specified purchase price (which,
    unless provided otherwise, shall be the Fair Market Value on the
    grant date), times the number of Shares with respect to which
    the SAR is exercised. The Committee may provide in the Agreement
    for automatic exercise on a certain date, for payment of the
    proceeds on a certain date,
    and/or for
    accelerated vesting and other rights upon the occurrence of a
    Change in Control or upon the occurrence of other events
    specified in the Agreement. A SAR granted in connection with an
    Option (a “Tandem SAR”) shall entitle the
    holder of the related Option, within the period specified for
    the exercise of the Option, to surrender the unexercised Option,
    or a portion thereof, and to receive in exchange therefore a
    payment having an aggregate value equal to the amount by which
    the Fair Market Value of a Share on the exercise date exceeds
    the Option Exercise Price per Share, times the number of Shares
    subject to the Option, or portion thereof, which is surrendered.
    SARs shall be subject to the same transferability restrictions
    as Nonqualified Stock Options.

 

    6.2  Agreement.  Each SAR grant shall
    be evidenced by an Agreement that shall specify the exercise
    price, the duration of the SAR, the number of Shares to which
    the SAR pertains and such other provisions as the Committee
    shall determine.

 

    6.3  Tandem SARs.  Each Tandem SAR
    shall be subject to the same terms and conditions as the related
    Option, including limitations on transferability, and shall be
    exercisable only to the extent such Option is exercisable and
    shall terminate or lapse and cease to be exercisable when the
    related Option terminates or lapses. The grant of Stock
    Appreciation Rights related to ISOs must be concurrent with the
    grant of the ISOs. With respect to NQSOs, the grant either may
    be concurrent with the grant of the NQSOs, or in connection with
    NQSOs previously granted under Article 5, which are
    unexercised and have not terminated or lapsed.

 

    6.4  Payment.  The Committee shall
    have sole discretion to determine in each Agreement whether the
    payment with respect to the exercise of an SAR will be in the
    form of all cash, all Shares, or any combination thereof. If
    payment is to be made in Shares, the number of Shares shall be
    determined based on the Fair Market Value of a Share on the date
    of exercise or the date of payment, as applicable. If the
    Committee elects to make full payment in Shares, no fractional
    Shares shall be issued and cash payments shall be made in lieu
    of fractional Shares. The Committee shall have sole discretion
    to determine and set forth in the Agreement the timing of any
    payment made in cash or Shares, or a combination thereof, upon
    exercise of SARs, including whether payment will be made in a
    lump sum, in annual installments or otherwise deferred; and the
    Committee shall have sole discretion to determine and set forth
    in the Agreement whether any deferred payments may bear amounts
    equivalent to interest or cash dividends.

 

    6.5  Exercise of SARs.  Upon exercise
    of a Tandem SAR, the number of Shares subject to exercise under
    any related Option shall automatically be reduced by the number
    of Shares represented by the Option or portion thereof which is
    surrendered.

 

    ARTICLE 7 —
    RESTRICTED STOCK AND RESTRICTED STOCK UNITS

 

    7.1  Grant of Restricted Stock and Restricted Stock
    Units.  Awards of Restricted Stock and Restricted
    Stock Units (“RSUs”) may be made to Eligible
    Participants as a reward for past service or as an incentive for
    the performance of future services that will contribute
    materially to the successful operation of the Employer. Awards

    

    9

 

    of Restricted Stock and RSUs may be made either alone or in
    addition to or in tandem with other Awards granted under the
    Plan and may be current grants of Restricted Stock and RSUs or
    deferred grants of Restricted Stock and RSUs.

 

    7.2  Restricted Stock Agreement.  The
    Restricted Stock Agreement shall set forth the terms of the
    Award, as determined by the Committee, including, without
    limitation, the purchase price, if any, to be paid for such
    Restricted Stock, which may be zero, subject to such minimum
    consideration as may be required by applicable law; any
    restrictions applicable to the Restricted Stock such as
    continued service or achievement of performance goals; the
    length of the Restriction Period, if any, and whether any
    circumstances, such as death, Disability, or a Change in
    Control, will shorten or terminate the Restriction Period; and
    rights of the Participant to vote or receive dividends with
    respect to the Shares during the Restriction Period.

 

    7.3  Restricted Stock Unit
    Agreement.  The Restricted Stock Unit Agreement
    shall set forth the terms of the Award, as determined by the
    Committee, including without limitation, the number of RSUs
    granted to the Participant; the restrictions, terms and
    conditions of the RSU; whether the RSU will be settled in cash,
    Shares, or a combination of the two and the date when the RSU
    will be settled; any requirements such as continued service or
    achievement of certain performance measures; the length of the
    Restriction Period, if any; whether any circumstances such as
    Change in Control, termination of employment, Disability or
    death will shorten or terminate any vesting or Restriction
    Period; and whether dividend equivalents will be paid or accrued
    with respect to the RSUs.

 

    7.4  Nontransferability.  Except as
    otherwise provided in a Participant’s Award Agreement, no
    RSUs and no Shares of Restricted Stock received by a Participant
    shall be sold, exchanged, transferred, pledged, hypothecated or
    otherwise disposed of during the Restriction Period.

 

    7.5  Certificates.  Upon an Award of
    Restricted Stock to a Participant, Shares of Restricted Stock
    shall be registered in the Participant’s name.
    Certificates, if issued, may either be held in custody by the
    Company until the Restriction Period expires or until
    restrictions thereon otherwise lapse
    and/or be
    issued to the Participant and registered in the name of the
    Participant, bearing an appropriate restrictive legend and
    remaining subject to appropriate stop-transfer orders. If
    required by the Committee, the Participant shall deliver to the
    Company one or more stock powers endorsed in blank relating to
    the Restricted Stock. If and when the Restriction Period expires
    without a prior forfeiture of the Restricted Stock subject to
    such Restriction Period, unrestricted certificates for such
    shares shall be delivered to the Participant or registered in
    the Participant’s name on the Company’s records;
    provided, however, that the Committee may cause such legend or
    legends to be placed on any such certificates as it may deem
    advisable under the terms of the Plan and the rules, regulations
    and other requirements of the Securities and Exchange Commission
    and any applicable federal or state law. The Company shall not
    be required to deliver any fractional Share but will pay, in
    lieu thereof, the Fair Market Value (determined as of the date
    the restrictions lapse) of such fractional Share to the holder
    thereof. Concurrently with the lapse of any risk of forfeiture
    applicable to the Restricted Stock, the Participant shall be
    required to pay an amount necessary to satisfy any applicable
    federal, state and local tax requirements as set out in
    Article 12 below.

 

    7.6  Dividends and Other
    Distributions.  Except as provided in this
    Article 7 or in the Award Agreement, a Participant
    receiving a Restricted Stock Award shall have, with respect to
    such Restricted Stock Award, all of the rights of a stockholder
    of the Company, including the right to vote the Shares to the
    extent, if any, such Shares possess voting rights and the right
    to receive any dividends; provided, however, the Committee may
    require that any dividends on such Shares of Restricted Stock
    shall be automatically deferred and reinvested in additional
    Restricted Stock subject to the same restrictions as the
    underlying Award, or may require that dividends and other
    distributions on Restricted Stock shall be paid to the Company
    for the account of the Participant. The Committee shall
    determine whether interest shall be paid on such amounts, the
    rate of any such interest, and the other terms applicable to
    such amounts.

 

    ARTICLE 8 —
    PERFORMANCE SHARES AND UNITS

 

    8.1  Grant of Performance
    Shares/Units.  Performance Shares, Performance
    Units or both may be granted to Participants in such amounts and
    upon such terms, and at any time and from time to time, as shall
    be determined by the Committee.

    

    10

 

 

    8.2  Value of Performance
    Shares/Units.  Each Performance Unit shall have an
    initial value that is established by the Committee at the time
    of grant. Each Performance Share shall have an initial value
    equal to the Fair Market Value of a Share on the date of grant.
    The Committee shall set performance goals in its discretion
    which, depending on the extent to which they are met, will
    determine the number
    and/or value
    of Performance Shares, Performance Units or both that will be
    paid out to the Participant. For purposes of this
    Article 8, the time period during which the performance
    goals must be met shall be called a “Performance
    Period.”

 

    8.3  Earning of Performance
    Shares/Units.  Subject to the terms of this Plan,
    after the applicable Performance Period has ended, the holder of
    Performance Shares/Units shall be entitled to receive a payout
    of the number and value of Performance Shares/Units earned by
    the Participant over the Performance Period, to be determined as
    a function of the extent to which the corresponding performance
    goals have been achieved.

 

    8.4  Form and Timing of Payment of Performance
    Shares/Units.  Subject to the terms of this Plan,
    the Committee, in its sole discretion, may pay earned
    Performance Shares/Units in the form of cash or in Shares (or in
    a combination thereof) which has an aggregate Fair Market Value
    equal to the value of the earned Performance Shares/Units at the
    close of the applicable Performance Period. Such Shares may be
    granted subject to any restrictions deemed appropriate by the
    Committee. The determination of the Committee with respect to
    the form and timing of payout of such Awards shall be set forth
    in the Award Agreement pertaining to the grant of the Award.

 

    Except as otherwise provided in the Participant’s Award
    Agreement, a Participant shall be entitled to receive any
    dividends declared with respect to Shares earned in connection
    with earned grants of Performance Shares/Units, that have not
    yet been distributed to the Participant (such dividends may be
    subject to the same accrual, forfeiture, and payout restrictions
    as apply to dividends earned with respect to Shares of
    Restricted Stock, as set forth in Section 7.6 herein).

 

    8.5  Nontransferability.  Except as
    otherwise provided in a Participant’s Award Agreement,
    Performance Shares/Units may not be sold, transferred, pledged,
    assigned, or otherwise alienated or hypothecated, other than by
    will or by the laws of descent and distribution. Further, except
    as otherwise provided in a Participant’s Award Agreement, a
    Participant’s rights under the Plan shall be exercisable
    during the Participant’s lifetime only by the Participant
    or the Participant’s legal representative.

 

    ARTICLE 9 —
    PERFORMANCE MEASURES

 

    Until the Committee proposes for stockholder vote and
    stockholders approve a change in the general Performance
    Measures set forth in this Article 9, the attainment of
    which may determine the degree of payout
    and/or
    vesting with respect to Named Executive Officers’ Awards
    that are intended to qualify under the performance-based
    compensation provisions of Section 162(m) of the Code, the
    Performance Measure(s) to be used for purposes of such Awards
    shall be chosen from among the following (which may relate to
    the Company or a business unit, division or subsidiary):
    earnings, earnings per share, consolidated pre-tax earnings, net
    earnings, operating income, EBIT (earnings before interest and
    taxes), EBITDA (earnings before interest, taxes, depreciation
    and amortization), gross margin, revenues, revenue growth,
    market value added, economic value added, return on equity,
    return on investment, return on assets, return on net assets,
    return on capital employed, total stockholder return, profit,
    economic profit, capitalized economic profit, after-tax profit,
    pre-tax profit, cash flow measures, cash flow return, sales,
    sales volume, revenues per employee, stock price, cost, or goals
    related to acquisitions or divestitures. The Committee can
    establish other Performance Measures for performance Awards
    granted to Eligible Participants that are not Named Executive
    Officers and for performance Awards granted to Named Executive
    Officers that are not intended to qualify under the
    performance-based compensation exception of Section 162(m)
    of the Code.

 

    The Committee shall be authorized to make adjustments in
    performance based criteria or in the terms and conditions of
    other Awards in recognition of unusual or nonrecurring events
    affecting the Company or its financial statements or changes in
    applicable laws, regulations or accounting principles. The
    Committee shall also have the discretion to adjust the
    determinations of the degree of attainment of the
    pre-established Performance Measures; provided, however, that
    Awards which are designed to qualify for the performance-based
    compensation exception from the deductibility limitations of
    Section 162(m) of the Code, and which are held by Named
    Executive Officers,

    

    11

 

    may not be adjusted upward (except as a result of adjustments
    permitted by this paragraph), but the Committee shall retain the
    discretion to adjust such Awards downward.

 

    If applicable tax
    and/or
    securities laws change to permit Committee discretion to alter
    the governing Performance Measures without obtaining stockholder
    approval of such changes, the Committee shall have sole
    discretion to make such changes without obtaining stockholder
    approval. In addition, in the event that the Committee
    determines that it is advisable to grant Awards which shall not
    qualify for the performance-based compensation exception from
    the deductibility limitations of Section 162(m) of the
    Code, the Committee may make such grants without satisfying the
    requirements of Section 162(m) of the Code.

 

    ARTICLE 10 —
    BENEFICIARY DESIGNATION

 

    Each Participant may, from time to time, name any beneficiary or
    beneficiaries (who may be named contingently or successively) to
    whom any benefit under the Plan is to be paid in case of his or
    her death before he or she receives any or all of such benefit.
    Each such designation shall revoke all prior designations by the
    same Participant, shall be in a form prescribed by the Company,
    and will be effective only when filed by the Participant in
    writing with the Company during the Participant’s lifetime.
    In the absence of any such designation, benefits remaining
    unpaid at the Participant’s death shall be paid to the
    Participant’s spouse, and if the Participant has no
    surviving spouse, to the Participant’s estate.

 

    ARTICLE 11 —
    DEFERRALS

 

    The Committee may permit a Participant to defer such
    Participant’s receipt of the payment of cash or the
    delivery of Shares that would otherwise be due to such
    Participant by virtue of the exercise of an Option or SAR, the
    lapse or waiver of restrictions with respect to Restricted
    Stock, or RSUs, or the satisfaction of any requirements or goals
    with respect to Performance Shares. If any such deferral
    election is permitted, the Committee shall, in its sole
    discretion, establish rules and procedures for such payment
    deferrals, which rules and procedures shall comply with
    Section 409A of the Code.

 

    ARTICLE 12 —
    WITHHOLDING

 

    12.1  Tax Withholding.  The Company
    shall have the power and the right to deduct or withhold, or
    require a Participant to remit to the Company, an amount
    sufficient to satisfy Federal, state, and local taxes, domestic
    or foreign, required by law or regulation to be withheld with
    respect to any taxable event arising as a result of any Award
    under this Plan. If a Participant makes a disposition within the
    meaning of Section 424(c) of the Code and regulation
    promulgated thereunder, of any Share or Shares issued to him
    pursuant to his exercise of an Incentive Stock Option within the
    two-year period commencing on the day after the date of the
    grant or within the one-year period commencing on the day after
    the date of transfer of such Share or Shares to the Optionee
    pursuant to such exercise, the Optionee shall, within ten
    (10) days of such disposition, notify the Company thereof,
    by delivery of written notice to the Company at its principal
    executive office.

 

    12.2  Share Withholding.  With
    respect to withholding required upon the exercise of Options or
    SARS, upon the lapse of restrictions on Restricted Stock or
    RSUs, or upon any other taxable event arising as a result of
    Awards granted hereunder which are to be paid in the form of
    Shares, Participants may elect, unless not permitted by the
    Committee, to satisfy the withholding requirement, in whole or
    in part, by having the Company withhold Shares having a fair
    market value on the date the tax is to be determined equal to
    not more than the minimum amount of tax required to be withheld
    with respect to the transaction. All such elections shall be
    subject to any restrictions or limitations that the Committee,
    in its sole discretion, deems appropriate.

 

    ARTICLE 13 —
    AMENDMENT AND TERMINATION

 

    13.1  Amendment of Plan.  The
    Committee may at any time terminate or from time to time amend
    the Plan in whole or in part, but no such action shall adversely
    affect any rights or obligations with respect to any Awards
    previously granted under the Plan, unless the affected
    Participants consent in writing. To the extent required by

    

    12

 

    Section 162(m) or 422 of the Code, other applicable law,
    and/or any
    Listing Standards, no amendment shall be effective unless
    approved by the stockholders of the Company.

 

    13.2  Amendment of Award
    Agreement.  The Committee may, at any time, amend
    outstanding Agreements in a manner not inconsistent with the
    terms of the Plan; provided, however, except as provided in
    Sections 13.4 and 13.5, if such amendment is adverse to the
    Participant, as determined by the Committee, the amendment shall
    not be effective unless and until the Participant consents, in
    writing, to such amendment. To the extent not inconsistent with
    the terms of the Plan, the Committee may, at any time, amend an
    outstanding Agreement in a manner that is not unfavorable to the
    Participant without the consent of such Participant.

 

    13.3  Termination of Plan.  No Awards
    shall be granted under the Plan on or after the tenth
    anniversary of the Effective Date of the Plan.

 

    13.4  Cancellation of Awards for Detrimental
    Activity.  The Committee may provide in the Award
    Agreement that if a Participant engages in any “Detrimental
    Activity” (as defined below or in the Award Agreement), the
    Committee may, notwithstanding any other provision in this Plan
    to the contrary, cancel, rescind, suspend, withhold or otherwise
    restrict or limit any unexpired, unexercised, unpaid or deferred
    Award as of the first date the Participant engages in the
    Detrimental Activity, unless sooner terminated by operation of
    another term of this Plan or any other agreement. Without
    limiting the generality of the foregoing, the Agreement may also
    provide that if the Participant exercises an Option or SAR,
    receives a Performance Share, Performance Unit, or RSU payout,
    or receives Shares under an Award at any time during the period
    beginning six months prior to the date the Participant first
    engages in Detrimental Activity and ending six months after the
    date the Participant ceases to engage in any Detrimental
    Activity, the Participant shall be required to pay to the
    Company the excess of the then fair market value of the Shares
    subject to the Award over the total price paid by the
    Participant for such Shares.

 

    For purposes of this Section, “Detrimental Activity”
    means any of the following, as determined by the Committee in
    good faith: (i) the violation of any agreement between the
    Company and the Participant relating to the disclosure of
    confidential information or trade secrets, the solicitation of
    employees, customers, suppliers, licensees, licensors or
    contractors, or the performance of competitive services;
    (ii) conduct that constitutes Cause (as defined in
    Section 2.5 above), whether or not the Participant’s
    employment is terminated for Cause; (iii) making, or
    causing or attempting to cause any other person to make, any
    statement, either written or oral, or conveying any information
    about the Company which is disparaging or which in any way
    reflects negatively upon the Company; (iv) improperly
    disclosing or otherwise misusing any confidential information
    regarding the Company; or (v) the refusal or failure of a
    Participant to provide, upon the request of the Company, a
    certification, in a form satisfactory to the Company, that he or
    she is in full compliance with the terms and conditions of the
    Plan; provided, that the Committee may provide in the Agreement
    that only certain of the restrictions provided above apply for
    purposes of the Award Agreement.

 

    13.5  Assumption or Cancellation of Awards Upon a
    Corporate Transaction.  In the event of a proposed
    sale of all or substantially all of the assets or stock of the
    Company, the merger of the Company with or into another
    corporation such that stockholders of the Company immediately
    prior to the merger exchange their shares of stock in the
    Company for cash
    and/or
    shares of another entity or any other Change in Control or
    corporate transaction to which the Committee deems this
    provision applicable (any such event is referred to as a
    “Corporate Transaction”), the Committee may, in its
    discretion, cause each Award to be assumed or for an equivalent
    Award to be substituted by the successor corporation or a parent
    or subsidiary of such successor corporation (and adjusted as
    appropriate).

 

    In addition or in the alternative, the Committee, in its
    discretion, may determine that all or certain types of Awards
    will be cancelled at or immediately prior to the time of the
    Corporate Transaction; provided, however, that at least
    15 days prior to the Corporate Transaction (or, if not
    feasible to provide 15 days notice, within a reasonable
    period prior to the Corporate Transaction), the Committee
    notifies the Participant that, subject to rescission if the
    Corporate Transaction is not successfully completed within a
    certain period, the Award will be terminated and provides the
    Participant, either, at the election of the Committee,
    (i) a payment (in cash or Shares) equal to value of the
    Award, as determined below, or (ii) the right to exercise
    the Option or other Award as to all Shares, including Shares as
    to which the Option or other Award would not otherwise be
    exercisable (or with respect to Restricted Stock, RSUs,
    Performance Shares or Performance Units, provide that all
    restrictions shall lapse) prior to the Corporate Transaction.
    For purposes of this provision, the value of the Award shall be
    measured as of the date of the

    

    13

 

    Corporate Transaction and shall equal the amount of cash or
    Shares that would be payable to the Participant upon exercise or
    vesting of the Award, less the amount of any payment required to
    be tendered by the Participant upon such exercise. For example,
    the amount payable to the Participant upon the Committee’s
    decision to cancel outstanding Options would equal the
    difference between the Fair Market Value of the Shares subject
    to the Options and the Exercise Price for such Options, computed
    as of the date of the Corporate Transaction.

 

    ARTICLE 14 —
    MISCELLANEOUS PROVISIONS

 

    14.1  Restrictions on Shares.  All
    certificates for Shares delivered under the Plan shall be
    subject to such stop-transfer orders and other restrictions as
    the Committee may deem advisable under the rules, regulations,
    and other requirements of the Securities and Exchange
    Commission, any Listing Standards and any applicable federal or
    state laws, and the Committee may cause a legend or legends to
    be placed on any such certificates to make appropriate reference
    to such restrictions. In making such determination, the
    Committee may rely upon an opinion of counsel for the Company.

 

    Notwithstanding any other provision of the Plan, the Company
    shall have no liability to deliver any Shares under the Plan or
    make any other distribution of the benefits under the Plan
    unless such delivery or distribution would comply with all
    applicable state and federal laws (including, without limitation
    and if applicable, the requirements of the Securities Act of
    1933), and any applicable requirements of any securities
    exchange or similar entity.

 

    14.2  Rights of a
    Stockholder.  Except as otherwise provided in
    Article 7 of the Plan and in the Restricted Stock
    Agreement, each Participant who receives an Award of Restricted
    Stock shall have all of the rights of a stockholder with respect
    to such Shares, including the right to vote the Shares to the
    extent, if any, such Shares possess voting rights and receive
    dividends and other distributions. Except as provided otherwise
    in the Plan or in an Agreement, no Participant awarded an
    Option, Stock Appreciation Right, RSU, Performance Unit, or
    Performance Share shall have any right as a stockholder with
    respect to any Shares covered by such Award prior to the date of
    issuance to him or his delegate of a certificate or certificates
    for such Shares or the date the Participant’s name is
    registered on the Company’s book as the stockholder of
    record with respect to such Shares.

 

    14.3  No Implied Rights.  Nothing in
    the Plan or any Award granted under the Plan shall confer upon
    any Participant any right to continue in the service of the
    Employer, or to serve as a Director thereof, or interfere in any
    way with the right of the Employer to terminate his or her
    employment or other service relationship at any time. Unless
    otherwise determined by the Committee, no Award granted under
    the Plan shall be deemed salary or compensation for the purpose
    of computing benefits under any employee benefit plan, severance
    program, or other arrangement of the Employer for the benefit of
    its employees. No Participant shall have any claim to an Award
    until it is actually granted under the Plan. To the extent that
    any person acquires a right to receive payments from the Company
    under the Plan, such right shall, except as otherwise provided
    by the Committee, be no greater than the right of an unsecured
    general creditor of the Company.

 

    14.4  Compliance with Laws.

 

    (a) At all times when the Committee determines that
    compliance with Section 162(m) of the Code is required or
    desirable, all Awards to Named Executive Officers shall comply
    with the requirements of Section 162(m) of the Code. In
    addition, in the event that changes are made to
    Section 162(m) of the Code to permit greater flexibility
    with respect to any Awards, the Committee may, subject to the
    requirements of Article 13, make any adjustments it deems
    appropriate.

 

    (b) The Plan and the grant of Awards shall be subject to
    all applicable federal and state laws, rules, and regulations
    and to such approvals by any United States government or
    regulatory agency as may be required. Any provision herein
    relating to compliance with
    Rule 16b-3
    under the Exchange Act shall not be applicable with respect to
    participation in the Plan by Participants who are not Insiders.

 

    14.5  Successors.  The terms of the
    Plan shall be binding upon the Company, and its successors and
    assigns.

 

    14.6  Tax Elections.  Each
    Participant agrees to give the Committee prompt written notice
    of any election made by such Participant under Code
    Section 83(b) or any similar provision thereof.

    

    14

 

 

    14.7  Compliance With Code
    Section 409A.  The Plan is intended to
    satisfy the requirements of Code Section 409A and any
    regulations or guidance that may be adopted thereunder from time
    to time, including any transition relief available under
    applicable guidance related to Code Section 409A. The Plan
    may be amended or interpreted by the Committee as it determines
    necessary or appropriate in accordance with Code
    Section 409A and to avoid a plan failure under Code
    Section 409A(a)(1).

 

    14.8  Legal Construction.

 

    (a)  Severability.  If any provision
    of this Plan or an Agreement is or becomes or is deemed invalid,
    illegal or unenforceable in any jurisdiction, or would
    disqualify the Plan or any Agreement under any law deemed
    applicable by the Committee, such provision shall be construed
    or deemed amended to conform to 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
    Agreement, it shall be stricken and the remainder of the Plan or
    the Agreement shall remain in full force and effect.

 

    (b)  Gender and Number.  Where the
    context admits, words in any gender shall include the other
    gender, words in the singular shall include the plural and words
    in the plural shall include the singular.

 

    (c)  Governing Law.  To the extent
    not preempted by federal law, the Plan and all Agreements
    hereunder, shall be construed in accordance with and governed by
    the laws of the State of Delaware.

 

    IN WITNESS WHEREOF, this Plan is executed as of the date
    approved by the Compensation Committee of the Board of Directors
    of the Company and ratified by the Board of Directors of the
    Company, the 21st day of February, 2007 and revised as of
    April 23, 2007.

 

    INDUSTRIAL DISTRIBUTION GROUP, INC.

 

			
	 	    By: 
	
    /s/  Jack
    P. Healey

    Executive Vice President, Chief Financial Officer

    and Secretary

    

    15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]