EXHIBIT 10.12
BCC Executive Officers Who Are Employees of BCC -- Form of Agreement [DO NOT
SEND TO Balkins, Milliken, & Moerdyk]
[As amended through February 11, 1999]
CONFIDENTIAL
(Date)
[ ]
Dear [ ]:
Boise Cascade Corporation (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment of key
management personnel in the event there is, or is threatened, a change in
control 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 of the Company, 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 of the Company 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 a "change in control of
the Company" (as defined in Section 2 hereof) 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 of the Company (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 of the Company occurred.
2. Change in Control.
A. No benefits shall be payable hereunder unless there shall have
been a change in control of the Company, 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 of the Company" shall be deemed to have
occurred if 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 the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 20% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company'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 then serving: individuals who, on
the date hereof, constitute the Board 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 the Company) whose
appointment or election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously so
approved (the "Continuing Directors"); or
(3) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or approve the issuance
of voting securities of the Company in connection with a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (i) a merger or consolidation
which would result in the voting securities of the Company 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 the Company, at least 66 2/3% of the combined voting power of the voting
securities of the Company 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 the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its subsidiaries other than in connection with the
acquisition by the Company or its subsidiaries of a business) representing 20%
or more of either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities; or
(4) The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company'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 the Company immediately prior to such sale.
Notwithstanding the foregoing, any event or transaction which
would otherwise constitute a change in control of the Company (a "Transaction")
shall not constitute a change in control of the Company 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 into incentive compensation awards of the Acquiror), on
terms and conditions substantially equivalent to those applicable to other
executives of the Company 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 the Company, 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 of
the Company" shall be deemed to have occurred if (1) the Company enters into an
agreement, the consummation of which would result in the occurrence of a change
in control of the Company, (2) the Company or any Person publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a change in control of the Company; (3) any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 9.5% or more of either the then outstanding shares of common stock
of the Company or the combined voting power of the Company's then outstanding
securities; or (4) the Board adopts a resolution to the effect that a potential
change in control of the Company 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 of the Company, 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 of the Company, or (b) the date of a change in control of the
Company.
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) the Company
or any of its subsidiaries, (2) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company 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 the Company in substantially the same proportions as their
ownership of stock of the Company.
3. Termination Following Change in Control. If any of the events
described in Section 2 hereof constituting a change in control of the Company
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 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 of the Company;
(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 are Continuing
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 and all executives of any Person in control of the Company;
(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 of the Company, 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 of the Company, including but not limited to your
participation, if any, in the Company's Key Executive Performance Plan for
Executive Officers (the "KEPP"), the 1982, 1986, and 1995 Executive Officer
Deferred Compensation Plans, the 1987 and 1995 Key Executive Deferred
Compensation Plans (the "Deferred Compensation Plans"), the 1984 Key Executive
Stock Option Plan (the "1984 Stock Option Plan"), or any substitute or
additional plans adopted prior to the change in control of the Company, 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
of the Company, or unless the plan has expired in accordance with its terms in
effect immediately prior to the change in control of the Company; 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 of the Company;
(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 of the
Company, 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 of the
Company, 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 of the Company;
(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 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 KEPP, 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 of the Company.
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:
(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 "KEPP") (or any substitute plan) for the year in which occurs the
Date of Termination or change in control of the Company, 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 of the Company 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 KEPP in accordance with its terms)
pursuant to the KEPP (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 KEPP
award (or award under a substitute plan) for the year in which the Date of
Termination occurs, equal to the greater of (i) 30% of your base salary for such
year (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 KEPP 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 KEPP 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; and
(5) 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, 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 of the Company,
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 of the Company, 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 of the Company, 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, require-
ment of the Early Retirement Plan, as in effect immediately prior to the change
in control of the Company, 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 of the Company, 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 of the Company, 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 of the Company, 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 of the Company, 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 of the Company.
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 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 the Executive on such day an estimate, as determined in
good faith by the Company of the minimum amount of such payments to which the
Executive is 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 the Executive, 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 the Executive 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 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 has established
a Deferred Compensation and Benefits Trust, and shall comply with the terms of
that Trust. Upon the occurrence of any potential change in control of the
Company, 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 of the Company, 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 of the Company; 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 of the Company does not occur within one
year after the potential change in control of the Company, 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 of the Company.
(b) Upon a change in control of the Company, 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 of the Company, 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. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the state of Idaho (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.
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 CORPORATION
By___________________________
J. W. Holleran
Senior Vice President and General Counsel
Agreed to this [ ] day of [ ],
______________________________
[Name of Officer]
Enclosure
BCC Executive Officers Who Are Employees of BCOP -- Form of Agreement [Balkins,
Milliken, & Moerdyk]
[As amended through February 11, 1999]
CONFIDENTIAL
(Date)
[ ]
Dear [ ]:
Boise Cascade Corporation (the "Company") considers it essential to the
best interests of its stockholders to foster the continuous employment of key
management personnel in the event there is, or is threatened, a change in
control 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 of the Company, although no such change is
now contemplated.
In order to induce you to remain as an employee of Boise Cascade Office
Products Corporation ("BCOP") in the face of a change in control of the Company,
if the change in control of the Company occurs when you are an executive officer
of the Company, 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 is terminated
subsequent to a "change in control of the Company" (as defined in Section 2
hereof) 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 of the Company (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 of the Company occurred.
Notwithstanding any other provision of this Agreement, this Agreement shall
terminate if, prior to the occurrence of a potential change in control of the
Company, you cease to be an executive officer of the Company, such termination
to be effective as of the date you so cease to be an executive officer of the
Company.
2. Change in Control.
A. No benefits shall be payable hereunder unless there shall have
been a change in control of the Company, as set forth below, and your employment
with BCOP shall thereafter have been terminated in accordance with Section 3
below. A "change in control of the Company" shall be deemed to have occurred if
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 the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates other than in connection with the acquisition by the
Company or its affiliates of a business) representing 20% or more of either the
then outstanding shares of common stock of the Company or the combined voting
power of the Company'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 then serving: individuals who, on
the date hereof, constitute the Board 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 the Company) whose
appointment or election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors on the date hereof or
whose appointment, election or nomination for election was previously so
approved (the "Continuing Directors"); or
(3) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation or approve the issuance
of voting securities of the Company in connection with a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (i) a merger or consolidation
which would result in the voting securities of the Company 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 the Company, at least 66 2/3% of the combined voting power of the voting
securities of the Company 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 the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Company or its subsidiaries other than in connection with the
acquisition by the Company or its subsidiaries of a business) representing 20%
or more of either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities; or
(4) The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or substantially all of
the Company'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 the Company immediately prior to such sale.
Notwithstanding the foregoing, any event or transaction which
would otherwise constitute a change in control of the Company (a "Transaction")
shall not constitute a change in control of the Company 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 into incentive compensation awards of the Acquiror), on
terms and conditions substantially equivalent to those applicable to other
executives of the Company 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 the Company, 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 of
the Company" shall be deemed to have occurred if (1) the Company enters into an
agreement, the consummation of which would result in the occurrence of a change
in control of the Company, (2) the Company or any Person publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a change in control of the Company; (3) any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 9.5% or more of either the then outstanding shares of common stock
of the Company or the combined voting power of the Company's then outstanding
securities; or (4) the Board adopts a resolution to the effect that a potential
change in control of the Company 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 of the Company, 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 of the Company, or (b) the date of a change in control of the
Company.
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) the Company
or any of its subsidiaries, (2) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company 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 the Company in substantially the same proportions as their
ownership of stock of the Company.
3. Termination Following Change in Control. If any of the events
described in Section 2 hereof constituting a change in control of the Company
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
with BCOP during the term of this Agreement unless such termination is because
of your death, by BCOP 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 BCOP 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, BCOP may terminate your employment for "Disability."
B. Cause. Termination by BCOP of your employment for "Cause" shall
mean termination upon (1) the willful and continued failure by you to
substantially perform your duties with BCOP (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 BCOP board
of directors which specifically identifies the manner in which the BCOP board of
directors 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 BCOP, 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 BCOP. 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 BCOP board of directors 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 BCOP board of directors 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 and BCOP or an adverse alteration
in the nature or status of your responsibilities from those in effect
immediately prior to a change in control of the Company;
(2) The disposition by the Company of its ownership interest in
the business of BCOP 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 are Continuing Directors;
(3) A reduction by BCOP 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 and BCOP and all executives of any Person in control of the Company;
(4) BCOP'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 of the Company, except for required travel on BCOP's business to an
extent substantially consistent with your present business travel obligations;
(5) The failure by BCOP to continue in effect any compensation
plan in which you were participating immediately prior to the change in control
of the Company, including but not limited to your participation, if any, in the
BCOP Key Executive Performance Plan for Executive Officers (the "KEPP"), the
BCOP 1995 Executive Officer Deferred Compensation Plan (the "Deferred
Compensation Plan"), the BCOP Key Executive Stock Option Plan (the "Stock Option
Plan"), or any substitute or additional plans adopted prior to the change in
control of the Company, 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 of the Company, or unless the plan has
expired in accordance with its terms in effect immediately prior to the change
in control of the Company; or the failure by BCOP 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 of the
Company;
(6) The failure by BCOP to continue to provide you with benefits
substantially similar to those enjoyed by you under any of BCOP's pension, life
insurance, medical, health and accident, or disability plans, including, without
limitation, BCOP's Split-Dollar Life Insurance Plan ("Split-Dollar Plan"), and
BCOP's 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 BCOP, in which you may have been
participating at the time of a change in control of the Company, the taking of
any action by BCOP 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 of the Company, or the failure by BCOP to
provide you with the number of paid vacation days to which you are entitled on
the basis of years of service with BCOP in accordance with BCOP's normal
vacation policy in effect at the time of the change in control of the Company;
(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 BCOP 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.
4. Compensation Upon Termination.
A. If your employment shall be terminated by BCOP, following a
Change in Control of the Company, 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 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.
(2) 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).
B. If your employment shall be terminated (1) by BCOP 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.
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 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 the Executive on such day an estimate, as determined in
good faith by the Company of the minimum amount of such payments to which the
Executive is 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 the Executive, 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 the Executive 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 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 has established
a Deferred Compensation and Benefits Trust, and shall comply with the terms of
that Trust. Upon the occurrence of any potential change in control of the
Company, 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 of the Company, 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 BCOP other than for Cause or Disability on the second anniversary
of the potential change in control of the Company; and (B) Upon any subsequent
recalculation, your employment will be deemed to have been terminated by BCOP
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 the irrevocable trust 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 of the Company does not occur within one
year after the potential change in control of the Company, 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 of the Company.
(b) Upon a change in control of the Company, 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 of the Company, 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. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the state of Idaho (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 or BCOP.
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 CORPORATION
By___________________________
J. W. Holleran
Senior Vice President and General Counsel
Agreed to this [ ] day of [ ],
______________________________
[Name of Officer]
Enclosure