January 18, 2001
First Name, Last Name
Address
City, State, Zip
Dear ___________________:
This letter amends and supplements the letter agreement dated April 20, 1999,
between you and Willamette Industries, Inc. ("Willamette") relating to certain
benefits following a change in control of Willamette (the "CIC Agreement") as
follows:
1. The following provision is added to paragraph 3(d)(ii) of the CIC
Agreement:
For purposes of this Agreement, "annual incentive compensation" includes,
without limitation, annual grants of stock options and restricted stock
under the Company's 1995 Long-Term Incentive Compensation Plan, as amended
and restated (the "Incentive Plan"). The value of your annual incentive
compensation represented by restricted stock granted to you under the
Incentive Plan during any fiscal year of the Company, will be equal to the
number of Company Shares granted to you multiplied by the market value of
a Company share on the grant date. The value of your annual incentive
compensation represented by stock options granted to you under the
Incentive Plan during any fiscal year of the Company will be equal to the
number of Company Shares subject to your stock option multiplied by the
value of each stock option determined as of the grant date of that option
using the Black Scholes option pricing model and the market value of a
Company Share on the grant date and using the following assumptions:
(a) The option will be assumed to be fully exercisable as of the grant
date;
January 18, 2001
Page Two
(b) The option will be assumed to have an expected life equal to the
average period for which options granted under the Plan have remained
outstanding which is 6.4 years;
(c) The volatility of the Company Shares underlying each option will be
determined based on the simple average of four volatility calculations: 1) the
daily close stock price for the three-year period preceding each stock option
grant date; 2) the daily close stock price for the 52-week preceding each stock
option grant date; 3) the daily close stock price for the most recent
peak-to-peak stock cycle, with a duration cycle of over 1 year, preceding each
stock option grant date; and 4) the daily close stock price for the most recent
trough-to-trough stock cycle, with a duration cycle of over 1 year, preceding
each stock option grant date. For any period of time during which the Company's
Shares are being solicited in the public arena through a public tender offer or
public bidding process, the volatility factor for such period will be the daily
average of the S&P forest products index for the four calculations noted above.
(d) The risk-free rate will be the yield to maturity on a U.S.Treasury note
with a term of 6.4 years.
(e) The dividend is the actual per share cash dividend paid with respect to
Company Shares in the most current calender quarter prior to the grant date,
annualized.
2. Except as expressly provided in this letter, all the terms and
conditions of the CIC Agreement will continue in full force and effect.
Sincerely,
WILLAMETTE INDUSTRIES, INC.
By
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Xxxxx X. XxXxxxxxx,
President and CEO
January 18, 2001
Page Three
Agreed to this day of , 2001.
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