Exhibit 10.1
[As amended through August 3, 1999]
CONFIDENTIAL
(Date)
[ ]
Dear [ ]:
Boise Cascade Office Products Corporation (the "Company") considers it
essential to the best interests of its stockholders to ▇▇▇▇▇▇ 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 prior or subsequent to "change in
control" (as defined in Section 2 hereof) under the circumstances described
below.
1. Term of Agreement. This Agreement amends, supersedes, and
restates in its entirety the Agreement between you and the Company dated
___________, and terminates the Agreement between you and Boise Cascade
dated __________, effective immediately. This amendment shall be effective
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 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 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 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; provided, however, if such Person acquires securities directly
from Boise Cascade, such securities shall not be included unless such
Person acquires additional securities which, when added to the securities
acquired directly from Boise Cascade, exceed 20% of Boise Cascade's then
outstanding shares of common stock or the combined voting power of Boise
Cascade's then outstanding securities; and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 2A(3)(i) of this Agreement shall not be deemed to
be a change in control of Boise Cascade; 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 consummation of a merger or consolidation of
Boise Cascade (or any direct or indirect subsidiary of Boise Cascade) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) 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) 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
Beneficial Owner, directly or indirectly, of securities of Boise Cascade
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; provided, however, if such Person acquires
securities directly from Boise Cascade, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from Boise Cascade, exceed 20% of
Boise Cascade's then outstanding shares of common stock or the combined
voting power of Boise Cascade's then outstanding securities; and provided
further that any acquisition of securities by any Person in connection with
a transaction described in Subsection 2A(3)(i) of this Agreement shall not
be deemed to be a change in control of Boise Cascade; or
(4) The stockholders of Boise Cascade approve a plan of
complete liquidation or dissolution of Boise Cascade or the consummation of
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 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 and Change in Control. If (1) any of the events
described in Section 2 hereof constituting a change in control shall have
occurred and your employment subsequently terminates during the term of
this Agreement or (2) there has occurred a potential change in control,
your employment subsequently terminates during the term of this Agreement
in contemplation of a change in control, and subsequently an actual change
in control of Boise Cascade pursuant to Section 2 occurs, you shall be
entitled to the benefits provided in Sections 4 and 5 hereof unless in
either case 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
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. All decisions by the Company
regarding termination for Cause must be supported by clear and convincing
evidence.
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;
(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 business travel
obligations as such existed immediately prior to the change in control;
(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 "▇▇▇▇"), 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 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.
▇. ▇▇▇▇▇▇ 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 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 ▇▇▇▇, 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 or
any subsidiary corporation by which you are employed other than for Cause
or Disability, or by you for Good Reason, then you shall be entitled to the
benefits provided below:
(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 without regard to any reduction in base salary that would
constitute Good Reason, 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 at the rate
in effect at the time Notice of Termination is given without regard to any
reduction in base salary that would constitute Good Reason, plus (ii) your
target bonus payout under the Company's Key Executive Performance Plan for
Executive Officers (the "▇▇▇▇") (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 ▇▇▇▇ in
accordance with its terms) pursuant to the ▇▇▇▇ (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 ▇▇▇▇ 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 ▇▇▇▇ 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 ▇▇▇▇ 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;
(6) 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 Company's Split Dollar Life Insurance 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; and
(7) 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).
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, either (a) 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 or (b) at your election, such plans or
arrangements in which you were participating immediately prior to the Date
of Termination, 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
(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 by the Company 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
Company's opinion, 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 Company's opinion, such excess parachute payments (in
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, 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 reasonably 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 Sections 4 and 5 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.
(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.
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. 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 Sections 4 and 5 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.
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___________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman of the Board
of Directors
Agreed to this [ ] day of [ ],
______________________________
[Name of Officer]
Enclosure