1
EXHIBIT 10.1
BOISE CASCADE OFFICE PRODUCTS CORPORATION
FORM OF EXECUTIVE OFFICER SEVERANCE AGREEMENT
(As Amended Through February 16, 1999)
2
[As amended through February 16, 1999]
CONFIDENTIAL
(Date)
[ ]
Dear [ ]:
Boise Cascade Office Products Corporation (the "Company") considers it
essential to the best interests of its stockholders to xxxxxx the continuous
employment of key management personnel in the event there is, or is threatened,
a Change in Control (as defined in this Agreement) of Boise Cascade Corporation
("Boise Cascade"), the principal shareholder of the Company. In this connection,
the Board of Directors of the Company (the "Board") recognizes that the
possibility of a Change in Control may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the Company
and its stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including yourself, to their assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a Change in Control, although no such change is now contemplated.
In order to induce you to remain in the employ of the Company in the
face of a Change in Control and in consideration of your agreement set forth in
Section 2.B hereof, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement in the event your employment with
the Company is terminated subsequent to "Change in Control" under the
circumstances described below.
1. Term of Agreement. This Agreement shall commence on the date
hereof and shall continue in effect through [ ]; provided, however, that
commencing on [ ], and each January 1 thereafter, the term of this
Agreement shall automatically be extended so as to terminate on the third
anniversary of such date, unless, not later than September 30 of the preceding
year, the Company shall have given notice not to extend this Agreement;
provided, however, if a Change in Control (as defined in Section 2 hereof)
shall have occurred during the term of this
3
Agreement, this Agreement shall continue in effect for a period of not less than
twenty-four months beyond the month in which such Change in Control occurred.
2. Change in Control.
A. No benefits shall be payable hereunder unless there shall have
been a Change in Control, as set forth below, and your employment by the Company
shall thereafter have been terminated in accordance with Section 3 below. A
"Change in Control" shall be deemed to have occurred if, at any time when Boise
Cascade owns more than 50% of the outstanding voting securities of the Company,
the event set forth in any one of the following paragraphs shall have occurred:
(1) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of Boise Cascade (not including in the
securities beneficially owned by such Person any securities acquired directly
from Boise Cascade or its affiliates other than in connection with the
acquisition by Boise Cascade or its affiliates of a business) representing 20%
or more of either the then outstanding shares of common stock of Boise Cascade
or the combined voting power of Boise Cascade's then outstanding securities; or
(2) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors of Boise Cascade then
serving: individuals who, on the date hereof, constitute the board of directors
of Boise Cascade and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of Boise Cascade) whose appointment or election by the
board of directors of Boise Cascade or nomination for election by Boise
Cascade's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors of Boise Cascade then still in office who either were directors of
Boise Cascade on the date hereof or whose appointment, election or nomination
for election was previously so approved (the "Continuing Directors"); or
(3) The stockholders of Boise Cascade approve a merger
or consolidation of Boise Cascade with any other corporation or approve the
issuance of voting securities of Boise Cascade in connection with a merger or
consolidation of Boise Cascade (or any direct or indirect subsidiary of Boise
Cascade) pursuant to applicable stock exchange requirements, other than (i) a
merger or consolidation which would result in the voting securities of Boise
Cascade outstanding immediately prior to such merger or consolidation continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities under an
employee benefit plan of Boise Cascade, at least 66 2/3% of the combined voting
power of the voting securities of Boise Cascade or such surviving entity or any
parent thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of Boise
Cascade (or similar transaction) in which no Person is or becomes the
4
Beneficial Owner, directly or indirectly, of securities of Boise Cascade (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from Boise Cascade or its subsidiaries other than in
connection with the acquisition by Boise Cascade or its subsidiaries of a
business) representing 20% or more of either the then outstanding shares of
common stock of Boise Cascade or the combined voting power of Boise Cascade's
then outstanding securities; or
(4) The stockholders of Boise Cascade approve a plan
of complete liquidation or dissolution of Boise Cascade or an agreement for the
sale or disposition by Boise Cascade of all or substantially all of Boise
Cascade's assets, other than a sale or disposition by Boise Cascade of all or
substantially all of Boise Cascade's assets to an entity, at least 66 2/3% of
the combined voting power of the voting securities of which are owned by Persons
in substantially the same proportions as their ownership of Boise Cascade
immediately prior to such sale.
Notwithstanding the foregoing, any event or transaction
which would otherwise constitute a Change in Control (a "Transaction") shall not
constitute a Change in Control for purposes of your benefits under this
Agreement if, in connection with the Transaction, you participate as an equity
investor in the acquiring entity or any of its affiliates (the "Acquiror"). For
purposes of the preceding sentence, you shall not be deemed to have participated
as an equity investor in the Acquiror by virtue of (a) obtaining beneficial
ownership of any equity interest in the Acquiror as a result of the grant to you
of an incentive compensation award under one or more incentive plans of the
Acquiror (including but not limited to the conversion in connection with the
Transaction of incentive compensation awards of the Company or Boise Cascade
into incentive compensation awards of the Acquiror), on terms and conditions
substantially equivalent to those applicable to other executives of the Company
or Boise Cascade immediately prior to the Transaction, after taking into account
normal differences attributable to job responsibilities, title and the like, (b)
obtaining beneficial ownership of any equity interest in the Acquiror on terms
and conditions substantially equivalent to those obtained in the Transaction by
all other stockholders of Boise Cascade, or (c) having obtained an incidental
equity ownership in the Acquiror prior to and not in anticipation of the
Transaction.
B. For purposes of this Agreement, a "Potential Change in
Control" shall be deemed to have occurred if (1) Boise Cascade enters into an
agreement, the consummation of which would result in the occurrence of a Change
in Control of Boise Cascade; (2) Boise Cascade or any Person publicly announces
an intention to take or to consider taking actions which if consummated would
constitute a Change in Control of Boise Cascade; (3) any Person becomes the
Beneficial Owner, directly or indirectly, of securities of Boise Cascade
representing 9.5% or more of either the then outstanding shares of common stock
of Boise Cascade or the combined voting power of Boise Cascade's then
outstanding securities; or (4) the Board adopts a resolution to the effect that
a potential Change in Control for purposes of this Agreement has occurred. You
agree that, subject to the terms and conditions of this Agreement, in the event
of a Potential Change in Control, you will at the option of the
5
Company remain in the employ of the Company until the earlier of (a) the date
which is six months from the occurrence of the first such Potential Change in
Control, or (b) the date of a Change in Control.
C. For purposes of this Agreement, "Beneficial Owner" shall have
the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
D. For purposes of this Agreement, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include (1)
Boise Cascade or any of its subsidiaries, (2) a trustee or other fiduciary
holding securities under an employee benefit plan of Boise Cascade or any of its
subsidiaries, (3) an underwriter temporarily holding securities pursuant to an
offering of such securities, or (4) a corporation owned, directly or indirectly,
by the stockholders of Boise Cascade in substantially the same proportions as
their ownership of stock of Boise Cascade.
3. Termination Following Change in Control. If any of the events
described in Section 2 hereof constituting a Change in Control shall have
occurred and be continuing, you shall be entitled to the benefits provided in
Section 4 hereof upon the subsequent termination of your employment during the
term of this Agreement unless such termination is because of your death, by the
Company for Cause or Disability, or by you other than for Good Reason.
A. Disability. If, as a result of your incapacity due to physical
or mental illness, you shall have been absent from your duties with the Company
on a full-time basis for six consecutive months, and within thirty days after
written notice of termination is given you shall not have returned to the
full-time performance of your duties, the Company may terminate your employment
for "Disability."
B. Cause. Termination by the Company of your employment for
"Cause" shall mean termination upon (1) the willful and continued failure by you
to substantially perform your duties with the Company (other than any such
failure resulting from your incapacity due to physical or mental illness or any
such actual or anticipated failure resulting from your termination for Good
Reason), after a demand for substantial performance is delivered to you by the
Board which specifically identifies the manner in which the Board believes that
you have not substantially performed your duties, or (2) the willful engaging by
you in conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For purposes of this Subsection, no act, or failure to
act, on your part shall be considered "willful" unless done, or omitted to be
done, by you not in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Notwithstanding the foregoing,
you shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for the
6
purpose (after reasonable notice to you and an opportunity for you, together
with your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of conduct set forth above in clauses (1)
or (2) of the first sentence of this Subsection and specifying the particulars
thereof in detail.
C. Good Reason. You shall be entitled to terminate your
employment for Good Reason. For purposes of this Agreement, "Good Reason" shall,
without your express written consent, mean:
(1) The assignment to you of any duties inconsistent with
your status as an Executive Officer of the Company or an adverse alteration in
the nature or status of your responsibilities from those in effect immediately
prior to a Change in Control;
(2) The disposition by the Company of the business of the
Company for which your services are principally provided pursuant to a partial
or complete liquidation of the Company, a sale of assets (including stock of a
subsidiary) of the Company, or otherwise, unless such disposition has been
approved by the Board, two-thirds of the members of which were directors on the
date of this Agreement or whose appointment, election, or nomination for
election was previously approved by such directors;
(3) A reduction by the Company in your annual base salary
as in effect on the date hereof or as the same may be increased from time to
time, except for across-the-board salary reductions similarly affecting all
executives of the Company, all executives of any Person in control of the
Company, and all executives of any Person in control of Boise Cascade;
(4) The Company's requiring you to be based anywhere other
than in the metropolitan area in which you were based immediately prior to a
Change in Control, except for required travel on the Company's business to an
extent substantially consistent with your present business travel obligations;
(5) The failure by the Company to continue in effect any
compensation plan in which you were participating immediately prior to the
Change in Control, including but not limited to your participation, if any, in
the Company's Key Executive Performance Plan for Executive Officers (the
"XXXX"), the 1995 Executive Officer Deferred Compensation Plans, the 1995 Key
Executive Deferred Compensation Plans (the "Deferred Compensation Plans"), the
Key Executive Stock Option Plan, or any substitute or additional plans adopted
prior to the Change in Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan
in connection with the Change in Control, or unless the plan has expired in
accordance with its terms in effect immediately prior to the Change in Control;
or the failure by the Company to continue your participation therein on a basis
not materially less favorable, both in terms of the amount of benefits provided
and the level of your participation relative to
7
other participants, as existed immediately prior to the Change in Control;
(6) The failure by the Company to continue to provide you
with benefits substantially similar to those enjoyed by you under any of the
Company's pension, life insurance, medical, health and accident, or disability
plans, including, without limitation, the Company's Split-Dollar Life Insurance
Plan ("Split-Dollar Plan"), and the Supplemental Early Retirement Plan for
Executive Officers ("Early Retirement Plan"), the Pension Plan for Salaried
Employees (the "Qualified Plan"), the Savings and Supplemental Retirement Plan
(the "SSRP"), the Supplemental Retirement Programs (the "Excess Benefit Plans"),
and any other nonqualified pension agreement between you and the Company, in
which you may have been participating at the time of a Change in Control, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material fringe
benefit enjoyed by you at the time of the Change in Control, or the failure by
the Company to provide you with the number of paid vacation days to which you
are entitled on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect at the time of the Change in
Control;
(7) The failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof; or
(8) Any purported termination of your employment which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Subsection D below (and, if applicable, Subsection B above). Furthermore, no
such purported termination of your employment shall be effective for purposes of
this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to physical or mental
illness. Your continued employment shall not constitute consent to, or a waiver
of rights with respect to, any act or failure to act constituting Good Reason
hereunder.
D. Notice of Termination. Any purported termination by the
Company or by you shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 8 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so indicated.
E. Date of Termination, Etc. "Date of Termination" shall mean (1)
if your employment is terminated for Disability, thirty days after Notice of
Termination is given (provided that you shall not have returned to the
performance of your duties on a full-time basis during such thirty-day period),
and (2) if your employment is
8
terminated pursuant to Subsection B or C above or for any other reason, the date
specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection B above shall not be less than thirty days, and in the
case of a termination pursuant to Subsection C above shall not be more than
sixty days, respectively, from the date such Notice of Termination is given);
provided that if within thirty days after any Notice of Termination is given the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual written
agreement of the parties or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected); and provided further that the Date of Termination
shall be extended by a notice of dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay you your full compensation in effect when the
notice giving rise to the dispute was given (including, but not limited to, base
salary) and continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice giving rise to
the dispute was given, until the dispute is finally resolved in accordance with
this Section. Amounts paid under this Section are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement.
4. Compensation Upon Termination or During Disability.
A. During any period that you fail to perform your duties
hereunder as a result of incapacity due to physical or mental illness, you shall
continue to receive your full base salary at the rate then in effect and all
compensation, including under the XXXX, paid during the period until your
employment is terminated pursuant to Section 3.A hereof. Thereafter, your
benefits shall be determined in accordance with the insurance programs then in
effect of the Company or subsidiary corporation by which you are employed, and
any qualified retirement plan and any executive supplemental retirement plan in
effect immediately prior to the Change in Control.
B. If your employment shall be terminated for Cause or by you
other than for Good Reason, the Company shall pay you only your full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
C. If your employment shall be terminated by the Company other
than for Cause or Disability, or by you for Good Reason, then you shall be
entitled to the benefits provided below:
9
(1) The Company shall pay you, not later than the
fifth day following the Date of Termination, your full base salary through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any compensation
plan of the Company at the time such payments are due;
(2) The Company shall pay to you, not later than the
fifth day following the Date of Termination, a lump sum severance payment equal
to (a) three times the sum of (i) your annual base salary, plus (ii) your target
bonus payout under the Company's Key Executive Performance Plan for Executive
Officers (the "XXXX") (or any substitute plan) for the year in which occurs the
Date of Termination or Change in Control, whichever is greater, less (b) the
dollar amount, if any, which you are paid upon termination of employment,
without regard to the provisions of this Agreement, under the Company's
Severance Pay Policy for Executive Officers as in effect immediately prior to
the Date of Termination;
(3) The Company shall pay to you, not later than the
fifth day following the Date of Termination, a lump sum amount equal to the
greater of the value of your unused and accrued vacation entitlement in
accordance with the Company's Vacation Policy as in effect immediately prior to
the Change in Control or as in effect on Date of Termination;
(4) The Company shall pay to you, not later than the
fifth day following the Date of Termination, a lump sum amount equal to the sum
of (a) any unpaid bonus (excluding deferred awards, plus interest, credited to
your account, which shall be payable under the XXXX in accordance with its
terms) pursuant to the XXXX (or any substitute plan) allocable to you in respect
of the Plan year preceding that in which the Date of Termination occurs, and (b)
a XXXX award (or award under a substitute plan) for the year in which the Date
of Termination occurs, equal to the greater of (i) your target bonus payout
under such plan (determined without regard to any reduction in your base salary
constituting Good Reason), prorated through the month in which the Date of
Termination occurs, or (ii) the actual XXXX award (or award under such
substitute plan) as determined by actual year-to-date earnings per share through
the last day of the month prior to the month in which the Date of Termination
occurs in accordance with the XXXX award criteria (or criteria under such
substitute plan) in which you are participating as of the Date of Termination,
prorated through the month in which the Date of Termination occurs;
(5) All stock options granted under the Key Executive
Stock Option Plan held by you shall become immediately exercisable; and
(6) The Company shall also pay to you all legal fees
and expenses incurred by you as a result of such termination (including all such
fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement).
10
D. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) by you for Good Reason, then for a twelve-month period
following such termination, the Company shall maintain, in full force and effect
for your continued benefit, all life, disability, accident and health insurance
plans or arrangements, and financial counseling services in which you may have
been participating immediately prior to the Change in Control, provided your
continued participation (or a particular type of coverage) is possible under the
general terms and provisions of such plans and arrangements. In the event your
participation (or a particular type of coverage) under any such plan or
arrangement is barred, the Company shall arrange to provide you with benefits,
at substantially the same cost to you, which are substantially similar to those
which you are entitled to receive under such plans and arrangements.
Notwithstanding the foregoing, the Company shall continue to pay such amounts as
may be required to maintain any insurance you may have had in force pursuant to
the Split-Dollar Plan until the later of your sixty-fifth birthday or ten years
after the insurance policy is issued, after which the Company will release to
you its interest in each such policy.
E. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) by you for Good Reason, then in addition to the aggregate
retirement benefits to which you are entitled under the Company's Qualified
Plan, the Company's Excess Benefit Plans, any other nonqualified pension
agreement or arrangement, or any successor plans thereto, the Company shall pay
you amounts equal to (a), (b), (c), or (d), whichever is applicable:
(a) If you have satisfied the service, but not the
age, requirements of the Early Retirement Plan, as in effect immediately prior
to the Change in Control, you shall receive a monthly benefit, commencing on
your fifty-fifth birthday equal to the benefit to which you would have been
entitled under the Early Retirement Plan, as in effect immediately prior to the
Change in Control, had you satisfied the age and service requirements as of the
Date of Termination; or
(b) If you have satisfied the age, but not the
service requirement of the Early Retirement Plan, as in effect immediately
prior to the Change in Control, you shall receive a monthly benefit, commencing
as of the Date of Termination equal to the benefit to which you would have been
entitled under the Early Retirement Plan, as in effect immediately prior to the
Change in Control, had you satisfied the age and service requirements as of the
Date of Termination; or
(c) If you have satisfied neither the age nor the
service requirements of the Early Retirement Plan, as in effect immediately
prior to the Change in Control, you shall receive a monthly benefit, commencing
on your fifty-fifth birthday equal to the benefit to which you would have been
entitled under the Early Retirement Plan, as in effect immediately prior to the
Change in Control, had you satisfied the age and service requirements as of the
Date of Termination; or
11
(d) If you have satisfied both the age and the service
requirements of the Early Retirement Plan, as in effect immediately before the
Change in Control, you shall receive the benefits to which you are entitled
under the Early Retirement Plan.
The benefits under this Paragraph E shall be paid in the same manner as, and
shall otherwise possess the same rights and privileges as were available with
respect to, benefits under the terms of the Early Retirement Plan as in effect
immediately prior to the Change in Control.
F. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) by you for Good Reason, then you shall not be required to
mitigate the amount of any payment provided for in this Section 4 by seeking
other employment or otherwise, nor shall the amount of any payment or benefit
provided for in this Section 4 (except as otherwise provided in the immediately
succeeding sentence) be reduced by any compensation earned by you as the result
of employment by another employer or by retirement benefits after the Date of
Termination, or otherwise. Benefits otherwise receivable by you pursuant to
Section 4.D shall be reduced to the extent comparable benefits are actually
received by you during the twelve-month period following your termination, and
any such benefits actually received by you shall be reported to the Company.
5. Protective Limitation.
A. Notwithstanding any provision hereof to the contrary, in the
event you (1) would receive payments under this Agreement or under any other
plan, program, or policy sponsored by the Company (the "Total Payments"); and
(2) which Total Payments relate to a change in control of the Company and which
are determined (as described below) by your legal counsel to be subject to
excise tax under Section 4999 of the Code (the "Excise Tax"); then (3) the
Company shall pay to you an additional amount (the "Gross-up Payment") such that
the net amount retained by you, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment taxes, and
Excise Tax upon the Gross-up Payment, shall be equal to the Total Payments.
B. For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (1) all of
the Total Payments shall be treated as "parachute payments" (within the meaning
of Section 280G(b)(2) of the Code) unless, in the opinion of your legal counsel
(who shall be reasonably acceptable to the Company), such payments or benefits
(in whole or in part) do not constitute parachute payments, including by reason
of Section 280G(b)(4)(A) of the Code, and (2) all "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code shall be treated as subject
to the Excise Tax unless, in the opinion of your legal counsel, such excess
parachute payments (in
12
whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of
the base amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax. For purposes of determining the amount of the
Gross-up Payment, you will be deemed to pay federal income tax at the highest
marginal rate of federal income taxation in the calendar year in which the
Gross-up Payment is to be made and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence on the
Date of Termination, net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
C. The payments provided in subsection 5(A) shall be made not
later than the fifth day following the Date of Termination; provided, however,
if the amount of such payment cannot be finally determined on or before such
day, the Company shall pay to you on such day an estimate, as determined in good
faith by the Company of the minimum amount of such payments to which you are
clearly entitled and shall pay the remainder of such payments (together with
interest on the unpaid remainder (or on all such payments to the extent the
Company fails to make such payments when due) at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined but in no event later than the thirtieth (30th) day after the Date of
Termination. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to you, payable on the fifth (5th) business day after demand
by the Company (together with interest at 120% of the rate provided in Section
1274(b)(2)(B) of the Code). At the time that payments are made under this
Agreement, the Company shall provide you with a written statement setting forth
the manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, its auditor, or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).
D. In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-up
Payment, you shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-up Payment attributable to such reduction (plus that
portion of the Gross-up Payment attributable to the Excise Tax and federal,
state, and local income and employment taxes imposed on the Gross-up Payment
being repaid by you, to the extent that such repayment results in a reduction in
the Excise Tax and a dollar-for-dollar reduction in your taxable income and
wages for purposes of federal, state, and local income and employment taxes)
plus interest on the amount of such repayment at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined, for any reason, to exceed the amount taken into account hereunder in
calculating the Gross-up Payment, the Company shall make an additional Gross-up
Payment in respect of such excess (plus any interest, penalties,
13
or additions payable by you with respect to such excess and such portion) within
five (5) business days following the time that the amount of such excess is
finally determined. You and the Company shall reasonable cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the Total
Payments.
6. Deferred Compensation and Benefits Trust. The Company will establish
a Deferred Compensation and Benefits Trust, and shall comply with the terms of
that Trust. Upon the occurrence of any Potential Change in Control, the Company
shall transfer to the Trust an amount of cash, marketable securities, or other
property acceptable to the trustee(s) equal in value to 105% of the amount
necessary, on an actuarial basis and calculated in accordance with the terms of
the Trust, to pay the Company's obligations under this Agreement (the "Funding
Amount"). The cash, marketable securities, and other property so transferred
shall be held, managed, and disbursed by the trustee(s) subject to and in
accordance with the terms of the Trust. In addition, from time to time, the
Company shall make any and all additional transfers of cash, marketable
securities, or other property acceptable to the trustee(s) as may be necessary
in order to maintain the Funding Amount with respect to this Agreement. The
determination of the amount required to be transferred by the Company to the
Trust shall include any amounts that could in any circumstances be payable in
the future under Section 4 hereof, calculated in accordance with the following
rules: (A) Upon a Potential Change in Control, the Company will calculate the
amount required to be transferred to the Trust based on the assumption that your
employment, if not previously terminated, will be terminated by the Company
other than for Cause or Disability on the second anniversary of the Potential
Change in Control; and (B) Upon any subsequent recalculation, your employment
will be deemed to have been terminated by the Company other than for Cause or
Disability on the later of the date of actual termination or the date of such
recalculation.
For this purpose, the term Deferred Compensation and Benefits
Trust shall mean an irrevocable trust or trusts established or to be established
by the Company with an independent trustee or trustees for the benefit of
persons entitled to receive payments or benefits hereunder, the assets of which
nevertheless will be subject to claims of the Company's creditors in the event
of bankruptcy or insolvency and with respect to which the Company shall have
received a ruling from the Internal Revenue Service that the trust is a "grantor
trust" for federal income tax purposes.
The Deferred Compensation and Benefits Trust shall contain the
following additional provisions:
(a) If a Change in Control does not occur within one year after
the Potential Change in Control, the Company may reclaim the assets transferred
to the trustee or trustees subject to the requirement that it be again funded
upon the occurrence of another Potential Change in Control.
14
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under this
Agreement, except to the extent such benefits are paid by the Company, and the
Company and any successor shall continue to be liable for the ultimate payment
of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment of all the
Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall contain
other appropriate terms and conditions consistent with the purposes sought to be
accomplished by it. Prior to a Change in Control, the Deferred Compensation and
Benefits Trust may be amended from time to time by the Company, but no such
amendment may substantially alter any of the provisions set out in the preceding
paragraphs.
7. Successors; Binding Agreement.
A. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle you to compensation from the Company in the same
amount and on the same terms as you would be entitled hereunder if you terminate
your employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
B. This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to your devisee, legatee or
other designee or if there is no such designee, to your estate.
C. Any dispute between you and the Company regarding this
Agreement may be resolved either by binding arbitration or by judicial
proceedings at your sole election, and the Company agrees to be bound by your
election in that regard.
15
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the first page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
9. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and such officer as may be designated by the Board. No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the state of Delaware (regardless of the law which may be applicable under
principles of conflicts of law). All references to sections of the Exchange Act
or the Code shall be deemed also to refer to any successor provisions to such
sections. If the obligations of the Company under Section 4 arise prior to the
expiration of the term of this Agreement, such obligations shall survive the
expiration of the term.
10. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. No Guaranty of Employment. Neither this contract nor any action
taken hereunder shall be construed as giving you a right to be retained as an
employee or an executive officer of the Company.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with Delaware law.
16
14. Other Benefits. Any payments due to you as provided herein are in
addition to, and not in lieu of, any amounts to which you may be entitled under
any other employee benefit plan, program or policy of the Company.
If this letter correctly sets forth our agreement on the subject matter
hereof, kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our agreement on this subject.
Sincerely,
BOISE CASCADE OFFICE PRODUCTS CORPORATION
By
----------------------------
Xxxxxx X. Xxxxx
Chairman of the Board
of Directors
Agreed to this [ ] day of [ ],
------------------------------
[Name of Officer]
Enclosure
