EMPLOYMENT AGREEMENT RAVI SALIGRAM

EMPLOYMENT AGREEMENT SAM DUNCAN

FORM OF AMENDMENT TO EMPLOYMENT AGREEMENT

Waiver and Ratification

 

EX-10.6 7 dex106.htm CHANGE IN CONTROL LETTER AGREEMENT

Exhibit 10.6

Form of Change in Control Agreement

LOGO

CONFIDENTIAL

November 8, 2010

Mr. Ravichandra K. Saligram

[address]

Dear Mr. Saligram:

OfficeMax Incorporated (the “Company”) provides you with the severance benefits described in this letter agreement (the “Agreement”) if your employment with the Company is terminated before or after a “potential change in control of the Company” or a “change in control of the Company” (each as defined in Section 2 of the Agreement). The Agreement terms are as follows:

1. Term of Agreement. This Agreement is effective as of November 8, 2010 and shall continue in effect through December 31, 2013, provided that, on each January 1, the term of this Agreement shall automatically be extended so as to terminate on the 2nd 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. However, if a change in control of the Company occurs during the term of this Agreement, this Agreement shall continue in effect for a period of 24 months after the month in which the change in control of the Company occurred.

2. Change in Control.

A. A “change in control of the Company” shall be deemed to have occurred if an event set forth in any one of the following paragraphs occurs:

(1) Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% 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; provided, however, if such Person acquires securities directly from the Company, such securities shall not be included unless such Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company’s then outstanding shares of common stock or the combined voting power of the Company’s then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

(2) The individuals who, on any date following the date hereof, constitute the Board (the “Incumbent Board Members”), cease, in any two year period following such date, to represent at least a majority of the number of directors then serving, provided, however, that any new director whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least 2/3rds of the Incumbent Board Members shall be deemed for purposes hereof to be Incumbent Board Members, unless such director’s 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; or

(3) The consummation of a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) with any other corporation other than (i) a merger or consolidation which would result in both (a) Incumbent Board Members continuing to constitute at least a majority of the number of directors of the combined entity immediately following consummation of such merger or consolidation, and (b) 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) more than 50% 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 with the approval of the Board 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 representing 25% 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; provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25 % of the Company’s then outstanding shares of common stock or the combined voting power of the Company’s then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

(4) The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of 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, more than 50% 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.

 

A transaction described in Section 2.A(3) which is not a change in control of the Company solely due to the operation of Subsection 2.A(3)(i)(a) will nevertheless constitute a change in control of the Company if the Board determines, prior to the consummation of the transaction, that there is not a reasonable assurance that, for at least two years following the consummation of the transaction, at least a majority of the members of the board of directors of the surviving entity or any parent will continue to consist of Continuing Directors and individuals whose election or nomination for election by the shareholders of the surviving entity or any parent would be approved by a vote of at least two-thirds of the Continuing Directors and individuals whose election or nomination for election has previously been so approved.

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, provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 9.5% of the Company’s then outstanding shares of common stock (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 6 months from the occurrence of the first 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 “Person” 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, (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, or (5) an individual, entity or group that is permitted to and does report its beneficial ownership of securities of the Company on Schedule 13G under the Exchange Act (or any successor schedule), provided that if the individual, entity or group later becomes required to or does report its ownership of Company securities on Schedule 13D under the Exchange Act (or any successor schedule), then the individual, person or group shall be deemed to be a Person for purposes of this Agreement as of the first date on which the individual, person or group becomes required to or does report its ownership on Schedule 13D.

3. Termination and Change in Control. Except as set forth in Sections 6 and 10.A, no benefits shall be payable under this Agreement unless your employment is terminated and your termination is a Qualifying Termination or a Qualifying Early Termination. Your termination is a Qualifying Termination if a change in control of the Company occurs and your employment subsequently terminates during the term of this Agreement, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. Your termination is a Qualifying Early Termination if a potential change in control of the Company occurs, your employment terminates during the pendency of the potential change in control of the Company and during the term of this Agreement, the termination is in contemplation of a change in control of the Company, and an actual change in control of the Company occurs within one year following your termination, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. A transfer of your employment from the Company to one of its subsidiaries, from a subsidiary to the Company, or between subsidiaries is not a termination of employment for purposes of this Agreement; provided, however, that the provisions of this sentence shall not modify in any way the definition of Good Reason in Section 3.C.

 

A. Disability. If, as a result of your incapacity due to physical or mental illness or injury, you are absent from your duties with the Company on a full- time basis for 6 consecutive months, and within 30 days after written notice of termination is given you have not 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” means termination upon (1) your willful and continued failure to substantially perform your duties with the Company (other than failure resulting from your incapacity due to physical or mental illness or injury, or 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) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Section 3.B, 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 act 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:

 

 

 

a resolution is 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 this Section 3.B and specifying the particulars of your conduct in detail, and

 

 

 

a copy of this resolution is delivered to you.

All decisions by the Company regarding termination for Cause must be supported by clear and convincing evidence.

C. Good Reason. “Good Reason” means any of the following, if occurring without your express written consent after a change in control of the Company:

(1) The assignment to you of any duties materially inconsistent with your responsibilities as Chief Executive Officer and President of the Company or a significant adverse alteration in your responsibilities from those in effect immediately prior to the change in control of the Company, provided that the election of another executive to the position of President of the Company shall not constitute Good Reason;

 

(2) A material reduction by the Company in your annual base salary as in effect on the date of this Agreement (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;

(3) A material reduction by the Company in your target annual cash incentive as in effect immediately prior to the change in control of the Company;

(4) The Company’s requiring you to be based anywhere located more than 50 miles from the primary office location at which you were based immediately prior to the change in control of the Company, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations as existed immediately prior to the change in control;

(5) Following the change in control of the Company, a material reduction by the Company in aggregate benefits and compensation available to you, including paid time off, welfare benefits, short-term incentives, pension, life insurance, healthcare, and disability plans, as compared to such benefits and compensation available to you immediately prior to the change in control of the Company;

(6) Following the change in control of the Company, a material reduction by the Company in long-term equity incentives available to you as compared to such incentives available to you immediately prior to the change in control of the Company, except for across-the-board long-term equity incentive reductions similarly affecting all executives of the Company and all executives of any Person in control of the Company; or

(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 10.

Notwithstanding the foregoing, the events described in clauses (1) through (7) above shall not constitute Good Reason unless (A) you have delivered a Notice of Termination to the Company according to Sections 3.D. and 11 within 90 days of the occurrence of the event, which notice sets forth in reasonable detail the basis for your claim that Good Reason exists and (B) the Company fails to cure such event or circumstance within the 30 day period following receipt of such Notice of Termination.

 

For purposes of determining whether a Qualifying Early Termination has occurred, references to a change in control of the Company in this Section 3.C shall be deemed to refer to any potential change in control of the Company pending at the time of the event or circumstance alleged to be Good Reason.

Your right to terminate your employment pursuant to this Section 3.C shall not be affected by your incapacity due to physical or mental illness or injury. 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.

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 according to Section 11. A “Notice of Termination” must indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision.

E. Date of Termination. “Date of Termination” means:

(1) if your employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during that 30-day period);

(2) if your employment is terminated for Cause, for Good Reason, or for any other reason other than Disability or a Qualifying Early Termination, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days from the date the Notice of Termination is given, and in the case of a termination for Good Reason shall not be less than 10 days or more than 60 days from the date the Notice of Termination is given); or

(3) if your termination is a Qualifying Early Termination, the date specified in the Notice of Termination (which, in the case of a termination for Good Reason shall not be less than 10 days or more than 60 days from the date the Notice of Termination is given); or

(4) if a dispute exists regarding the termination, 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 having expired and no appeal having been perfected), or, if earlier, the last day of the term of this Agreement. This subsection (4) shall apply only if (i) the party receiving the Notice of Termination notifies the other party within 30 days that a dispute exists, (ii) the notice of dispute is made in good faith, and (iii) the party giving the notice of dispute pursues resolution of the dispute with reasonable diligence. While any dispute is pending under this subsection (4), the Company will continue to pay you your full compensation in effect when the Notice of Termination 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 and programs in which you were participating when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, or if earlier, the last day of the term of this Agreement. Amounts paid under this subsection (4) 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 for Cause or Other than for Good Reason. If your employment is 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 accrued but unused vacation, and all other amounts to which you are entitled under any compensation plan of the Company at the time those payments are due, and the Company shall have no further obligations to you under this Agreement. Accrued base salary and accrued but unused vacation will be paid to you on the first regularly scheduled Company payroll date that occurs after your Date of Termination.

5. Compensation upon a Qualifying Termination or Qualifying Early Termination. If your employment is terminated pursuant to a Qualifying Termination or Qualifying Early Termination, then you shall be entitled to the benefits provided in this Section 5, provided (a) you execute and deliver to the Company the release required pursuant to Section 8.E and such release becomes irrevocable within 60 days of your Date of Termination.

A. The Company will pay you the amounts specified below at the times specified below:

(1) 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 (whether or not any reduction is asserted as Good Reason), plus all other amounts to which you are entitled under any compensation plan of the Company at the time those payments are due (in each case, to the extent not already paid), which shall be paid to you on the first regularly scheduled Company payroll date that occurs after your Date of Termination; and

(2) To the extent not already paid, a lump sum amount equal to the greater of the value of your unused and accrued time off, less any advanced time off, in accordance with the Company’s Your Time Off Policy (or any successor policy) as in effect (a) in the case of a Qualifying Early Termination, on the Date of Termination, or (b) in the case of a Qualifying Termination, immediately prior to the change in control of the Company or as in effect on the Date of Termination, whichever is more favorable to you, which in each case shall be paid to you on the first regularly scheduled Company payroll date that occurs after your Date of Termination; and

 

(3) A lump sum severance payment equal to two times the sum of (a) 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 (whether or not any reduction is asserted as Good Reason) (“Base Salary”), plus (b) the Target Bonus, which shall be paid to you on the 60th day following your Date of Termination. For purposes of this paragraph (3), “Target Bonus” means your target annual incentive for the year in which occurs the Date of Termination without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason).

B. For a 24-month period following the Date of Termination, maintain, in full force and effect for your continued benefit at substantially the same cost to you as determined immediately prior to your last day of employment, all life (including the Company’s Executive Life Insurance Program, if applicable), disability and accident insurance plans, programs, or arrangements, and financial counseling services in which you were participating immediately prior to the change in control of the Company, or, if more favorable to you, and in the case of a Qualifying Early Termination, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination; provided, however, that if a delay is required under Section 5.D, you will pay the required monthly premiums and fees for such life (including the Company’s Executive Life Insurance Program, if applicable), disability and accident insurance plans, programs, or arrangements, and financial counseling services, during the 6-month period following your Date of Termination, and the Company shall pay you a payment equal to 150% of such premiums and fees that you paid during such period on the first regularly scheduled Company payroll date following the 6-month anniversary of the date of your termination.

You and your spouse and dependents shall for a period of 24 months following the Date of Termination be eligible to participate in Company medical and vision insurance at the employee (or, if applicable, family) premium and co-pay rates; provided, that that in order to receive such continued medical and vision coverage at such rates, you shall be required to pay to the Company at the same time that premium payments are due for the month an amount equal to the full monthly COBRA premium required by the Company under such plans for such coverage. Following receipt of such payment, the Company shall reimburse to you the amount of the monthly COBRA premium payment (the “Health Payment”). In addition, unless a delay is required pursuant to Section 5.D, on each date on which the monthly Health Payment is paid to you, the Company shall pay you an additional amount equal to 50% of the monthly Health Payment.

 

If your continued participation in the benefits indicated in this Section 5.B (or a particular type of coverage) is not possible or becomes impossible under the general terms and provisions of the plans, programs or arrangements, then the Company shall arrange to provide you with benefits, at substantially the same cost to you as determined immediately prior to your last day of employment, which are substantially similar to those which you are entitled to receive under such plans, programs and arrangements.

C. You shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 5.A 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, except as specifically provided in Section 5.D. Benefits otherwise receivable by you pursuant to Section 5.B shall be reduced to the extent comparable benefits are actually received by you during the 24-month period following your termination, and you must report any such benefits actually received by you to the Company.

D. Code Section 409A Provision. Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under Code Section 409A. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Code Section 409A and, if necessary, any such provision shall be deemed amended to comply with Code Section 409A and the regulations thereunder. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Code Section 409A, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. All payments to be made upon a termination of employment under this Agreement that are deferred compensation subject to Code Section 409A may only be made upon a “separation from service” under Code Section 409A. For purposes of Code Section 409A, whenever payments under this Agreement are to be made in installments, each such installment shall be treated as a separate payment. Except to the extent permitted under Code Section 409A, you may not in any event designate the calendar year of any payment under this Agreement. Notwithstanding anything in this Agreement to the contrary, in all cases, if you are a “specified employee” of the Company for purposes of Code Section 409A at the time of your separation from service (as determined pursuant to Code Section 409A) with the Company and if an exception under Code Section 409A does not apply, any severance payment(s) that constitute deferred compensation subject to Section 409A which are otherwise scheduled to be paid within the six month period following your separation from service shall be delayed so that they will be paid in a lump sum payment to you on the first regularly scheduled Company payroll date following the 6-month anniversary of the date of your separation from service, which payment will be equal to the severance payment(s) that you would otherwise have received through such payroll date. You are strongly encouraged to consult your own tax, financial and legal advisors regarding the effects of this Agreement on your personal tax situation. If you die during such 6-month period and prior to the payment of the deferred compensation that is required to be delayed on account of Code Section 409A, such amount shall be paid to the personal representative of your estate within 30 days after your death. For purposes of applying the exceptions to Code Section 409A, the following rules shall apply. Any payments that would otherwise be payable (i) within 2- 1/2 months after the end of the Company’s taxable year containing the date of your separation from service, or (ii) within 2- 1/2 months after your taxable year containing the date of your separation from service, whichever occurs later (the “Short Term Deferral Period”), are exempt from Code Section 409A. Furthermore, any such payments paid after the Short Term Deferral Period are exempt from Code Section 409A as severance pay due to an involuntary separation from service to the extent that the sum of those payments is equal to or less than the maximum amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (the “Involuntary Separation Amount”) because such payments both are payable only upon your “involuntary” separation from service for purposes of Code Section 409A and must be paid to you no later than the last day of your second taxable year following the taxable year in which your separation from service occurs. Lastly, any such payments that are paid after the Short Term Deferral Period and otherwise exceed the Involuntary Separation Amount are exempt from Code Section 409A to the extent such payments in the aggregate do not exceed the applicable dollar amount under Code Section 402(g)(1)(B) for the year in which your separation from service occurs (the “Limited Payments”). Accordingly, the sum of (1) such payments that are paid within the Short Term Deferral Period, (2) such payments paid after the Short Term Deferral Period that do not exceed the Involuntary Separation Amount, and (3) such payments paid after the Short Term Deferral Period that exceed the Involuntary Separation Amount, but only to the extent such payments constitute Limited Payments, are exempt from Code Section 409A and, therefore, notwithstanding any provision of this Agreement to the contrary, if you are a “specified employee” of the Company for purposes of Code Section 409A, only those payments that are not otherwise exempt from Code Section 409A under clause (1), (2), and (3) above and that would otherwise have been payable in the first 6 months following your date of separation from service will not be paid to you until the first regularly scheduled payroll date following the 6-month anniversary of the date of your separation from service, provided that if you die during such 6-month period and prior to the payment of the deferred compensation that is required to be delayed on account of Code Section 409A, such amount shall be paid to the personal representative of your estate within 30 days after your death. To the extent required to avoid an accelerated or additional tax under Code Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred, the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not effect amounts reimbursable or provided in any subsequent year, and the right to reimbursement (and in-kind benefits provided to you) under this Agreement shall not be subject to liquidation or exchange for another benefit.

 

6. Legal Fees. The Company shall pay to you all reasonable legal fees and expenses which you incur following a change in control of the Company or a potential change in control of the Company (a) as a result of contesting or disputing your termination, (b) in seeking in good faith to obtain or enforce any right or benefit provided by this Agreement (provided, that you shall refund all such fees and expenses to the Company should you not prevail on any material issue). This payment shall be made within 10 business days after the Company receives your written request for payment accompanied by reasonable evidence of fees and expenses incurred. To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to you under this Agreement shall be paid to you on or before the last day of the year following the year in which the expense was incurred, the amount of expenses eligible for reimbursement (and in-kind benefits provided to you) during any one year may not effect amounts reimbursable or provided in any subsequent year, and the right to reimbursement (and in-kind benefits provided to you) under this Agreement shall not be subject to liquidation or exchange for another benefit.

7. Excise Tax Provisions. Notwithstanding any provision of this Agreement to the contrary (but except as provided in the following sentence), if you would receive payments under this Agreement or under any other plan, program, or policy sponsored by the Company which relate to a change in control of the Company (the “Total Payments”) and which are determined by the Company to be subject to excise tax under Section 4999 of the Code or any comparable successor provisions, then such payment shall be either: (i) provided to you in full, or (ii) provided to you as to such lesser extent which would result in no portion of such payment being subject to such excise tax, whichever of the foregoing amounts, when taking into account applicable federal, state, local and foreign income and employment taxes, such excise tax, and any other applicable taxes, results in the receipt by you, on an after-tax basis, of the greatest amount of the payment, notwithstanding that all or some portion of such payment may be taxable under such excise tax. To the extent such payment needs to be reduced pursuant to the preceding sentence, reductions shall be done in a manner that is consistent with the requirements of Section 409A and shall come from taxable amounts before non-taxable amounts and beginning with the payments otherwise scheduled to occur soonest. You agree to cooperate fully with the Company to determine the benefits applicable under this Section.

8. Employee Covenants; Release.

A. The Company shall provide you with certain Company confidential information and trade secrets (“Confidential Information”). Confidential lnformation includes information about the business and affairs of the Company including, without limitation, the names, addresses, price lists, purchasing histories and requirements of customers and potential customers; location, region, and company financial reports and company financial data of any type; sales and service manuals and bulletins; cost information and patterns; floor plans and drawings of facilities; marketing, merchandising, procurement, sales and other business strategies; transactional, acquisition and expansion plans; information regarding vendors, business affiliates and employees; and other similar information. Confidential lnformation shall also include, without limitation, all letters, memoranda, notes, tables, spreadsheets, and other similar documents, whether in hard-copy or electronic form, created or generated by you or on your behalf using the information, or any part thereof, described in the previous sentence. You recognize that such information is the confidential information and trade secrets of the Company, and agree not to divulge such information to any person, firm, or institution except as such disclosure is a necessary part of the performance of your duties and obligations for the Company. Further, upon termination of employment with the Company, you will continue to treat Confidential lnformation as private and privileged, and will not, either for your own purposes or as an employee of or for the benefit of any other entity or person, use such information or disclose it to any person, firm, or institution. Confidential Information does not include any information that is in the public domain or disclosed by someone other than you.

B. To the maximum extent allowable under applicable state law, for the period beginning on the date hereof and ending 12 months following your termination of employment with the Company, whether such termination is voluntary or involuntary (or for a period of 12 months after a final judgment or injunction enforcing this covenant), you agree not to, directly as an employee or indirectly as a consultant or contractor, without the prior written consent of the Company, be employed in North America in the same or similar capacity as you were employed by the Company immediately prior to termination of employment, by another business entity or person for whom greater than 35% of its North American revenues are comprised of the direct sale or distribution of office supplies, office furniture, technology-related office products or computer consumables actually sold by the Company, print and document services, or related office products or services (a “Competitor”). The parties agree that the term Competitor shall not include any business entity or person principally engaged in the manufacture and distribution of computer hardware, software or peripherals. In agreeing to this restriction, you specifically acknowledge the substantial value to the Company of its Confidential Information and your intimate knowledge of the Company’s business and agree that such constitutes goodwill and a protectable interest of the Company.

 

C. In addition to the foregoing and not in limitation thereof, for all periods beginning upon the date hereof and ending 12 months after your termination of employment with the Company for whatever reason, you agree that you shall not directly or indirectly, for your benefit or on behalf of any other party (other than the Company):

(1) solicit or attempt to solicit any customer of the Company for the purpose of selling, distributing, purchasing or obtaining office supplies, office furniture, technology-related office products or computer consumables actually sold by the Company, print and document services, or related office products or services. For purposes hereof, a customer of the Company shall mean any person or business to whom the Company sold or distributed greater than $50,000 of office supplies, office furniture, technology-related office products or computer consumables, print and document services, or related office products and services during the last 12 months you were employed by the Company,

(2) solicit or discuss potential employment opportunities with any employee of the Company (other than for opportunities with the Company) or induce or attempt to induce any employee of the Company to leave the employ of the Company, or in any way interfere with the relationship between the Company and any employee thereof without the prior express written consent of the Company,

(3) offer, hire or cause to be offered or hired any person who was employed by the Company at any time during the 12 months prior to the termination of your employment with the Company, or

(4) induce or attempt to induce any supplier, or other business relation of the Company to cease doing business with the Company or in any way interfere with the relationship between any such supplier or business relation and the Company (including without limitation making any negative statements or communications about the Company).

D. In case any one or more of the terms contained in this Section 8 shall for any reason become invalid, illegal, or unenforceable, such invalidity, illegality, or unenforceability shall not affect any other terms herein, but such terms shall be deemed deleted and such deletion shall not affect the validity of the other terms of this Agreement. In addition, if any one or more of the terms contained in this Section 8 shall for any reason be held by a court of competent jurisdiction to be excessively broad or unreasonable with regard to duration, scope, or area, the terms shall be construed in a manner to enable it to be enforced to the maximum extent permitted by applicable law, and any such court shall have the power to modify such term.

E. Notwithstanding anything in this Agreement to the contrary, the payment to you of the benefits provided in Section 5 is conditioned upon your execution and delivery to the Company of a Release, in substantially the form that is attached as an Exhibit to your Employment Agreement, dated October     , 2010, which must be made irrevocable within 60 days from the Date of Termination.

 

9. Deferred Compensation and Benefits Trust. The Company has established a Deferred Compensation and Benefits Trust, and shall comply with the terms of that Trust.

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, the assets of which nevertheless will be subject to claims of the Company’s creditors in the event of bankruptcy or insolvency.

10. 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 succession had taken place. Failure of the Company to obtain an assumption and agreement prior to the effectiveness of any succession which occurs during your employment with the Company and the term of this Agreement 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 experience a Qualifying Termination or Qualifying Early Termination, except that for purposes of this Section 10.A, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “Company” shall mean OfficeMax Incorporated and any successor to its business and/or assets which assumes and agrees to perform this Agreement.

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 under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, 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, provided that the Company is entitled to seek equitable relief in a court of competent jurisdiction in connection with the enforcement of the covenants set forth in Section 8. Under no circumstance will a violation or alleged violation of those covenants entitle the Company to withhold or offset a payment or benefit due under this Agreement.

 

11. 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 General Counsel 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 with this Section 11, except that notice of change of address shall be effective only upon receipt.

12. 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 an elected officer designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the 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 of this Agreement 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 those sections. If the obligations of the Company under Sections 4, 5 or 6 arise prior to the expiration of the term of this Agreement, those obligations shall survive the expiration of the term.

13. 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.

14. 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.

15. No Guaranty of Employment. Neither this Agreement nor any action taken under this Agreement shall be construed as giving you a right to be retained as an employee or an executive officer of the Company.

16. Governing Law. This Agreement shall be governed by and construed in accordance with Delaware law.

17. Other Benefits. Any payments made to you pursuant to this Agreement 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, except that (A) payments made to you pursuant to Section 5.A(3) shall be in lieu of any severance payment to which you would otherwise be entitled under any severance pay policy of the Company and (B) payments and benefits to which you are entitled under this Agreement may offset payments and benefits to which you are entitled under your Employment Agreement with the Company dated October     , 2010.  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,

OFFICEMAX INCORPORATED

By

 

 

 

Matthew R. Broad

 

Executive Vice President - General Counsel

Agreed to this      day of         , 2010

 

Ravichandra K. Saligram

 

 

EX-10.1 2 dex101.htm EMPLOYMENT AGREEMENT

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made by and between OfficeMax Incorporated, a Delaware corporation (the “Company”), and Ravichandra K. Saligram (the “Executive”), dated October 13, 2010 and effective as of the Effective Date (as hereinafter defined).

W I T N E S S E T H:

WHEREAS, the Company wishes to provide for the employment by the Company of the Executive, and the Executive wishes to serve the Company, in the capacities and on the terms and conditions set forth in this Agreement;

NOW, THEREFORE, it is agreed as follows:

1. TERM. The term of this Agreement (the “Term”) and Executive’s employment hereunder shall commence on November 8, 2010 (the “Effective Date”) and end on November 7, 2013, provided that, commencing on November 8, 2013 and on each subsequent anniversary thereof (each, a “Renewal Date”), the Term shall be extended by an additional year unless either party shall have given written notice of non-renewal to the other at least 90 days prior to the applicable Renewal Date.

2. POSITION AND DUTIES.

(a) During the Term the Executive shall serve as the Chief Executive Officer and President of the Company, in each case with such duties and responsibilities as are customarily assigned to such positions, and have such other duties and responsibilities not inconsistent therewith as may from time to time be reasonably assigned to him by the board of directors of the Company (the “Board”). As of the Effective Date or as soon thereafter as practicable, the Company shall cause the Executive to be elected as a member of the Board. Thereafter, while the Executive is employed by the Company during the Term, the Company shall cause the Executive to be included in the slate of persons nominated to serve as directors on the Board following the end of each term of the Executive’s service as a director. Upon any termination of his employment with the Company, the Executive shall promptly resign from the Board and from all other offices held with the Company and its subsidiaries.

(b) During the Term, and excluding any periods of paid time off to which the Executive is entitled, the Executive shall devote his full working attention and time to the business and affairs of the Company and use the Executive’s reasonable best efforts to carry out such responsibilities faithfully and efficiently. The parties agree the Executive shall be permitted to remain in the positions listed on the attached Exhibit A. During the Term, the Executive shall be limited to one publicly traded for-profit outside board position. All participation on outside boards of directors or committees of any kind beyond those listed on Exhibit A are subject to prior approval by the Board. It shall not be considered a violation of the foregoing for the Executive to manage his personal investments.

(c) During the Term, the Executive shall be based at the Company’s principal headquarters in Naperville, Illinois, except for travel reasonably required for the performance of the Executive’s duties hereunder. The Executive shall use commercially reasonable efforts to establish his principal residence in the greater Chicago, Illinois area within six months (the “Relocation Period”) following the Effective Date and maintain his principal residence there during the Term. Notwithstanding the above, if the Executive is unable to sell his home within such six-month period, the Company shall extend the Relocation Period for an additional three months. For the avoidance of doubt, so long as the Executive establishes his principal residence in the greater Chicago, Illinois area prior to the end of the Relocation Period, the fact that the Executive has not sold his current residence prior to the end of the Relocation Period shall not be deemed a breach of this subsection.

3. COMPENSATION.

(a) BASE SALARY. During the Term, the Executive shall receive an annual base salary (“Annual Base Salary”) of $900,000. The Annual Base Salary shall be payable in accordance with the Company’s regular payroll practice for its senior executives, as in effect from time to time. During the Term, the Annual Base Salary shall be periodically reviewed by the Executive Compensation Committee of the Board (the “Compensation Committee”) for possible increase. Following any such increase, the term “Annual Base Salary” shall thereafter refer to the Annual Base Salary as so increased.

(b) CASH BONUSES.

(i) SIGN-ON BONUS AND CLAWBACK. Within 14 business days following the Effective Date, the Company shall pay the Executive a lump sum cash sign-on bonus of $250,000 (the “Sign-on Bonus”). If the Executive resigns his employment with the Company within 12 months of the Effective Date without Good Reason as defined herein, then within 14 business days following such resignation the Executive shall repay the Sign-on Bonus to the Company.

(ii) ANNUAL INCENTIVE AWARD. For fiscal years during the Term, the Executive shall participate in annual cash incentive compensation plans, as adopted and approved by the Board or the Compensation Committee from time to time, with targets and performance measures determined by the Compensation Committee. The Executive’s annual target cash incentive opportunity pursuant to such plans for each fiscal year shall equal 100% (or such greater percentage as the Board may establish for the Executive from time to time) of the Executive’s Annual Base Salary, with a maximum award not less than 200% of the target cash incentive level. With respect to the award for the Company’s 2010 fiscal year, the Executive’s annual cash incentive award shall be governed by the provisions of the 2003 OfficeMax Incentive and Performance Plan (the “Plan”) (or subsequent plans as adopted by the Company) and an award agreement substantially in the form attached as Exhibit B, and any award under the Plan for 2010 shall be prorated based on the proportion of 2010 fiscal year that the Executive is employed by the Company. All annual cash incentive awards payable to the Executive will be paid at the time the Company normally pays such awards to its senior executives.

(c) STOCK OPTION GRANTS.

(i) INITIAL STOCK OPTION GRANT. On the Effective Date, the Compensation Committee shall grant to the Executive a seven-year nonqualified option (the “Initial Option”) to purchase 375,000 shares of the Company’s common stock (“Company Stock”), which is intended to replace compensation that the Executive is forfeiting as a result of termination of the Executive’s employment with his prior employer. The Initial Option shall have a per share exercise price equal to the closing price of the Company Stock on the New York Stock Exchange on the date of grant. The Initial Option shall vest and become fully exercisable with respect to 33.33% of the shares subject thereto on each of the first three anniversaries of the Effective Date and shall be governed by the provisions of the Plan and an option agreement substantially in the form attached hereto as Exhibit C.

(ii) OTHER STOCK OPTION GRANT. On the Effective Date, the Compensation Committee shall grant to the Executive an additional seven-year nonqualified option (the “Other Option”) to purchase 600,000 shares of Company Stock. The Other Option shall have a per share exercise price equal to the closing price of the Company Stock on the New York Stock Exchange on the date of grant. The Other Option shall vest with respect to 33.33% of the Company Stock subject to the Other Option on each of the first three anniversaries of the Effective Date and shall be governed by the provisions of the Plan and an option agreement substantially in the form attached hereto as Exhibit D.

(d) RESTRICTED STOCK UNIT GRANT. On the Effective Date, the Compensation Committee shall grant to the Executive an aggregate of 125,000 restricted Company Stock units under the Plan (such units, the “Initial Restricted Stock Units”), which is intended to replace compensation that the Executive is forfeiting as a result of termination of the Executive’s employment with his prior employer. The Initial Restricted Stock Units shall vest with respect to 33.33% of the Company Stock units on each of the first three anniversaries of the Effective Date and shall be governed by the provisions of the Plan and an agreement substantially in the form attached hereto as Exhibit E.

(e) OTHER LONG-TERM INCENTIVE COMPENSATION. Commencing with the Company’s 2011 fiscal year and annually thereafter while the Executive is employed during the Term, the Company shall grant to the Executive long-term incentive compensation awards which may consist of equity awards, long-term cash awards or other forms of long-term incentive compensation, as determined by the Compensation Committee and consistent with the form and mix provided to other senior officers of the Company. Such shall be awarded at the same time as regular long-term compensation is granted to other senior officers of the Company and shall have terms and conditions (including performance criteria, vesting schedules and acceleration provisions, if any) as determined by the Compensation Committee.

(f) OTHER BENEFITS. While the Executive is employed during the Term: (1) the Executive shall be entitled to participate in all tax-qualified retirement plans of the Company, all fringe benefit and perquisite practices, policies and programs of the Company, and all other employee benefit plans of the Company, in each case as are made available to the senior officers of the Company and (2) the Executive and/or the Executive’s eligible dependents, as the case may be, shall be eligible to participate in all welfare benefit plans, practices, policies and programs provided by the Company, including any medical, prescription, dental, disability, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs to the same extent, and subject to the same terms and conditions, as such arrangements are made available to the senior officers of the Company.

(g) PAID TIME OFF AND RELOCATION. The Executive shall be credited with 26 days paid time as of the Effective Date. For paid time off purposes only, the Executive will be credited with 12 years of service as of the Effective Date and will accrue paid time off pursuant to the Company’s paid time off policy. Carryover of unused paid time off from year to year shall be according to the terms of the policy. Except as otherwise set forth in this Section 3(g), the Executive shall be provided relocation benefits consistent with the Company’s relocation policy, attached as Exhibit F, for expenses incurred in connection with the relocation of the Executive and his spouse to the greater Chicago, Illinois, area. During the Relocation Period, the Company agrees to provide up to two months temporary housing and storage, plus a gross-up for applicable taxes, and if necessary an additional seven months temporary housing and storage, provided there shall be no gross-up beyond the first two months. Notwithstanding Exhibit F, the Executive shall not be required to repay relocation expense benefits to the Company upon a termination of employment for Good Reason, and “cause” as used in Exhibit F shall have the same meaning given to such term in this Agreement.

 

(h) CHANGE IN CONTROL AGREEMENT. On the Effective Date, the Executive and the Company shall enter into a change in control agreement (the “Change in Control Agreement”) substantially in the form as attached hereto as Exhibit G, it being understood that if the Executive’s employment is terminated under circumstances entitling him to severance benefits under this Agreement and the Change in Control Agreement, the severance payments described in Section 5(a) shall be offset (but not below zero) by similar payments and benefits provided under the Change in Control Agreement.

(i) PAYMENT OF FEES. The Company shall pay the Executive a lump sum cash payment equal to $45,000 within 14 days of the Effective Date for fees and expenses incurred by the Executive in connection with the preparation and negotiation of this Agreement.

(j) COBRA. The Company shall reimburse the Executive for the cost of COBRA continuation premiums incurred by him during the period between the Effective Date and the first day of the calendar month that immediately follows the Executive’s first 90 days of employment with the Company.

(k) DIRECTOR AND OFFICER LIABILITY INSURANCE COVERAGE. The Company agrees to maintain reasonable and customary director and officer liability insurance coverage that covers the Executive for the Term and seven years following the end of the Term.

4. TERMINATION OF EMPLOYMENT.

(a) DEATH OR DISABILITY. The Executive’s employment shall terminate automatically upon the Executive’s death during the Term. The Company shall be entitled to terminate the Executive’s employment because of the Executive’s Disability during the Term. “Disability” means that the Executive is disabled within the meaning of the Company’s long-term disability policy or, if there is no such policy in effect, that (i) the Executive has been substantially unable, for a period of 180 consecutive calendar days, to perform the Executive’s duties under this Agreement, as a result of physical or mental illness or injury, and (ii) a physician selected by the Company or its insurers, and reasonably acceptable to the Executive or the Executive’s legal representative, has determined that the Executive is disabled. A termination of the Executive’s employment by the Company for Disability shall be communicated to the Executive by written notice, and shall be effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Time”), unless the Executive returns to full-time performance of the Executive’s duties before the Disability Effective Time.

 

(b) TERMINATION BY THE COMPANY.

(i) The Company may terminate the Executive’s employment during the Term for Cause or without Cause. “Cause” means the Executive’s (1) willful and continued failure to substantially perform his duties with the Company (other than failure resulting from the Executive’s incapacity due to physical or mental illness or injury, or actual or anticipated failure resulting from the Executive’s termination for Good Reason), after a demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties, or (2) the Executive’s willful engagement in conduct which is materially injurious to the Company, monetarily or otherwise. For purposes of this Section 4(b)(i), no act or failure to act on the Executive’s part shall be considered “willful” unless done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s act or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until (X) a resolution is 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 (excluding the Executive) called and held for the purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth above in clauses (1) or (2) of this Section 4(b)(i) and specifying the particulars of the Executive’s conduct in detail, and (Y) a copy of this resolution is delivered to the Executive. All decisions by the Company regarding termination for Cause must be supported by clear and convincing evidence.

(c) GOOD REASON.

(i) The Executive may terminate employment for Good Reason or without Good Reason. “Good Reason” shall mean, without the Executive’s express written consent, (a) the assignment to the Executive of any duties materially inconsistent with the Executive’s responsibilities as an executive officer of the Company or a significant adverse alteration in responsibilities, provided that the election of another executive to the position of President of the Company shall not constitute Good Reason; (b) a material reduction in the Executive’s Annual Base Salary (other than in connection with across- the-board salary reduction similarly affecting all executives of the Company and all executives of any entity in control of the Company); (c) a material reduction in the Executive’s annual incentive award target; (d) a requirement that the Executive be based anywhere located more than 50 miles from Naperville, Illinois, which is the Company’s principal headquarters as of the Effective Date, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations in performing his duties hereunder; (e) a material reduction by the Company in aggregate benefits and compensation available to the Executive, including paid time off, welfare benefits, short-term incentives, pension, life insurance, healthcare and disability benefits, as compared to such benefits and compensation available to the Executive pursuant to this Agreement; (f) a material reduction by the Company in long-term equity incentives available to the Executive (other than in connection with across- the-board long-term equity incentive reductions similarly affecting all executives of the Company and all executives of any entity in control of the Company); (g) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement; or (h) any action or inaction that would constitute a material breach of this Agreement by the Company.

(ii) A termination of employment by the Executive for Good Reason shall be effectuated by delivering a Notice of Termination to the Company within 90 days following the occurrence of the event constituting Good Reason (“Notice of Termination for Good Reason”), which Notice of Termination for Good Reason shall set forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. The Company shall have a 30 day period following the receipt of the Notice of Termination for Good Reason to cure such event or circumstance that constitutes Good Reason. If the Company does not cure the event or circumstance that constitutes Good Reason, the Executive’s employment shall terminate on the date set forth in the Notice of Termination for Good Reason, which date shall not be later than 30 days following the end of the Company’s 30 day cure period.

(d) DATE OF TERMINATION. The “Date of Termination” means the date of the Executive’s death, the Disability Effective Time or the date on which the termination of the Executive’s employment by the Company for Cause or without Cause or by the Executive for Good Reason or without Good Reason is effective.

5. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

(a) OTHER THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON. If, during the Term, the Company terminates the Executive’s employment for any reason other than Cause, death or Disability, or the Executive terminates his employment for Good Reason, then, subject to Section 13(h) hereof and Section 6 hereof, the Company shall pay to the Executive, on the 60th day following the Date of Termination, a lump sum cash payment equal to two times the Executive’s Annual Base Salary (prior to taking into account any reduction that triggered Good Reason) immediately prior to the Date of Termination. In addition, on the first regularly scheduled Company payroll date following the Date of Termination, the Company shall pay to the Executive in a lump sum in cash any portion of the Executive’s Annual Base Salary, accrued, but unused, vacation time, and previously earned but unpaid bonus through the Date of Termination that has not yet been paid. Further, all of the Executive’s then outstanding equity awards shall be treated in accordance with the terms of the plan and agreements evidencing such equity awards. The Company shall also pay or provide to the Executive, in the event of such a termination, all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination, and the Executive, his spouse and dependents shall for a period of up to 24 months following termination of employment be eligible to participate in Company medical, vision and life insurance at the employee (or, if applicable, family) premium and co-pay rates, subject to the following provisions: If a delay is required pursuant to Section 6(b), the Executive will pay the required insurance premiums for such life insurance coverage during the six-month period following the Executive’s termination of employment, and the Company shall pay to the Executive a payment equal to 150% of such premiums that the Executive paid during such period on the first regularly scheduled Company payroll date following the six-month anniversary of the date of the Executive’s termination. Further, in order to receive such continued medical and vision coverage at such rates, the Executive shall be required to pay to the Company at the same time that premium payments are due for the month an amount equal to the full monthly COBRA premium required by the Company under such plans for such coverage. Within five days following receipt of such payment, the Company shall reimburse to the Executive the amount of the monthly COBRA premium payment (the “Health Payment”). In addition, unless a delay is required pursuant to Section 6(b), on each date on which the monthly Health Payment is paid to the Executive, the Company shall pay to the Executive an additional amount equal to 50% of the monthly Health Payment. The Executive shall also be entitled to receive a prorata portion of the Executive’s annual incentive award for the fiscal year in which the Date of Termination occurs based on actual performance and to be paid at the same time as other senior officers of the company receive payments of annual incentive awards.

(b) DEATH AND DISABILITY. If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Term, on the first regularly scheduled Company payroll date following the Date of Termination, the Company shall pay to the Executive or, in the case of the Executive’s death, to the Executive’s designated beneficiaries (or, if there is no such beneficiary, to the Executive’s estate or legal representative), in a lump sum in cash any portion of the Executive’s Annual Base Salary, accrued, but unused, vacation time, and previously earned but unpaid bonus through the Date of Termination that has not yet been paid. The Company shall also pay or provide to the Executive, in the event of such a termination, all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination. If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Term, all of the Executive’s then outstanding equity awards shall be treated in accordance with the terms of the plan and agreements evidencing such equity awards.

(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR GOOD REASON. If the Executive’s employment is terminated by the Company for Cause or the Executive voluntarily terminates employment other than for Good Reason during the Term then, (1) first regularly scheduled payroll date following the Date of Termination, the Company shall pay to the Executive in a lump sum in cash any portion of the Executive’s Annual Base Salary, accrued, but unused, vacation time, and bonus earned for completed fiscal years through the Date of Termination that has not been paid; (2) all outstanding equity awards shall be treated according to the provisions of the plan and agreements under which such awards were granted; and (3) the Company shall also pay or provide to the Executive all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination.

 

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6. SECTION 409A PROVISION.

(a) Notwithstanding the other provisions hereof, this Agreement is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), to the extent applicable, and this Agreement shall be interpreted to avoid any penalty sanctions under Section 409A. Accordingly, all provisions herein, or incorporated by reference, shall be construed and interpreted to comply with Section 409A and, if necessary, any such provision shall be deemed amended to comply with Section 409A and regulations thereunder. If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under Section 409A, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions will not be imposed. All payments to be made upon a termination of employment under this Agreement that are deferred compensation subject to Section 409A may only be made upon a “separation from service” under Section 409A. For purposes of Section 409A, whenever payments under this Agreement are to be made in installments, each such installment shall be treated as a separate payment. Except to the extent permitted under Section 409A, in no event may the Executive designate the calendar year of any payment under this Agreement.

(b) Notwithstanding anything in this Agreement to the contrary, in all cases, if the Executive is a “specified employee” of the Company for purposes of Section 409A at the time of his separation from service (as determined pursuant to Section 409A) with the Company and if an exception under Section 409A does not apply, any severance payment(s) that constitute deferred compensation subject to Section 409A which are otherwise scheduled to be paid within the six-month period following the Executive’s separation from service shall be delayed so that they will be paid in a lump sum payment to the Executive on the first regularly scheduled Company payroll date following the six-month anniversary of the date of the Executive’s separation from service, which payment will be equal to the severance payment(s) that he would otherwise have received through such payroll date. The Executive is strongly encouraged to consult his own tax, financial and legal advisors regarding the effects of this Agreement on his personal tax situation. If the Executive dies during such six-month period and prior to the payment of the deferred compensation that is required to be delayed on account of Section 409A, such amount shall be paid to the personal representative of the Executive’s estate within 30 days after the Executive’s death.

(c) For purposes of applying the exceptions to Section 409A, the following rules shall apply. Any payments that would otherwise be payable (i) within two and one-half months after the end of the Company’s taxable year containing the date of the Executive’s separation from service, or (ii) within two and one-half months after the Executive’s taxable year containing the date of the

 

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Executive’s separation from service, whichever occurs later (the “Short Term Deferral Period”), are exempt from Section 409A. Furthermore, any such payments paid after the Short Term Deferral Period are exempt from Section 409A as severance pay due to an involuntary separation from service to the extent that the sum of those payments is equal to or less than the maximum amount described in Treasury Regulation Section 1.409A-1(b)(9)(iii)(A) (the “Involuntary Separation Amount”) because such payments both are payable only upon the Executive’s “involuntary” separation from service for purposes of Section 409A and must be paid to the Executive no later than the last day of the Executive’s second taxable year following the taxable year in which the Executive’s separation from service occurs. Lastly, any such payments that are paid after the Short Term Deferral Period and otherwise exceed the Involuntary Separation Amount are exempt from Section 409A to the extent such payments in the aggregate do not exceed the applicable dollar amount under Section 402(g)(1)(B) for the year in which the Executive’s separation from service occurs (the “Limited Payments”). Accordingly, the sum of (1) such payments that are paid within the Short Term Deferral Period, (2) such payments paid after the Short Term Deferral Period that do not exceed the Involuntary Separation Amount, and (3) such payments paid after the Short Term Deferral Period that exceed the Involuntary Separation Amount, but only to the extent such payments constitute Limited Payments, are exempt from Section 409A and, therefore, notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” of the Company for purposes of Section 409A, only those payments that are not otherwise exempt from Section 409A under clause (1), (2), and (3) above and that would otherwise have been payable in the first six months following the Executive’s date of separation from service will not be paid to the Executive until the first regularly scheduled payroll date following the six-month anniversary of the date of the Executive’s separation from service, provided that if the Executive dies during such six-month period and prior to the payment of the deferred compensation that is required to be delayed on account of Section 409A, such amount shall be paid to the personal representative of the Executive’s estate within 30 days after the Executive’s death.

(d) To the extent required to avoid an accelerated or additional tax under Section 409A, amounts reimbursable to the Executive under this Agreement shall be paid to the Executive on or before the last day of the year following the year in which the expense was incurred, the amount of expenses eligible for reimbursement (and in-kind benefits provided to the Executive) during any one year may not effect amounts reimbursable or provided in any subsequent year, and the right to reimbursement (and in-kind benefits provided to the Executive) under this Agreement shall not be subject to liquidation or exchange for another benefit.

7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies for which the Executive may qualify.

 

8. FULL SETTLEMENT. Except as provided herein, the Company’s obligation to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.

9. CONFIDENTIAL INFORMATION; SOLICITATION; DISPARAGEMENT; COMPETITION. The Executive agrees that upon the Effective Date he will enter into a Nondisclosure and Fair Competition Agreement substantially in the form attached as Exhibit H. The Executive agrees that during and after his employment with the Company he shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services. The Company agrees that during and after the Executive’s employment with the Company, no elected officer or director of the Company shall make any public statements that disparage the Executive.

10. DISPUTE RESOLUTION. Except for the Company’s right to seek injunctive relief as set forth in Section 8, all disputes arising under, related to, or in connection with this Agreement arising prior to a Change in Control shall be settled by expedited arbitration conducted before a panel of three arbitrators (with the Company selecting one arbitrator, the Executive selecting the second and the parties agreeing to the third arbitrator) sitting in Chicago, Illinois, in accordance with the rules of the American Arbitration Association then in effect. The decision of the arbitrators in that proceeding shall be binding on the Company and the Executive. Judgment may be entered on the award of the arbitrators in any court having jurisdiction. All expenses of such arbitration, including legal fees, shall be borne by the respective parties in such arbitration, provided the Company shall reimburse the Executive for his fees and expenses if the Executive prevails on at least one material issue.

11. SUCCESSORS.

(a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c) The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, the “Company” shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

12. NO VIOLATIONS. As a material inducement to the Company’s willingness to enter into this Agreement, the Executive represents to the Company that neither the execution of this Agreement by the Executive, the employment of the Executive by the Company nor the performance by the Executive of his duties hereunder will constitute a violation by the Executive of any employment, non-competition or other agreement to which the Executive is a party.

13. MISCELLANEOUS.

(a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

 

If to the Executive:

 

to his principal residence as reflected in the records of

the Company

 

If to the Company:

 

Executive Vice President and General Counsel

 

OfficeMax Incorporated

 

263 Shuman Blvd.

 

Naperville, IL 60563

 

13


or to such other address as either party furnishes to the other in writing in accordance with this paragraph (b) of Section 12. Notices and communications shall be effective when actually received by the addressee.

(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.

(d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provisions of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

(f) The Executive and the Company acknowledge that this Agreement, the Annual Incentive Award Agreement, the Relocation Policy, the Initial Option Award Agreement, the Other Option Award Agreement, the Initial Restricted Stock Unit Award Agreement, the Change in Control Agreement, the Nondisclosure and Fair Competition Agreement, and the Form of Release constitute the entire understanding of the parties with respect to the subject matter hereof and supersede any other prior agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof and that, following the date hereof, no such agreement or understanding shall be of any further force or effect.

(g) The rights and benefits of the Executive under this Agreement may not be anticipated, assigned, alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process except as required by law. Any attempt by the Executive to anticipate, alienate, assign, sell, transfer, pledge, encumber or charge the same shall be void.

(h) In connection with any termination of the Executive’s employment, the Executive agrees to execute a release from liability in favor of the Company substantially in the form attached as Exhibit I, and such release must be irrevocable within 60 days from the date of termination.

 

(i) The Company and the Executive agree to fully cooperate with respect to the timing and content of any public announcement regarding the hiring of the Executive or the execution of this Agreement.

(j) If the Executive brings a claim to enforce his rights under this Agreement, the Company shall reimburse to the Executive all of the Executive’s legal fees and expenses if the Executive prevails on at least one material issue in such enforcement action.

(k) To the extent necessary to effectuate the terms of this Agreement, terms of this Agreement which must survive the termination of the Executive’s employment or the termination of this Agreement shall so survive.

(l) This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of its Board, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

 

OFFICEMAX INCORPORATED

By:

 

/s/ Matthew R. Broad

 

Title:

 

EVP and General Counsel

/s/ Ravichandra Salligram

        EXECUTIVE

 

 

 

EXHIBIT F

to Employment Agreement

OfficeMax Employees

Guaranteed Offer Relocation Policy

Benefits At-a-Glance

 

 

* This Assistance At-a-Glance document is provided for overview purposes only. For full benefit

parameters, eligibility details and important reminders, please see the associated information

presented in your Policy document. Your Relocation Counselor can help you confirm your

eligibility for each of the possible benefits. *

 

Benefit

  

Brief Description *

Miscellaneous Allowance

  

You will qualify for an Allowance of four weeks’ new salary up to a maximum of $10,000. This allowance can assist you in paying various costs outside of policy.

Home Finding

  

The Company has designed a Home Finding program with WRRI to assist you with locating a residence at your new location and will reimburse expenses for you and your spouse/partner for two trips, up to a maximum of seven days and six nights.

Home Sale

Assistance

  

The Company will provide assistance in selling your primary residence in the form of professional and aggressive home marketing strategies. Selling your home quickly and for the best price is not only good for you – it is also good for the Company. It expedites your relocation and keeps costs to a minimum. In the unfortunate event that a qualified buyer cannot be secured for your home after aggressive home marketing efforts, the Company will purchase your home for an appraised value offer as a fall-back option.

Home Marketing Allowance

  

To give your home an edge over the competition and to help it sell faster, OfficeMax will contribute an allowance of 1% of the indicated market/appraised value (not to exceed $3,000) to be used as a buyer incentive.

Home Sale Incentive

  

The Company strongly encourages you to follow our guidelines and will reward you for doing so with a Home Sale Incentive of up to 2% of the sale price if your home sells to a qualified buyer within 60 days, prior to the establishment of an appraised value and 1% after 60 days (See Appraisal Process).

Equity Advance

  

During your offer period, you may request an advance of up to 90% on the equity of your home, if needed, for the closing of your home in the new location. (Those impacted by the Sarbanes-Oxley Act of 2002 are not eligible.)

Rental Finder’s Fees

  

The Company may provide reimbursement of costs associated with obtaining a rented property, including agent’s commission and finder’s fees not to exceed one month’s rent.

New Home Closing Costs

  

For employees who own their primary residence in the departure location, if you choose to work with a Company-approved lender, specific closing costs are eligible for payment, including loan origination fees, discount points or mortgage broker points up to a maximum of 1% of the purchase price of the property.

Mortgage Assistance

  

To assist you in obtaining a mortgage, the Company has made an agreement with specific lenders to provide mortgage programs.

Temporary Living

  

If required to report to work at the new location prior to finding and/or occupying a new permanent residence, temporary living may be necessary. Temporary living is for you and accompanying family members, for a limited amount of time (a maximum of 60 days) and requires you to focus your efforts on obtaining a new residence quickly.

Household Goods - Moving

  

WRRI will handle arrangements for the movement of your household goods. Your Relocation Counselor will discuss your options and help you select the right services to expedite a cost-effective move. The Company will be billed directly from the carrier for the cost of shipping your household goods.

Household Goods - Storage

  

Storage, if necessary, is available for up to 60 days at the new location site.

 

©2008 Weichert Relocation Resources Inc.

  

 

Benefit

  

Brief Description *

Household Goods -

Vehicles

  

The Company may pay the cost of moving up to two automobiles, provided the distance of your move is greater than 500 miles. If the distance is less than 500 miles, mileage will be reimbursed (at IRS relocation mileage reimbursement rates) for up to two vehicles.

Final Move Trip

  

Actual travel and lodging expenses incurred by you and your accompanying family members for the final move to the new location.

Spouse/Partner

Career Assistance

  

Appropriate transition support and job search assistance through coaching, customized research and materials as needed, by a personal consultant who provides on-going support before, during and after the move, up to a maximum of $1,500.

Tax Gross-up Assistance

  

A tax “gross-up” will be made to help protect you on the taxes due from certain non-deductible relocation expenses.

Repayment

Agreement

  

If you leave OfficeMax’s employment voluntarily or are discharged for cause at any time during the two-year period following your date of transfer, there will be repayment of relocation expense benefits to OfficeMax. Please refer to actual agreement for details.

 

©2008 Weichert Relocation Resources Inc.

  

 

EXHIBIT I

to Employment Agreement

WAIVER OF CLAIMS AND GENERAL RELEASE

As this is a legal document, OfficeMax Incorporated (“the Company”) hereby advises Executive in writing to consult with an attorney prior to executing this Waiver of Claims and General Release (or the “Agreement”).

In consideration of the Benefits set forth in this Agreement and for other good and valuable consideration, the undersigned Executive agrees as follows:

1. Benefits Pursuant to [Executive’s Employment Agreement dated October     , 2010 (the “Employment Agreement”)] [the change in control letter agreement between Executive and the Company dated October     , 2010 (the “Change in Control Agreement”)], and as a result of [the Company’s decision to terminate Executive’s employment for other than Cause, death or Disability, or the Executive’s decision to terminate the Executive’s employment for Good Reason] [the Executive’s Qualifying Termination or Qualifying Early Termination], the Company, subject to Executive’s execution of this Agreement and the expiration of the revocation period described in Section 3 of this Agreement prior to the sixtieth day following Executive’s Date of Termination, shall pay or provide the payments and benefits set forth in [the Employment Agreement] [the Change in Control Agreement]. The Company agrees to maintain reasonable and customary director and officer liability insurance coverage that covers Executive for seven years following the Executive’s termination of employment with the Company.

In the event that the revocation period described in Section 3 of this Agreement has not expired prior to the sixtieth day following the Date of Termination, the payments and benefits described in [the Employment Agreement] [the Change in Control Agreement] will be forfeited. Capitalized terms in this Section 1 which are not defined in this Agreement shall be as defined in the [Employment] [Change in Control] Agreement.

2. Waiver of Claims and General Release

a. Executive, on behalf of himself, and Executive’s spouse, heirs, executors, administrators, children, and assigns, does hereby release and discharge the Company and its parents, subsidiaries, affiliates, related organizations and employee benefit plans, and all of their respective officers, trustees, directors, Associates, agents and shareholders (in their official and personal capacities), and all of their successors and assigns from and for all suits, causes of action, claims and demands, whether known or unknown, that Executive has or may have as of the date that Executive executes this Waiver of Claims and General Release, including without limitation, those arising out of, or in any way related to Executive’s employment with and termination of employment from the Company. This Waiver of Claims and General Release includes but is not limited to all claims in common law, contract and tort, including but not limited to claims for wrongful or retaliatory discharge, breach of express or implied contract, defamation or intentional infliction of emotional distress, and any claims under any federal, state and local statute, ordinance and regulation, including but not limited to Title VII of the

 

Civil Rights Act of 1964, the Civil Rights Acts of 1866 and 1871, The Worker Adjustment and Retraining Notification Act of 1988, the National Labor Relations Act, the Age Discrimination in Employment Act (the “ADEA”), the Americans with Disabilities Act, the Family and Medical Leave Act, the Employees Retirement Income Security Act, the Equal Pay Act, and state or local employment discrimination and wage payment laws.

This Waiver of Claims and General Release (1) does not prevent or prohibit Executive from filing a charge or complaint with any state or federal agency or to cooperate or participate in any such matter even though Executive has waived and released all claims for any personal recovery and (2) does not include the release of (i) any vested benefits for which Executive is eligible in accordance with the express and written terms of the respective employee benefit plans (including pension plans) or programs in which Executive participates; (ii) rights accruing to Executive solely under this Agreement (including the payments and benefits described in Section 1 of this Agreement); (iii) claims to indemnification or insurance coverage provided under the Company’s certificate of incorporation, by-laws, and “D&O coverage” insurance policy that Executive may have with respect to any claims made or threatened against Executive in Executive’s capacity as a director, officer or employee of the Company; (iv) any rights or claims that Executive has relating to Executive’s outstanding equity rights or options to receive shares of common stock of the Company, as well as any shares of common stock of the Company that Executive owns and (v) claims that cannot be released as a matter of law or that arise after the date of this Agreement.

b. If a court of competent jurisdiction determines that Executive brings a claim waived under the first paragraph of Section 2(a), the Company shall be relieved of all obligations under this Agreement in addition to any other damages or relief a court may award; provided, however, that this Section 2(b) shall not apply to (i) claims under the ADEA or actions challenging the validity of the release of claims under the ADEA or (ii) the “whistleblower” provisions under the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Sarbanes–Oxley Act or applicable State law; provided, further, that nothing in this agreement is intended or should be construed to mean that the release of claims under the ADEA is unenforceable, it being the parties’ intent that all such claims are being released.

c. The Company does not admit, and to the contrary, expressly denies, that it engaged in any unlawful or wrongful conduct with respect to Executive’s employment or otherwise.

3. Period to Consider Agreement and Revocation Period

Executive hereby acknowledges that he has been given at least twenty-one (21) calendar days to consider this Waiver of Claims and General Release and if Executive decides to accept its terms, he understands and agrees that he must return one (1) executed copy to the Company (to the person identified below in this Section 3) on or prior to the end of such twenty-one (21) day period.

 

Executive has the right to revoke this Waiver of Claims and General Release within seven (7) calendar days after execution. Executive understands that he will not receive the Benefits described in Section 1 if he revokes. This Agreement shall not become effective until the revocation period has expired without an effective revocation.

Notice of revocation must be timely given in writing and received by the Company via personal delivery, overnight courier or U.S. Mail, postage prepaid, to:

General Counsel

OfficeMax Incorporated

263 Shuman Blvd.

Naperville, IL 60563

4. Cooperation Non-disparagement and Confidentiality

a. Executive understands and agrees that he is required to return all property, records and information of the Company, including any copies, to the Company. Executive further agrees that, during the two-year period following his termination of employment, Executive shall reasonably cooperate with the Company and/or its lawyers in connection with the legal affairs of the Company, on reasonable request and on terms and conditions mutually agreeable between Executive and the Company. The Company shall pay or reimburse Executive for Executive’s reasonable out-of-pocket costs and expenses in connection therewith.

b. Executive specifically agrees to preserve the confidentiality of all confidential and proprietary information of the Company, which information does not include any information that is in the public domain or disclosed by someone other than Executive. Executive also agrees to not disparage the Company in any way. The Company agrees that neither it nor any of its elected officers or directors will disparage Executive in any way.

5. Miscellaneous

Executive further acknowledges and agrees that:

a. He has read and understands the terms of this Waiver of Claims and General Release and knowingly and voluntarily enters into this Agreement;

b. The benefits provided to Executive under this Agreement are greater than the benefits that he would otherwise have been legally entitled to receive;

c. Executive understands and agrees that if any phrase, sentence or Section of this Agreement shall to any extent be held invalid, then the remainder of this Agreement or the application of such provision to persons or circumstances other than those as to which it is held invalid shall not be affected hereby, and all other phrases, sentences and paragraphs of this instrument shall be valid and enforced to the fullest extent permitted by law; and

 

d. This Agreement describes all benefits to which Executive is entitled in connection with his termination of employment.

6. Governing Law.

For enforcement purposes, this Agreement shall be governed and construed according to the laws of the state of Delaware, without giving effect to any conflict of laws provisions.

 

AGREED:

 

 

 

 

    Date:

 

 

Ravichandra K. Saligram

 

 

 

 

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made by and between OfficeMax Incorporated, a Delaware corporation (the “Company”), and Sam Duncan (the “Executive”), dated April 14, 2005 and effective as of the Effective Date (as hereinafter defined).

 

W I T N E S S E T H:

 

WHEREAS, the Company wishes to provide for the employment by the Company of the Executive, and the Executive wishes to serve the Company, in the capacities and on the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, it is agreed as follows:

 

1.                                       TERM.  The term of this Agreement (the “Term”) and Executive’s employment hereunder shall commence on April 18, 2005 (the “Effective Date”) and end on April 17, 2008, provided that, commencing on April 17, 2008 and on each subsequent anniversary thereof (each, a “Renewal Date”), the Term shall be extended by an additional year unless either party shall have given written notice of non-renewal to the other at least 90 days prior to the applicable Renewal Date.

 

2.                                       POSITION AND DUTIES.

 

(a)                                  During the Term the Executive shall serve as the Chief Executive Officer and President of the Company; in each case with such duties and responsibilities as are customarily assigned to such positions, and have such other duties and responsibilities not inconsistent therewith as may from time to time be assigned to him by the Board.  As of the Effective Date or as soon thereafter as practicable, the Company shall cause the Executive to be elected as a member of the board of directors of the Company (the “Board”) to serve as a member of the class of directors with a term expiring in 2006.  Thereafter, while Executive is employed during the Term, the Company shall cause the Executive to be included in the slate of persons nominated to serve as directors on the Board following the end of each term of the Executive’s service as a director.  Upon any termination of his employment with the Company, the Executive shall promptly resign from the Board and from all other offices held with the Company and its subsidiaries.

 

(b)                                 During the Term, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote his full attention and time to the business and affairs of the Company and use the Executive’s reasonable best efforts to carry out such responsibilities faithfully and efficiently.  It

 

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shall not be considered a violation of the foregoing for the Executive to manage his personal investments or, subject to the approval of the Board, to serve on corporate, industry, civic or charitable boards or committees, so long as such activities do not interfere with the performance of the Executive’s responsibilities as an executive officer of the Company in accordance with this Agreement.

 

(c)                                  During the Term, the Executive shall be based at the Company’s principal headquarters in Itasca, Illinois, except for travel reasonably required for the performance of the Executive’s duties hereunder.

 

3.                                       COMPENSATION.

 

(a)                                  BASE SALARY.  During the Term, the Executive shall receive an annual base salary (“Annual Base Salary”) of $850,000.  The Annual Base Salary shall be payable in accordance with the Company’s regular payroll practice for its senior executives, as in effect from time to time.  During the Term, the Annual Base Salary shall be periodically reviewed by the Executive Compensation Committee of the Board (the “Compensation Committee”) for possible increase.  Following any such increase, the term “Annual Base Salary” shall thereafter refer to the Annual Base Salary as so increased.

 

(b)                                 CASH BONUSES.

 

(i)                                     SIGN-ON BONUS.  If, within 60 days following the Effective Date, the Executive’s prior employer takes steps to rescind or seek reimbursement of the Executive’s 2004 bonus in the amount of $400,557 (the “2004 Bonus”), which was paid on or about April 5, 2005, the Executive shall use his reasonable best efforts to resist his prior employer’s actions.  If, despite Executive’s efforts, he is unsuccessful in causing his prior employer to reinstate the 2004 Bonus, the Company shall pay to the Executive a sign-on bonus of $400,557 (the “Sign-on Bonus”), which amount is in lieu of the Executive’s 2004 bonus from his prior employer.  If the Company pays the Sign-on Bonus and Executive is subsequently successful in causing his prior employer to reinstate the 2004 Bonus, the Executive  shall immediately notify the Company of any amount of such bonus paid to him by his prior employer and promptly reimburse such amount to the Company.

 

(ii)                                  ANNUAL INCENTIVE AWARD.  For fiscal years during the Term, the Executive shall participate in annual cash incentive compensation plans, as adopted and approved by the Board or the Compensation Committee from time to time, with targets and performance measures determined by the Compensation Committee.  The Executive’s annual target cash incentive opportunity pursuant to such plans for each fiscal year shall equal 100% (or such

 

2



 

greater percentage as the Board may establish for Executive from time to time) of the Annual Base Salary in effect for the Executive at the end of such fiscal year, with a maximum potential award equal to 225% of the Annual Base Salary in effect for the Executive at the beginning of such fiscal year, subject to any limitations set by the Compensation Committee from time to time.  With respect to the award for the Company’s 2005 fiscal year, the Executive’s annual cash incentive award shall be governed by the provisions of the 2003 OfficeMax Incentive and Performance Plan (the “Plan”) and an award agreement substantially in the form attached as Exhibit A.  Any annual cash incentive awards payable to the Executive will be paid at the time the Company normally pays such awards to its senior executives.

 

(c)                                  OPTION GRANTS.

 

(i)                                     INITIAL OPTION GRANT.  As soon as practicable following the Effective Date, the Compensation Committee shall grant to the Executive a ten-year nonqualified option (the “Initial Option”) to purchase 70,000 shares of the Company’s common stock (“Company Stock”).  The Initial Option shall have a per share exercise price equal to the closing price of the Company Stock on the New York Stock Exchange on the date of grant.  The Initial Option shall vest and become fully exercisable with respect to 33.3% of the shares subject thereto on each of the first three anniversaries of the grant date and shall be governed by the provisions of the Plan and an option agreement substantially in the form attached hereto as Exhibit B.

 

(ii)                                  OTHER OPTION GRANT.  As soon as practicable following the Effective Date, the Compensation Committee shall grant to the Executive an additional ten-year nonqualified option (the “Other Option”) to purchase 180,000 shares of Company Stock.  The Other Option shall vest with respect to 20% of the Company Stock subject to the Other Option on each of the first five anniversaries of the grant date and shall be governed by the provisions of the Plan and an option agreement substantially in the form attached hereto as Exhibit C.

 

(d)                                 RESTRICTED STOCK UNIT GRANTS.

 

(i)                                     INITIAL RESTRICTED STOCK UNITS.  As soon as practicable following the Effective Date, the Compensation Committee shall grant to the Executive an aggregate of 35,000 restricted Company Stock units under the Plan (such units, the “Initial Restricted Stock Units”).  Each Initial Restricted Stock Unit shall be governed by the provisions of the Plan and an agreement substantially in the form attached hereto as Exhibit D.  Subject to the provisions of the agreement and the Plan, 33.3% of the Initial Restricted Stock Units shall vest and immediately be paid on each of the first three anniversaries of the grant date; provided, however, that

 

3



 

if, in the good faith determination of the Company (which shall be made immediately prior to the scheduled vesting date), some or all of the remuneration attributable to the payment of the Initial Restricted Stock Units shall fail to be deductible by the Company for federal income tax purposes pursuant to Section 162(m) of the Internal Revenue Code, as amended (the “Code”), the payment of such Initial Restricted Stock Units shall be automatically deferred (the “Automatic Deferral”) and shall instead take place on the day following the six month anniversary of the Date of Termination (as defined below); provided further, however, that if, in the good faith determination of the Company such Automatic Deferral can reasonably be expected to result in the imposition of tax on the Executive with respect to the Initial Restricted Stock Units prior to payment being made with respect to such Initial Restricted Stock Units pursuant to Section 409A of the Code, this provision shall be reformed to provide that all of the Initial Restricted Stock Units shall be paid out on the day following the six month anniversary of the Date of Termination.

 

(ii)                                  OTHER RESTRICTED STOCK UNITS.  As soon as practicable following the Effective Date, the Compensation Committee shall grant to the Executive an additional grant of an aggregate of 15,000 restricted Company Stock units under the Plan (such units, together with any additional units credited hereunder, the “Other Restricted Stock Units”).  Each Other Restricted Stock Unit shall vest with respect to 20% of the Other Restricted Stock Units on each of the first five anniversaries of the grant date and shall otherwise be governed by the provisions of the Plan and an agreement substantially in the form attached hereto as Exhibit E, provided that the provisions set forth above with respect to Automatic Deferral shall also apply to the Other Restricted Stock Units.

 

(e)                                  OTHER LONG-TERM INCENTIVE COMPENSATION.  Commencing with the Company’s 2006 fiscal year and annually thereafter while the Executive is employed during the Term, the Company shall grant to the Executive long-term incentive compensation awards (which may consist of equity awards, long-term cash awards or other forms of long-term incentive compensation, as determined by the Compensation Committee) with a present value (as determined by the Compensation Committee) approximately equal to 350% of the Executive’s then-current Annual Base Salary.  Such awards shall have terms and conditions (including performance criteria, vesting schedules and acceleration provisions, if any) determined by the Compensation Committee.

 

(f)                                    OTHER BENEFITS.  While the Executive is employed during the Term: (1) the Executive shall be entitled to participate in all tax-qualified retirement plans of the Company and shall be entitled to participate in all fringe benefit and perquisite practices, policies and programs of the Company, in each case

 

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as are made available to the senior officers of the Company and (2) the Executive and/or the Executive’s eligible dependents, as the case may be, shall be eligible to participate in all welfare benefit plans, practices, policies and programs provided by the Company, including any medical, prescription, dental, disability, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs to the same extent, and subject to the same terms and conditions, as such arrangements are made available to the senior officers of the Company.

 

(g)                                 PAID TIME OFF AND RELOCATION.  The Executive shall be entitled to 5 weeks paid time off per year in accordance with the Company’s paid time off policy.  Carryover of unused paid time off from year to year shall be according to the terms of the policy.  Executive shall be provided relocation benefits consistent with the Company’s relocation policy, attached as Exhibit F, for expenses incurred in connection with the relocation of Executive and his spouse to the Itasca, Illinois, area.

 

(h)                                 CHANGE OF CONTROL AGREEMENT.  Following the Effective Date, the Executive and the Company shall enter into a change of control agreement (the “Change of Control Agreement”) substantially similar to those which the Company has offered or will offer to its other senior executives in 2005 (and attached hereto as Exhibit G), it being understood that if the Executive’s employment is terminated under circumstances entitling him to severance benefits under this Agreement and the Change of Control Agreement, the severance payments described in Section 5(a) shall be offset (but not below zero) by similar payments and benefits provided under the Change of Control Agreement.

 

(i)                                     SUPPLEMENTAL PENSION BENEFIT.  Upon the fifth anniversary of the Effective Date, the Executive (if employed by the Company on such anniversary) shall vest in a supplemental pension benefit (the “Supplemental Pension Benefit”) in an annual amount equal to the product of (A) two percent (2%) of the sum of (1) the average amount of Annual Base Salary earned by the Executive with respect to the five most recently completed years of the Executive’s employment with the Company (such years to be calculated by reference to calendar years) plus (2) the average amount of the annual cash bonuses earned by the Executive pursuant to Section 3(b)(ii) for the Company’s five completed fiscal years immediately preceding the termination of the Executive’s employment and (B) the number of completed full years of Executive’s employment with the Company (also calculated by reference to calendar years, provided that Executive shall be deemed to have completed a full calendar year of employment with the Company for 2005).  The amount of the Executive’s Supplemental Pension Benefit shall be offset by any amounts payable to the Executive under any qualified or nonqualified pension plans of the Company (with the amount of any balance in a defined contribution plan

 

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converted into a single life annuity for purposes of calculating the amount of such offset) and by the amount of the Executive’s benefit from Social Security.  The Supplemental Pension Benefit shall be payable according to Executive’s election on the election form attached as Exhibit H.

 

4.                                       TERMINATION OF EMPLOYMENT.

 

(a)                                  DEATH OR DISABILITY.  The Executive’s employment shall terminate automatically upon the Executive’s death during the Term.  The Company shall be entitled to terminate the Executive’s employment because of the Executive’s Disability during the Term.  “Disability” means that the Executive is disabled within the meaning of the Company’s long-term disability policy or, if there is no such policy in effect, that (i) the Executive has been substantially unable, for 120 calendar days within a period of 180 consecutive calendar days, to perform the Executive’s duties under this Agreement, as a result of physical or mental illness or injury, and (ii) a physician selected by the Company or its insurers, and reasonably acceptable to the Executive or the Executive’s legal representative, has determined that the Executive is disabled.  A termination of the Executive’s employment by the Company for Disability shall be communicated to the Executive by written notice, and shall be effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Time”), unless the Executive returns to full-time performance of the Executive’s duties before the Disability Effective Time.

 

(b)                                 TERMINATION BY THE COMPANY.

 

(i)                                     The Company may terminate the Executive’s employment during the Term for Cause or without Cause.  “Cause” means that the Executive’s (1) willful and continued failure to substantially perform his duties with the Company, or (2) the Executive’s willful engagement in conduct which is materially injurious to the Company, monetarily or otherwise.  For purposes of this Section 4(b)(i), no act or failure to act on the Executive’s part shall be considered “willful” unless done or omitted to be done by the Executive not in good faith and without reasonable belief that the Executive’s act or omission was in the best interest of the Company.  Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until (X) a resolution is 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 the Executive and an opportunity for the Executive, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board the Executive was guilty of conduct set forth above in clauses (1) or (2) of this Section 4(b)(i) and specifying the particulars of the Executive’s conduct in detail, and (Y) a copy of this resolution is delivered to the Executive.  All decisions by the

 

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Company regarding termination for Cause must be supported by clear and convincing evidence.

 

(ii)                                  Following a Change in Control, a termination of the Executive’s employment for Cause shall not be effective unless it is accomplished in accordance with the procedures set forth in Section 3.B. of the Change of Control Agreement.

 

(c)                                  GOOD  REASON.

 

(i)                                     The Executive may terminate employment for Good Reason or without Good Reason. “Good Reason” shall mean, without the Executive’s consent, (a) a reduction in the Executive’s title or the assignment to him of any duties inconsistent in any material respect with his position, authority, duties or responsibilities as contemplated by this Agreement, unless the action is remedied by the Company within fifteen (15) days after receipt of notice thereof given by the Executive; (b) any failure by the Company to comply with any of the provisions of this Agreement, unless such action is remedied by the Company within fifteen (15) days after receipt of notice thereof given by the Executive; (c) a reduction in the Annual Base Salary (other than in connection with an across the board reduction similarly affecting all of the Company’s executive officers); (d) a reduction in the Executive’s target annual incentive award (other than in connection with an across the board reduction affecting all of the Company’s executive officers or a reduction due to a demonstrable change in comparable market data) or (d) a delivery by the Company of a notice of non-renewal as contemplated by Section 1.

 

(ii)                                  A termination of employment by the Executive for Good Reason shall be effectuated by giving the Company written notice (“Notice of Termination for Good Reason”) of the termination, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies.  A termination of employment by the Executive for Good Reason shall be effective fifteen (15) days following the date when the Notice of Termination for Good Reason is given, unless the event constituting Good Reason is remedied by the Company in accordance with the foregoing.

 

(iii)                               A termination of the Executive’s employment by the Executive without Good Reason shall be effected by giving the Company 30 days written notice of the termination.

 

(d)                                 DATE OF TERMINATION.  The “Date of Termination” means the date of the Executive’s death, the Disability Effective Time or the date on

 

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which the termination of the Executive’s employment by the Company for Cause or without Cause or by the Executive for Good Reason or without Good Reason is effective.

 

5.                                       OBLIGATIONS OF THE COMPANY UPON TERMINATION.

 

(a)                                  OTHER THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON.  If, during the Term, the Company terminates the Executive’s employment for any reason other than Cause, death or Disability, or the Executive terminates his employment for Good Reason, then, subject to Section 12(h) hereof, the Company shall pay to the Executive, not later than 30 days following the Date of Termination, (i) a lump sum equal to two times the sum of the Executive’s Annual Base Salary immediately prior to the Date of Termination, plus the greater of (A) the Executive’s annual target bonus for the fiscal year in which the Date of Termination occurs or (B) the annual target bonus described in Section 3(b)(ii) (in each case without giving effect to any reduction constituting Good Reason); and (ii) any portion of the Executive’s Annual Base Salary and previously earned but unpaid bonus through the Date of Termination that has not yet been paid.  In addition, all of the Executive’s then outstanding equity awards shall be treated in accordance with the terms of the plan and agreements evidencing such equity awards. The Company shall also pay or provide to the Executive, in the event of such a termination, all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination.

 

(b)                                 DEATH AND DISABILITY.  If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Term, the Company shall pay to the Executive or, in the case of the Executive’s death, to the Executive’s designated beneficiaries (or, if there is no such beneficiary, to the Executive’s estate or legal representative), in a lump sum in cash within 30 days after the Date of Termination, any portion of the Executive’s Annual Base Salary and previously earned but unpaid bonus through the Date of Termination that has not yet been paid.  The Company shall also pay or provide to the Executive, in the event of such a termination, all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination.  If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Term, all of the Executive’s then outstanding equity awards shall be treated in accordance with the terms of the plan and agreements evidencing such equity awards.

 

(c)                                  BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE

 

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OTHER THAN FOR GOOD REASON.  If the Executive’s employment is terminated by the Company for Cause or the Executive voluntarily terminates employment other than for Good Reason during the Term then, (1) the Company shall pay to the Executive in a lump sum in cash within thirty (30) days after the Date of Termination, any portion of the Executive’s Annual Base Salary and bonus earned through the Date of Termination that has not been paid; (2) all outstanding equity awards shall be treated according to the provisions of the plan and agreements under which such awards were granted; and (3) the Company shall also pay or provide to the Executive all compensation and benefits payable to the Executive under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination.

 

6.                                       NON-EXCLUSIVITY OF RIGHTS.  Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies for which the Executive may qualify.

 

7.                                       FULL SETTLEMENT.  Except as provided herein, the Company’s obligation to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment.

 

8.                                       CONFIDENTIAL INFORMATION; SOLICITATION; DISPARAGEMENT; COMPETITION.

 

(a)                                  The Executive agrees that he will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Executive’s assigned duties and for the benefit of the Company, either during the period of the Executive’s employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which the Executive obtained during the Executive’s employment by the Company.  This restriction will not apply to information that (i) was known to the public before its disclosure to the Executive; (ii) becomes known to the public after disclosure to the Executive through no wrongful act of the Executive; or (iii) the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive shall provide the Company with prior notice of the contemplated

 

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disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

(b)                                 During the Executive’s employment with the Company and for one year after the Date of Termination, the Executive agrees that he will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce any managerial level employee of the Company or any of its subsidiaries or affiliates to leave employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee.

 

(c)                                  The Executive agrees that during and after his employment with the Company he shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services.  Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 8(c).

 

(d)                                 For a period of 12 months after Executive’s termination of employment with the Company (or for a period of 12 months after a final judgment or injunction enforcing this covenant), Executive agrees not to, directly as an employee or indirectly as a consultant or contractor, without the prior written consent of the Company, be employed in the same or similar capacity as Executive was employed by the Company immediately prior to Executive’s termination of employment, by another business entity or person deriving more than 10% of its gross revenues in the Territory from the sale or distribution of office supplies, office furniture, computer consumables or related office products or services.  For purposes hereof, the Territory shall be all of North America.

 

(e)                                  The Executive agrees that the restrictions set forth in Section 8(a), 8(b), 8(c) and 8(d) hereof are reasonable and necessary to protect the legal interests of the Company.  The Executive further agrees that the Company shall be entitled to injunctive relief in the event of any actual or threatened breach of such restrictions.

 

9.                                       DISPUTE RESOLUTION.  Except for the Company’s right to seek injunctive relief as set forth in Section 8(e), all disputes arising under, related to, or in connection with this Agreement arising prior to a Change of Control shall be settled by expedited arbitration conducted before a panel of three arbitrators sitting in

 

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Chicago, Illinois, in accordance with the rules of the American Arbitration Association then in effect.  The decision of the arbitrators in that proceeding shall be binding on the Company and the Executive.  Judgment may be entered on the award of the arbitrators in any court having jurisdiction.  All expenses of such arbitration, including legal fees, shall be borne by the non-prevailing party in such arbitration.

 

10.                                 SUCCESSORS.

 

(a)                                  This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

 

(c)                                  The Company shall 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 expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place.  As used in this Agreement, the “Company” shall mean both the Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

 

11.                                 NO VIOLATIONS.  As a material inducement to the Company’s willingness to enter into this Agreement, the Executive represents to the Company that neither the execution of this Agreement by the Executive, the employment of the Executive by the Company nor the performance by the Executive of his duties hereunder will constitute a violation by the Executive of any employment, non-competition or other agreement to which the Executive is a party.

 

12.                                 MISCELLANEOUS.

 

(a)                                  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives.

 

(b)                                 All notices and other communications under this Agreement

 

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shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

Sam Duncan

1122 Pleasant Valley Drive

Oneida, WI  54115

 

If to the Company:

 

Matthew R. Broad

Executive Vice President and General Counsel

OfficeMax Incorporated

150 E. Pierce Rd.

Itasca, IL  60143

 

or to such other address as either party furnishes to the other in writing in accordance with this paragraph (b) of Section 12.  Notices and communications shall be effective when actually received by the addressee.

 

(c)                                  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.  If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.

 

(d)                                 Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

 

(e)                                  The Executive’s or the Company’s failure to insist upon strict compliance with any provisions of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

 

(f)                                    The Executive and the Company acknowledge that this Agreement and the Change of Control Agreement constitute the entire understanding

 

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of the parties with respect to the subject matter hereof and supersede any other prior agreement or other understanding, whether oral or written, express or implied, between them concerning, related to or otherwise in connection with, the subject matter hereof and that, following the date hereof, no such agreement or understanding shall be of any further force or effect.

 

(g)                                 The rights and benefits of the Executive under this Agreement may not be anticipated, assigned, alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process except as required by law.  Any attempt by the Executive to anticipate, alienate, assign, sell, transfer, pledge, encumber or charge the same shall be void.

 

(h)                                 In connection with any termination of the Executive’s employment, the Executive agrees to execute a customary release from liability in favor of the Company and it is understood that no payments shall be made pursuant to Section 5(a) hereof prior to the expiration of the required revocation period with respect to such release.

 

(i)                                     The Company and the Executive agree to fully cooperate with respect to the timing and content of any public announcement regarding the hiring of the Executive or the execution of this Agreement.

 

(j)                                     To the extent necessary to effectuate the terms of this Agreement, terms of this Agreement which must survive the termination of the Executive’s employment or the termination of this Agreement shall so survive.

 

(k)                                  This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

 

(l)                                     The Company shall pay all reasonable legal fees and expenses incurred by the Executive in connection with the preparation and negotiation of this Agreement, up to a maximum of $20,000.

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of its Board, the Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

 

 

OFFICEMAX INCORPORATED

 

 

 

 

 

By:

/s/ Lorene Flewellen

 

 

Title:  Senior Vice President, Human Resources

 

 

 

/s/ Sam K. Duncan

 

EXECUTIVE

 

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Exhibit G


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[As amended through March 11, 2005]

CONFIDENTIAL

(Date)

[                                                 ]

Dear [                             ]:

        OfficeMax Incorporated (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel in the event a change in control of the Company is threatened or occurs. In this regard, the Board of Directors of the Company (the "Board") recognizes that the possibility of a change in control may exist and that the uncertainty and questions which this possibility may raise among management could 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 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, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (this "Agreement") if your employment with the Company is terminated before or after a "change in control of the Company" (as defined in Section 2) 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                        .] This [Agreement][amendment] is effective on the date hereof and shall continue in effect through [    ]; provided that on January 1, [2006] and on each January 1 thereafter, the term of this Agreement shall automatically be extended so as to terminate on the 2nd 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. However, if a change in control of the Company occurs during the term of this Agreement, this Agreement shall continue in effect for a period of 24 months after the month in which the change in control of the Company occurred.

        2.    Change in Control.    

        A.    A "change in control of the Company" shall be deemed to have occurred if an event set forth in any one of the following paragraphs occurs:

        (1)   Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% 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; provided, however, if such Person acquires securities directly from the Company, such securities shall not be included unless such Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (2)   The individuals who, on any date following the date hereof, constitute the Board (the "Incumbent Board Members"), cease, in any two year period following such date, to represent at least a majority of the number of directors then serving, provided, however, that any new director whose appointment or election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least 2/3rds of the Incumbent Board Members shall be deemed for purposes hereof to be Incumbent Board Members, unless such director's 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; or

        (3)   The consummation of a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) with any other corporation other than (i) a merger or consolidation which would

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result in both (a) Incumbent Board Members continuing to constitute at least a majority of the number of directors of the combined entity immediately following consummation of such merger or consolidation, and (b) 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) more than 50% 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 with the approval of the Board 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 representing 25% 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; provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (4)   The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of 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, more than 50% 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.

        A transaction described in Section 2.A(3) which is not a change in control of the Company solely due to the operation of Subsection 2.A(3)(i)(a) will nevertheless constitute a change in control of the Company if the Board determines, prior to the consummation of the transaction, that there is not a reasonable assurance that, for at least two years following the consummation of the transaction, at least a majority of the members of the board of directors of the surviving entity or any parent will continue to consist of Continuing Directors and individuals whose election or nomination for election by the shareholders of the surviving entity or any parent would be approved by a vote of at least two-thirds of the Continuing Directors and individuals whose election or nomination for election has previously been so approved.

        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, provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 9.5% of the Company's then outstanding shares of common stock 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

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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 6 months from the occurrence of the first 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 "Person" 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, (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, or (5) an individual, entity or group that is permitted to and does report its beneficial ownership of securities of the Company on Schedule 13G under the Exchange Act (or any successor schedule), provided that if the individual, entity or group later becomes required to or does report its ownership of Company securities on Schedule 13D under the Exchange Act (or any successor schedule), then the individual, person or group shall be deemed to be a Person for purposes of this Agreement as of the first date on which the individual, person or group becomes required to or does report its ownership on Schedule 13D.

        3.    Termination and Change in Control.    Except as set forth in Sections 6, 7, and 10.A, no benefits shall be payable under this Agreement unless there is a change in control of the Company, your employment is terminated, and your termination is a Qualifying Termination or a Qualifying Early Termination. Your termination is a Qualifying Termination if a change in control of the Company occurs and your employment subsequently terminates during the term of this Agreement, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. Your termination is a Qualifying Early Termination if a potential change in control of the Company occurs, your employment terminates during the pendency of the potential change in control of the company and during the term of this Agreement, the termination is in contemplation of a change in control of the Company, and an actual change in control of the Company occurs within one year following your termination, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. A transfer of your employment from the Company to one of its subsidiaries, from a subsidiary to the Company, or between subsidiaries is not a termination of employment for purposes of this Agreement.

        A.    Disability.    If, as a result of your incapacity due to physical or mental illness or injury, you are absent from your duties with the Company on a full-time basis for 6 consecutive months, and within 30 days after written notice of termination is given you have not 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" means termination upon (1) your willful and continued failure to substantially perform your duties with the Company (other than failure resulting from your incapacity due to physical or mental illness or injury, or 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) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Section 3.B, 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 act 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:

a resolution is 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 this Section 3.B and specifying the particulars of your conduct in detail, and

a copy of this resolution is delivered to you.

        All decisions by the Company regarding termination for Cause must be supported by clear and convincing evidence.

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        C.    Good Reason.    "Good Reason" means any of the following, if occurring without your express written consent after a change in control of the Company:

        (1)   The assignment to you of any duties inconsistent with your responsibilities as an Executive Officer of the Company or a significant adverse alteration in your responsibilities from those in effect immediately prior to the change in control of the Company;

        (2)   A reduction by the Company in your annual base salary as in effect on the date of this Agreement (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;

        (3)   A reduction by the Company in your target annual cash incentive as in effect immediately prior to the change in control of the Company;

        (4)   The Company's requiring you to be based anywhere located more than 50 miles from the primary office location at which you were based immediately prior to the change in control of the Company, except for required travel on the Company's business to an extent substantially consistent with your business travel obligations as existed immediately prior to the change in control;

        (5)   The failure by the Company to continue to provide you with benefits and compensation, including paid time off, welfare benefits, short-term incentives, pension, life insurance, healthcare, and disability plans, no less favorable in the aggregate than the benefits and compensation available to you immediately prior to the change in control of the Company;

        (6)   The failure by the Company to continue to provide you with long-term equity incentives in a target dollar amount no less favorable than the target dollar amount of long-term equity incentives available to you immediately prior to the change in control of the Company, except for across-the-board long-term equity incentive reductions similarly affecting all executives of the Company and all executives of any Person 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 10; or

        (8)   Any purported termination of your employment by the Company which is not effected pursuant to a Board resolution satisfying the requirements of Section 3.B or a Notice of Termination satisfying the requirements of Section 3.D, as applicable. Furthermore, no such purported termination of your employment shall be effective for purposes of this Agreement.

        For purposes of determining whether a Qualifying Early Termination has occurred, references to a change in control of the Company in this Section 3.C shall be deemed to refer to any potential change in control of the Company pending at the time of the event or circumstance alleged to be Good Reason.

        Your right to terminate your employment pursuant to this Section 3.C shall not be affected by your incapacity due to physical or mental illness or injury. 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.

        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 according to Section 11. A "Notice of Termination" must indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision.

        E.    Date of Termination.    "Date of Termination" means:

        (1)   if your employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during that 30-day period);

        (2)   if your employment is terminated for Cause, for Good Reason, or for any other reason other than Disability or a Qualifying Early Termination, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days from the date the Notice of Termination is given, and in the case of a termination for Good Reason shall not be more than 60 days from the date the Notice of Termination is given);

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        (3)   if your termination is a Qualifying Early Termination, the later of the date determined according to subsection (1) or (2) above, or the date upon which the actual change in control of the Company occurs; or

        (4)   if a dispute exists regarding the termination, 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 having expired and no appeal having been perfected), or, if earlier, the last day of the term of this Agreement. This subsection (4) shall apply only if (i) the party receiving the Notice of Termination notifies the other party within 30 days that a dispute exists, (ii) the notice of dispute is made in good faith, and (iii) the party giving the notice of dispute pursues resolution of the dispute with reasonable diligence. While any dispute is pending under this subsection (4), the Company will continue to pay you your full compensation in effect when the Notice of Termination 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 and programs in which you were participating when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, or if earlier, the last day of the term of this Agreement. Amounts paid under this subsection (4) 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 for Cause or Other than for Good Reason.    If your employment is 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 those payments are due, and the Company shall have no further obligations to you under this Agreement.

        5.    Compensation upon a Qualifying Termination or Qualifying Early Termination.    If your employment is terminated pursuant to a Qualifying Termination or Qualifying Early Termination, then you shall be entitled to the benefits provided in this Section 5.

        A.    Not later than the 15th day following the date the release required pursuant to Section 8.E becomes effective, the Company will pay you the following amounts:

        (1)   Your full base salary through the Date of Termination (or, in the case of a Qualifying Early Termination, through your last day of employment if such amount has not already been paid) 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 (whether or not any reduction is asserted as Good Reason), plus all other amounts to which you are entitled under any compensation plan of the Company at the time those payments are due (in each case, to the extent not already paid);

        (2)   A lump sum severance payment equal to (i) [3 times—for CEO][2 times—for presidents and EVPs][1 times—for SVPs] the sum of (a) 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 (whether or not any reduction is asserted as Good Reason) ("Base Salary"), plus (b) the Target Bonus. For purposes of this section 5.A(2), "Target Bonus" means (i) if the Date of Termination occurs prior to March 1, 2008, an amount equal to 80% of your target annual incentive for the year in which the Date of Termination occurs (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason), and (ii) if the Date of Termination occurs on or after March 1, 2008, an amount equal to the average annual incentive earned by you in the three completed years preceding the Date of Termination, provided that in either case, if you have earned fewer than three annual bonuses prior to the Date of Termination, Target Bonus means your target annual incentive for the year in which occurs the Date of Termination (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason); and

        (3)   To the extent not already paid, a lump sum amount equal to the greater of the value of your unused and accrued time off, less any advanced time off, in accordance with the Company's Your Time Off Policy (or any successor policy) as in effect immediately prior to the change in control of the Company or as in effect on the Date of Termination (or, in the case of a Qualifying Early Termination, as in effect on your last day of employment), whichever is more favorable to you.

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        B.    With respect to each benefit listed below, the Company shall, at its sole discretion, comply with either subsection (1) or (2) below:

        (1)   for a [24-month—for CEO][12-month—for presidents, EVPs and SVPs] period following the Date of Termination, maintain, in full force and effect for your continued benefit at substantially the same cost to you as determined immediately prior to your last day of employment, all life (other than the Company's Executive Life Insurance Program, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and financial counseling services in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination, or

        (2)   not later than the 15th day following the date the release required pursuant to Section 8.D becomes effective, pay you a lump sum payment equal to [24 for CEO][12 for presidents, EVPs and SVPs] times 150% of the sum of (a) the monthly group premium, less the amount of employee contributions, for the life (other than executive life, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and (b) the monthly allowance for financial counseling services, in each case in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination.

        If the Company chooses to provide the benefits indicated under subsection (1), and your continued participation (or a particular type of coverage) is not possible or becomes impossible under the general terms and provisions of the plans, programs or arrangements, then the Company shall arrange to provide you with benefits, at substantially the same cost to you as determined immediately prior to your last day of employment, which are substantially similar to those which you are entitled to receive under such plans, programs and arrangements.

        Notwithstanding the foregoing, the Company shall continue to pay the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) for [twenty-four for CEO][twelve for presidents, EVPs and SVPs] months following the Date of Termination.

        For a Qualifying Early Termination, any portion of the period commencing on the day after your last day of employment through and including the Date of Termination during which the Company provides you with benefit continuation or pays the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) will apply toward the payment period required above.

        C.    You shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 5.A 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 5.B(1) shall be reduced to the extent comparable benefits are actually received by you during the [12-month][24-month] period following your termination, and you must report any such benefits actually received by you to the Company.

        6.    Legal Fees.    The Company shall pay to you all reasonable legal fees and expenses which you incur following a change in control of the Company (a) as a result of contesting or disputing your termination, (b) in seeking in good faith to obtain or enforce any right or benefit provided by this Agreement (provided, in the case of clauses (a) and (b) that you shall refund all such fees and expenses to the Company should you not substantially prevail in the applicable proceeding), or (c) in connection with any tax audit or proceeding to the extent applicable to the application of Section 4999 of the Internal Revenue Code of 1986 as amended, to any payment or benefit provided under this Agreement. This payment shall be made within 10 business days after the Company receives your written request for payment accompanied by reasonable evidence of fees and expenses incurred.

        7.    Excise Tax Provisions.    

        A.    Notwithstanding any provision of this Agreement to the contrary (but except as provided in the following sentence), if you would receive payments under this Agreement or under any other plan, program, or policy sponsored by the Company which relate to a change in control of the Company (the "Total Payments") and which are determined by the Company to be subject to excise tax under Section 4999 of the Code (the "Excise Tax");

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then 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 taxes, employment taxes and Excise Tax upon the Gross-up Payment, shall be equal to the Total Payments. Notwithstanding the preceding sentence, if it shall be determined that the Total Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to you such that the receipt of Total Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to you, and the portion of the Total Payments that are payable hereunder shall be reduced such that the Total Payments equal the Reduced Amount. The reduction of the amounts payable hereunder shall be made in consultation with you and in such a manner as to maximize the value of all Total Payments actually made you.

        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, the 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, the 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 state and local taxes.

        C.    The Company will pay you the amount of the Gross-up Payment as soon as the amount can be determined, but in no event later than the 30th day after the Date of Termination. 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 the payments were calculated and the basis for the calculations including, without limitation, any opinions or other advice the Company has received from its tax counsel, its auditor, or other advisors or consultants (and any opinions or advice which are in writing shall be attached to the statement).

        D.    If the Excise Tax is finally determined to be less than the amount taken into account in calculating the Gross-up Payment, you shall repay to the Company, within 5 business days following the time that the amount of the reduction in Excise Tax is finally determined, the portion of the Gross-up Payment attributable to the 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). If the Excise Tax is determined, for any reason, to exceed the amount taken into account in calculating the Gross-up Payment, the Company shall make an additional Gross-up Payment in respect of the excess (including any interest, penalties, or additions payable by you with respect to the Excise Tax) within 5 business days following the time that the amount of the 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.

        8.    Employee Covenants; Release.    

        A.    You agree that you will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of your assigned duties and for the benefit of the Company, either during the period of your employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which you obtained during your employment by the Company. This restriction will not apply to information that (i) was known to the public before its disclosure to you; (ii) becomes known to the public after disclosure to you through no wrongful act of yours; or (iii) you are required to disclose by applicable law, regulation or legal process (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information).

        B.    During your employment with the Company and for one year after your termination, you agree that you will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity,

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knowingly solicit, aid or induce any managerial level employee of the Company or any of its subsidiaries or affiliates to leave employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee.

        C.    You agree that during and after your employment with the Company you shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services. Notwithstanding the foregoing, (i) statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 8.C, and (ii) nothing in this Section 8.C shall in any way be interpreted to preclude or limit you from pursuing your legal rights or from otherwise communicating with governmental agencies pursuant to legislation or regulations permitting or requiring such communications.

        D.    For a period of 12 months after your termination of employment with the Company (or for a period of 12 months after a final judgment or injunction enforcing this covenant), you agree not to, directly as an employee or indirectly as a consultant or contractor, without the prior written consent of the Company, be employed in the same or similar capacity as you were employed by the Company immediately prior to termination of your employment, by another business entity or person engaged in the sale or distribution of office supplies, office furniture, computer consumables or related office products or services, in the Territory (as defined below). For purposes hereof, the Territory shall be all of [North America][Australasia].

        In agreeing to this restriction, you specifically acknowledge the substantial value to the Company of Confidential Information and your intimate knowledge of the Company's business and agrees that such constitutes goodwill and a protectable interest of the Company.

        E.    Notwithstanding anything in this Agreement to the contrary, the payment to you of the benefits provided in Section 5 is conditioned upon your execution and delivery to the Company (and your failure to revoke) a customary general release of claims.

        9.    Deferred Compensation and Benefits Trust.    The Company has established a Deferred Compensation and Benefits Trust, and shall comply with the terms of that Trust.

        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, the assets of which nevertheless will be subject to claims of the Company's creditors in the event of bankruptcy or insolvency.

        10.    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 succession had taken place. Failure of the Company to obtain an assumption and agreement prior to the effectiveness of any succession which occurs during your employment with the Company and the term of this Agreement 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 experience a Qualifying Termination or Qualifying Early Termination, except that for purposes of this Section 10.A, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean OfficeMax Incorporated and any successor to its business and/or assets which assumes and agrees to perform this Agreement.

        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 under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, 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, provided that the Company is entitled to seek equitable relief in a court of competent jurisdiction in connection with the enforcement of the covenants set forth in Section 8. Under no circumstance will a violation

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or alleged violation of those covenants entitle the Company to withhold or offset a payment or benefit due under this Agreement.

        11.    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 with this Section 11, except that notice of change of address shall be effective only upon receipt.

        12.    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 an officer designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the 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 of this Agreement 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 those sections. If the obligations of the Company under Sections 4, 5, 6 and 7 arise prior to the expiration of the term of this Agreement, those obligations shall survive the expiration of the term.

        13.    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.

        14.    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.

        15.    No Guaranty of Employment.    Neither this Agreement nor any action taken under this Agreement shall be construed as giving you a right to be retained as an employee or an executive officer of the Company.

        16.    Governing Law.    This Agreement shall be governed by and construed in accordance with Delaware law.

        17.    Other Benefits.    Any payments made to you pursuant to this Agreement 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, except that payments made to you pursuant to Section 5.A(2) shall be in lieu of any severance payment to which you would otherwise be entitled under any severance pay 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,

 


OFFICEMAX INCORPORATED


 


By


 


    



 

 

 

Name

 

    


 

 

 

Title

 

    


 


Agreed to this [    ] day of [                             ], 200  


 


    


[Name of Officer]


 

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QuickLinks

Exhibit 10.32

Top of the Document

Exhibit 10.32

[As amended through March 11, 2005]

CONFIDENTIAL

(Date)

[                                                 ]

Dear [                             ]:

        OfficeMax Incorporated (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel in the event a change in control of the Company is threatened or occurs. In this regard, the Board of Directors of the Company (the "Board") recognizes that the possibility of a change in control may exist and that the uncertainty and questions which this possibility may raise among management could 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 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, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (this "Agreement") if your employment with the Company is terminated before or after a "change in control of the Company" (as defined in Section 2) 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                        .] This [Agreement][amendment] is effective on the date hereof and shall continue in effect through [    ]; provided that on January 1, [2006] and on each January 1 thereafter, the term of this Agreement shall automatically be extended so as to terminate on the 2nd 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. However, if a change in control of the Company occurs during the term of this Agreement, this Agreement shall continue in effect for a period of 24 months after the month in which the change in control of the Company occurred.

        2.    Change in Control.    

        A.    A "change in control of the Company" shall be deemed to have occurred if an event set forth in any one of the following paragraphs occurs:

        (1)   Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% 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; provided, however, if such Person acquires securities directly from the Company, such securities shall not be included unless such Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (2)   The individuals who, on any date following the date hereof, constitute the Board (the "Incumbent Board Members"), cease, in any two year period following such date, to represent at least a majority of the number of directors then serving, provided, however, that any new director whose appointment or election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least 2/3rds of the Incumbent Board Members shall be deemed for purposes hereof to be Incumbent Board Members, unless such director's 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; or

        (3)   The consummation of a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) with any other corporation other than (i) a merger or consolidation which would

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result in both (a) Incumbent Board Members continuing to constitute at least a majority of the number of directors of the combined entity immediately following consummation of such merger or consolidation, and (b) 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) more than 50% 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 with the approval of the Board 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 representing 25% 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; provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (4)   The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of 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, more than 50% 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.

        A transaction described in Section 2.A(3) which is not a change in control of the Company solely due to the operation of Subsection 2.A(3)(i)(a) will nevertheless constitute a change in control of the Company if the Board determines, prior to the consummation of the transaction, that there is not a reasonable assurance that, for at least two years following the consummation of the transaction, at least a majority of the members of the board of directors of the surviving entity or any parent will continue to consist of Continuing Directors and individuals whose election or nomination for election by the shareholders of the surviving entity or any parent would be approved by a vote of at least two-thirds of the Continuing Directors and individuals whose election or nomination for election has previously been so approved.

        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, provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 9.5% of the Company's then outstanding shares of common stock 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

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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 6 months from the occurrence of the first 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 "Person" 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, (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, or (5) an individual, entity or group that is permitted to and does report its beneficial ownership of securities of the Company on Schedule 13G under the Exchange Act (or any successor schedule), provided that if the individual, entity or group later becomes required to or does report its ownership of Company securities on Schedule 13D under the Exchange Act (or any successor schedule), then the individual, person or group shall be deemed to be a Person for purposes of this Agreement as of the first date on which the individual, person or group becomes required to or does report its ownership on Schedule 13D.

        3.    Termination and Change in Control.    Except as set forth in Sections 6, 7, and 10.A, no benefits shall be payable under this Agreement unless there is a change in control of the Company, your employment is terminated, and your termination is a Qualifying Termination or a Qualifying Early Termination. Your termination is a Qualifying Termination if a change in control of the Company occurs and your employment subsequently terminates during the term of this Agreement, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. Your termination is a Qualifying Early Termination if a potential change in control of the Company occurs, your employment terminates during the pendency of the potential change in control of the company and during the term of this Agreement, the termination is in contemplation of a change in control of the Company, and an actual change in control of the Company occurs within one year following your termination, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. A transfer of your employment from the Company to one of its subsidiaries, from a subsidiary to the Company, or between subsidiaries is not a termination of employment for purposes of this Agreement.

        A.    Disability.    If, as a result of your incapacity due to physical or mental illness or injury, you are absent from your duties with the Company on a full-time basis for 6 consecutive months, and within 30 days after written notice of termination is given you have not 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" means termination upon (1) your willful and continued failure to substantially perform your duties with the Company (other than failure resulting from your incapacity due to physical or mental illness or injury, or 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) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Section 3.B, 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 act 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:

a resolution is 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 this Section 3.B and specifying the particulars of your conduct in detail, and

a copy of this resolution is delivered to you.

        All decisions by the Company regarding termination for Cause must be supported by clear and convincing evidence.

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        C.    Good Reason.    "Good Reason" means any of the following, if occurring without your express written consent after a change in control of the Company:

        (1)   The assignment to you of any duties inconsistent with your responsibilities as an Executive Officer of the Company or a significant adverse alteration in your responsibilities from those in effect immediately prior to the change in control of the Company;

        (2)   A reduction by the Company in your annual base salary as in effect on the date of this Agreement (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;

        (3)   A reduction by the Company in your target annual cash incentive as in effect immediately prior to the change in control of the Company;

        (4)   The Company's requiring you to be based anywhere located more than 50 miles from the primary office location at which you were based immediately prior to the change in control of the Company, except for required travel on the Company's business to an extent substantially consistent with your business travel obligations as existed immediately prior to the change in control;

        (5)   The failure by the Company to continue to provide you with benefits and compensation, including paid time off, welfare benefits, short-term incentives, pension, life insurance, healthcare, and disability plans, no less favorable in the aggregate than the benefits and compensation available to you immediately prior to the change in control of the Company;

        (6)   The failure by the Company to continue to provide you with long-term equity incentives in a target dollar amount no less favorable than the target dollar amount of long-term equity incentives available to you immediately prior to the change in control of the Company, except for across-the-board long-term equity incentive reductions similarly affecting all executives of the Company and all executives of any Person 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 10; or

        (8)   Any purported termination of your employment by the Company which is not effected pursuant to a Board resolution satisfying the requirements of Section 3.B or a Notice of Termination satisfying the requirements of Section 3.D, as applicable. Furthermore, no such purported termination of your employment shall be effective for purposes of this Agreement.

        For purposes of determining whether a Qualifying Early Termination has occurred, references to a change in control of the Company in this Section 3.C shall be deemed to refer to any potential change in control of the Company pending at the time of the event or circumstance alleged to be Good Reason.

        Your right to terminate your employment pursuant to this Section 3.C shall not be affected by your incapacity due to physical or mental illness or injury. 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.

        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 according to Section 11. A "Notice of Termination" must indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision.

        E.    Date of Termination.    "Date of Termination" means:

        (1)   if your employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during that 30-day period);

        (2)   if your employment is terminated for Cause, for Good Reason, or for any other reason other than Disability or a Qualifying Early Termination, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days from the date the Notice of Termination is given, and in the case of a termination for Good Reason shall not be more than 60 days from the date the Notice of Termination is given);

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        (3)   if your termination is a Qualifying Early Termination, the later of the date determined according to subsection (1) or (2) above, or the date upon which the actual change in control of the Company occurs; or

        (4)   if a dispute exists regarding the termination, 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 having expired and no appeal having been perfected), or, if earlier, the last day of the term of this Agreement. This subsection (4) shall apply only if (i) the party receiving the Notice of Termination notifies the other party within 30 days that a dispute exists, (ii) the notice of dispute is made in good faith, and (iii) the party giving the notice of dispute pursues resolution of the dispute with reasonable diligence. While any dispute is pending under this subsection (4), the Company will continue to pay you your full compensation in effect when the Notice of Termination 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 and programs in which you were participating when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, or if earlier, the last day of the term of this Agreement. Amounts paid under this subsection (4) 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 for Cause or Other than for Good Reason.    If your employment is 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 those payments are due, and the Company shall have no further obligations to you under this Agreement.

        5.    Compensation upon a Qualifying Termination or Qualifying Early Termination.    If your employment is terminated pursuant to a Qualifying Termination or Qualifying Early Termination, then you shall be entitled to the benefits provided in this Section 5.

        A.    Not later than the 15th day following the date the release required pursuant to Section 8.E becomes effective, the Company will pay you the following amounts:

        (1)   Your full base salary through the Date of Termination (or, in the case of a Qualifying Early Termination, through your last day of employment if such amount has not already been paid) 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 (whether or not any reduction is asserted as Good Reason), plus all other amounts to which you are entitled under any compensation plan of the Company at the time those payments are due (in each case, to the extent not already paid);

        (2)   A lump sum severance payment equal to (i) [3 times—for CEO][2 times—for presidents and EVPs][1 times—for SVPs] the sum of (a) 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 (whether or not any reduction is asserted as Good Reason) ("Base Salary"), plus (b) the Target Bonus. For purposes of this section 5.A(2), "Target Bonus" means (i) if the Date of Termination occurs prior to March 1, 2008, an amount equal to 80% of your target annual incentive for the year in which the Date of Termination occurs (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason), and (ii) if the Date of Termination occurs on or after March 1, 2008, an amount equal to the average annual incentive earned by you in the three completed years preceding the Date of Termination, provided that in either case, if you have earned fewer than three annual bonuses prior to the Date of Termination, Target Bonus means your target annual incentive for the year in which occurs the Date of Termination (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason); and

        (3)   To the extent not already paid, a lump sum amount equal to the greater of the value of your unused and accrued time off, less any advanced time off, in accordance with the Company's Your Time Off Policy (or any successor policy) as in effect immediately prior to the change in control of the Company or as in effect on the Date of Termination (or, in the case of a Qualifying Early Termination, as in effect on your last day of employment), whichever is more favorable to you.

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        B.    With respect to each benefit listed below, the Company shall, at its sole discretion, comply with either subsection (1) or (2) below:

        (1)   for a [24-month—for CEO][12-month—for presidents, EVPs and SVPs] period following the Date of Termination, maintain, in full force and effect for your continued benefit at substantially the same cost to you as determined immediately prior to your last day of employment, all life (other than the Company's Executive Life Insurance Program, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and financial counseling services in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination, or

        (2)   not later than the 15th day following the date the release required pursuant to Section 8.D becomes effective, pay you a lump sum payment equal to [24 for CEO][12 for presidents, EVPs and SVPs] times 150% of the sum of (a) the monthly group premium, less the amount of employee contributions, for the life (other than executive life, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and (b) the monthly allowance for financial counseling services, in each case in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination.

        If the Company chooses to provide the benefits indicated under subsection (1), and your continued participation (or a particular type of coverage) is not possible or becomes impossible under the general terms and provisions of the plans, programs or arrangements, then the Company shall arrange to provide you with benefits, at substantially the same cost to you as determined immediately prior to your last day of employment, which are substantially similar to those which you are entitled to receive under such plans, programs and arrangements.

        Notwithstanding the foregoing, the Company shall continue to pay the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) for [twenty-four for CEO][twelve for presidents, EVPs and SVPs] months following the Date of Termination.

        For a Qualifying Early Termination, any portion of the period commencing on the day after your last day of employment through and including the Date of Termination during which the Company provides you with benefit continuation or pays the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) will apply toward the payment period required above.

        C.    You shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 5.A 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 5.B(1) shall be reduced to the extent comparable benefits are actually received by you during the [12-month][24-month] period following your termination, and you must report any such benefits actually received by you to the Company.

        6.    Legal Fees.    The Company shall pay to you all reasonable legal fees and expenses which you incur following a change in control of the Company (a) as a result of contesting or disputing your termination, (b) in seeking in good faith to obtain or enforce any right or benefit provided by this Agreement (provided, in the case of clauses (a) and (b) that you shall refund all such fees and expenses to the Company should you not substantially prevail in the applicable proceeding), or (c) in connection with any tax audit or proceeding to the extent applicable to the application of Section 4999 of the Internal Revenue Code of 1986 as amended, to any payment or benefit provided under this Agreement. This payment shall be made within 10 business days after the Company receives your written request for payment accompanied by reasonable evidence of fees and expenses incurred.

        7.    Excise Tax Provisions.    

        A.    Notwithstanding any provision of this Agreement to the contrary (but except as provided in the following sentence), if you would receive payments under this Agreement or under any other plan, program, or policy sponsored by the Company which relate to a change in control of the Company (the "Total Payments") and which are determined by the Company to be subject to excise tax under Section 4999 of the Code (the "Excise Tax");

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then 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 taxes, employment taxes and Excise Tax upon the Gross-up Payment, shall be equal to the Total Payments. Notwithstanding the preceding sentence, if it shall be determined that the Total Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to you such that the receipt of Total Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to you, and the portion of the Total Payments that are payable hereunder shall be reduced such that the Total Payments equal the Reduced Amount. The reduction of the amounts payable hereunder shall be made in consultation with you and in such a manner as to maximize the value of all Total Payments actually made you.

        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, the 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, the 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 state and local taxes.

        C.    The Company will pay you the amount of the Gross-up Payment as soon as the amount can be determined, but in no event later than the 30th day after the Date of Termination. 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 the payments were calculated and the basis for the calculations including, without limitation, any opinions or other advice the Company has received from its tax counsel, its auditor, or other advisors or consultants (and any opinions or advice which are in writing shall be attached to the statement).

        D.    If the Excise Tax is finally determined to be less than the amount taken into account in calculating the Gross-up Payment, you shall repay to the Company, within 5 business days following the time that the amount of the reduction in Excise Tax is finally determined, the portion of the Gross-up Payment attributable to the 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). If the Excise Tax is determined, for any reason, to exceed the amount taken into account in calculating the Gross-up Payment, the Company shall make an additional Gross-up Payment in respect of the excess (including any interest, penalties, or additions payable by you with respect to the Excise Tax) within 5 business days following the time that the amount of the 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.

        8.    Employee Covenants; Release.    

        A.    You agree that you will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of your assigned duties and for the benefit of the Company, either during the period of your employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which you obtained during your employment by the Company. This restriction will not apply to information that (i) was known to the public before its disclosure to you; (ii) becomes known to the public after disclosure to you through no wrongful act of yours; or (iii) you are required to disclose by applicable law, regulation or legal process (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information).

        B.    During your employment with the Company and for one year after your termination, you agree that you will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity,

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knowingly solicit, aid or induce any managerial level employee of the Company or any of its subsidiaries or affiliates to leave employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee.

        C.    You agree that during and after your employment with the Company you shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services. Notwithstanding the foregoing, (i) statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 8.C, and (ii) nothing in this Section 8.C shall in any way be interpreted to preclude or limit you from pursuing your legal rights or from otherwise communicating with governmental agencies pursuant to legislation or regulations permitting or requiring such communications.

        D.    For a period of 12 months after your termination of employment with the Company (or for a period of 12 months after a final judgment or injunction enforcing this covenant), you agree not to, directly as an employee or indirectly as a consultant or contractor, without the prior written consent of the Company, be employed in the same or similar capacity as you were employed by the Company immediately prior to termination of your employment, by another business entity or person engaged in the sale or distribution of office supplies, office furniture, computer consumables or related office products or services, in the Territory (as defined below). For purposes hereof, the Territory shall be all of [North America][Australasia].

        In agreeing to this restriction, you specifically acknowledge the substantial value to the Company of Confidential Information and your intimate knowledge of the Company's business and agrees that such constitutes goodwill and a protectable interest of the Company.

        E.    Notwithstanding anything in this Agreement to the contrary, the payment to you of the benefits provided in Section 5 is conditioned upon your execution and delivery to the Company (and your failure to revoke) a customary general release of claims.

        9.    Deferred Compensation and Benefits Trust.    The Company has established a Deferred Compensation and Benefits Trust, and shall comply with the terms of that Trust.

        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, the assets of which nevertheless will be subject to claims of the Company's creditors in the event of bankruptcy or insolvency.

        10.    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 succession had taken place. Failure of the Company to obtain an assumption and agreement prior to the effectiveness of any succession which occurs during your employment with the Company and the term of this Agreement 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 experience a Qualifying Termination or Qualifying Early Termination, except that for purposes of this Section 10.A, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean OfficeMax Incorporated and any successor to its business and/or assets which assumes and agrees to perform this Agreement.

        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 under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, 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, provided that the Company is entitled to seek equitable relief in a court of competent jurisdiction in connection with the enforcement of the covenants set forth in Section 8. Under no circumstance will a violation

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or alleged violation of those covenants entitle the Company to withhold or offset a payment or benefit due under this Agreement.

        11.    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 with this Section 11, except that notice of change of address shall be effective only upon receipt.

        12.    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 an officer designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the 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 of this Agreement 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 those sections. If the obligations of the Company under Sections 4, 5, 6 and 7 arise prior to the expiration of the term of this Agreement, those obligations shall survive the expiration of the term.

        13.    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.

        14.    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.

        15.    No Guaranty of Employment.    Neither this Agreement nor any action taken under this Agreement shall be construed as giving you a right to be retained as an employee or an executive officer of the Company.

        16.    Governing Law.    This Agreement shall be governed by and construed in accordance with Delaware law.

        17.    Other Benefits.    Any payments made to you pursuant to this Agreement 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, except that payments made to you pursuant to Section 5.A(2) shall be in lieu of any severance payment to which you would otherwise be entitled under any severance pay 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,

 


OFFICEMAX INCORPORATED


 


By


 


    



 

 

 

Name

 

    


 

 

 

Title

 

    


 


Agreed to this [    ] day of [                             ], 200  


 


    


[Name of Officer]


 

9


 

Exhibit 10.37

[As amended through March 11, 2005]

CONFIDENTIAL

(Date)

[                                                 ]

Dear [                             ]:

        OfficeMax Incorporated (the "Company") considers it essential to the best interests of its stockholders to foster the continuous employment of key management personnel in the event a change in control of the Company is threatened or occurs. In this regard, the Board of Directors of the Company (the "Board") recognizes that the possibility of a change in control may exist and that the uncertainty and questions which this possibility may raise among management could 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 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, the Company agrees that you shall receive the severance benefits set forth in this letter agreement (this "Agreement") if your employment with the Company is terminated before or after a "change in control of the Company" (as defined in Section 2) 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                        .] This [Agreement][amendment] is effective on the date hereof and shall continue in effect through [    ]; provided that on January 1, [2006] and on each January 1 thereafter, the term of this Agreement shall automatically be extended so as to terminate on the 2nd 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. However, if a change in control of the Company occurs during the term of this Agreement, this Agreement shall continue in effect for a period of 24 months after the month in which the change in control of the Company occurred.

        2.    Change in Control.    

        A.    A "change in control of the Company" shall be deemed to have occurred if an event set forth in any one of the following paragraphs occurs:

        (1)   Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 25% 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; provided, however, if such Person acquires securities directly from the Company, such securities shall not be included unless such Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (2)   The individuals who, on any date following the date hereof, constitute the Board (the "Incumbent Board Members"), cease, in any two year period following such date, to represent at least a majority of the number of directors then serving, provided, however, that any new director whose appointment or election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least 2/3rds of the Incumbent Board Members shall be deemed for purposes hereof to be Incumbent Board Members, unless such director's 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; or

        (3)   The consummation of a merger or consolidation of the Company (or any direct or indirect subsidiary of the Company) with any other corporation other than (i) a merger or consolidation which would

1


 

result in both (a) Incumbent Board Members continuing to constitute at least a majority of the number of directors of the combined entity immediately following consummation of such merger or consolidation, and (b) 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) more than 50% 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 with the approval of the Board 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 representing 25% 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; provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 25% of the Company's then outstanding shares of common stock or the combined voting power of the Company's then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Subsection 2.A(3)(i) of this Agreement shall not be deemed to be a change in control of the Company; or

        (4)   The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of 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, more than 50% 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.

        A transaction described in Section 2.A(3) which is not a change in control of the Company solely due to the operation of Subsection 2.A(3)(i)(a) will nevertheless constitute a change in control of the Company if the Board determines, prior to the consummation of the transaction, that there is not a reasonable assurance that, for at least two years following the consummation of the transaction, at least a majority of the members of the board of directors of the surviving entity or any parent will continue to consist of Continuing Directors and individuals whose election or nomination for election by the shareholders of the surviving entity or any parent would be approved by a vote of at least two-thirds of the Continuing Directors and individuals whose election or nomination for election has previously been so approved.

        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, provided that securities acquired directly from the Company shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from the Company, exceed 9.5% of the Company's then outstanding shares of common stock 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

2


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 6 months from the occurrence of the first 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 "Person" 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, (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, or (5) an individual, entity or group that is permitted to and does report its beneficial ownership of securities of the Company on Schedule 13G under the Exchange Act (or any successor schedule), provided that if the individual, entity or group later becomes required to or does report its ownership of Company securities on Schedule 13D under the Exchange Act (or any successor schedule), then the individual, person or group shall be deemed to be a Person for purposes of this Agreement as of the first date on which the individual, person or group becomes required to or does report its ownership on Schedule 13D.

        3.    Termination and Change in Control.    Except as set forth in Sections 6, 7, and 10.A, no benefits shall be payable under this Agreement unless there is a change in control of the Company, your employment is terminated, and your termination is a Qualifying Termination or a Qualifying Early Termination. Your termination is a Qualifying Termination if a change in control of the Company occurs and your employment subsequently terminates during the term of this Agreement, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. Your termination is a Qualifying Early Termination if a potential change in control of the Company occurs, your employment terminates during the pendency of the potential change in control of the company and during the term of this Agreement, the termination is in contemplation of a change in control of the Company, and an actual change in control of the Company occurs within one year following your termination, unless your termination is because of your death, by the Company for Cause or Disability, or by you other than for Good Reason. A transfer of your employment from the Company to one of its subsidiaries, from a subsidiary to the Company, or between subsidiaries is not a termination of employment for purposes of this Agreement.

        A.    Disability.    If, as a result of your incapacity due to physical or mental illness or injury, you are absent from your duties with the Company on a full-time basis for 6 consecutive months, and within 30 days after written notice of termination is given you have not 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" means termination upon (1) your willful and continued failure to substantially perform your duties with the Company (other than failure resulting from your incapacity due to physical or mental illness or injury, or 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) your willful engagement in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Section 3.B, 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 act 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:

a resolution is 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 this Section 3.B and specifying the particulars of your conduct in detail, and

a copy of this resolution is delivered to you.

        All decisions by the Company regarding termination for Cause must be supported by clear and convincing evidence.

3


        C.    Good Reason.    "Good Reason" means any of the following, if occurring without your express written consent after a change in control of the Company:

        (1)   The assignment to you of any duties inconsistent with your responsibilities as an Executive Officer of the Company or a significant adverse alteration in your responsibilities from those in effect immediately prior to the change in control of the Company;

        (2)   A reduction by the Company in your annual base salary as in effect on the date of this Agreement (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;

        (3)   A reduction by the Company in your target annual cash incentive as in effect immediately prior to the change in control of the Company;

        (4)   The Company's requiring you to be based anywhere located more than 50 miles from the primary office location at which you were based immediately prior to the change in control of the Company, except for required travel on the Company's business to an extent substantially consistent with your business travel obligations as existed immediately prior to the change in control;

        (5)   The failure by the Company to continue to provide you with benefits and compensation, including paid time off, welfare benefits, short-term incentives, pension, life insurance, healthcare, and disability plans, no less favorable in the aggregate than the benefits and compensation available to you immediately prior to the change in control of the Company;

        (6)   The failure by the Company to continue to provide you with long-term equity incentives in a target dollar amount no less favorable than the target dollar amount of long-term equity incentives available to you immediately prior to the change in control of the Company, except for across-the-board long-term equity incentive reductions similarly affecting all executives of the Company and all executives of any Person 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 10; or

        (8)   Any purported termination of your employment by the Company which is not effected pursuant to a Board resolution satisfying the requirements of Section 3.B or a Notice of Termination satisfying the requirements of Section 3.D, as applicable. Furthermore, no such purported termination of your employment shall be effective for purposes of this Agreement.

        For purposes of determining whether a Qualifying Early Termination has occurred, references to a change in control of the Company in this Section 3.C shall be deemed to refer to any potential change in control of the Company pending at the time of the event or circumstance alleged to be Good Reason.

        Your right to terminate your employment pursuant to this Section 3.C shall not be affected by your incapacity due to physical or mental illness or injury. 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.

        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 according to Section 11. A "Notice of Termination" must indicate the specific termination provision in this Agreement relied upon and set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the indicated provision.

        E.    Date of Termination.    "Date of Termination" means:

        (1)   if your employment is terminated for Disability, 30 days after the Notice of Termination is given (provided that you have not returned to the performance of your duties on a full-time basis during that 30-day period);

        (2)   if your employment is terminated for Cause, for Good Reason, or for any other reason other than Disability or a Qualifying Early Termination, the date specified in the Notice of Termination (which, in the case of a termination for Cause shall not be less than 30 days from the date the Notice of Termination is given, and in the case of a termination for Good Reason shall not be more than 60 days from the date the Notice of Termination is given);

4


 

        (3)   if your termination is a Qualifying Early Termination, the later of the date determined according to subsection (1) or (2) above, or the date upon which the actual change in control of the Company occurs; or

        (4)   if a dispute exists regarding the termination, 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 having expired and no appeal having been perfected), or, if earlier, the last day of the term of this Agreement. This subsection (4) shall apply only if (i) the party receiving the Notice of Termination notifies the other party within 30 days that a dispute exists, (ii) the notice of dispute is made in good faith, and (iii) the party giving the notice of dispute pursues resolution of the dispute with reasonable diligence. While any dispute is pending under this subsection (4), the Company will continue to pay you your full compensation in effect when the Notice of Termination 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 and programs in which you were participating when the Notice of Termination giving rise to the dispute was given, until the dispute is finally resolved, or if earlier, the last day of the term of this Agreement. Amounts paid under this subsection (4) 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 for Cause or Other than for Good Reason.    If your employment is 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 those payments are due, and the Company shall have no further obligations to you under this Agreement.

        5.    Compensation upon a Qualifying Termination or Qualifying Early Termination.    If your employment is terminated pursuant to a Qualifying Termination or Qualifying Early Termination, then you shall be entitled to the benefits provided in this Section 5.

        A.    Not later than the 15th day following the date the release required pursuant to Section 8.E becomes effective, the Company will pay you the following amounts:

        (1)   Your full base salary through the Date of Termination (or, in the case of a Qualifying Early Termination, through your last day of employment if such amount has not already been paid) 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 (whether or not any reduction is asserted as Good Reason), plus all other amounts to which you are entitled under any compensation plan of the Company at the time those payments are due (in each case, to the extent not already paid);

        (2)   A lump sum severance payment equal to (i) [3 times—for CEO][2 times—for presidents and EVPs][1 times—for SVPs] the sum of (a) 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 (whether or not any reduction is asserted as Good Reason) ("Base Salary"), plus (b) the Target Bonus. For purposes of this section 5.A(2), "Target Bonus" means (i) if the Date of Termination occurs prior to March 1, 2008, an amount equal to 80% of your target annual incentive for the year in which the Date of Termination occurs (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason), and (ii) if the Date of Termination occurs on or after March 1, 2008, an amount equal to the average annual incentive earned by you in the three completed years preceding the Date of Termination, provided that in either case, if you have earned fewer than three annual bonuses prior to the Date of Termination, Target Bonus means your target annual incentive for the year in which occurs the Date of Termination (or, in the case of a Qualifying Early Termination, your last day of employment) without regard to any reduction in the target incentive that would constitute Good Reason (whether or not any reduction is asserted as Good Reason); and

        (3)   To the extent not already paid, a lump sum amount equal to the greater of the value of your unused and accrued time off, less any advanced time off, in accordance with the Company's Your Time Off Policy (or any successor policy) as in effect immediately prior to the change in control of the Company or as in effect on the Date of Termination (or, in the case of a Qualifying Early Termination, as in effect on your last day of employment), whichever is more favorable to you.

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        B.    With respect to each benefit listed below, the Company shall, at its sole discretion, comply with either subsection (1) or (2) below:

        (1)   for a [24-month—for CEO][12-month—for presidents, EVPs and SVPs] period following the Date of Termination, maintain, in full force and effect for your continued benefit at substantially the same cost to you as determined immediately prior to your last day of employment, all life (other than the Company's Executive Life Insurance Program, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and financial counseling services in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination, or

        (2)   not later than the 15th day following the date the release required pursuant to Section 8.D becomes effective, pay you a lump sum payment equal to [24 for CEO][12 for presidents, EVPs and SVPs] times 150% of the sum of (a) the monthly group premium, less the amount of employee contributions, for the life (other than executive life, if applicable), disability, accident and healthcare insurance plans, programs, or arrangements, and (b) the monthly allowance for financial counseling services, in each case in which you were participating immediately prior to the change in control of the Company (or in the case of a Qualifying Early Termination, immediately prior to your last day of employment), or, if more favorable to you, the plans, programs, or arrangements in which you were participating immediately prior to the Date of Termination.

        If the Company chooses to provide the benefits indicated under subsection (1), and your continued participation (or a particular type of coverage) is not possible or becomes impossible under the general terms and provisions of the plans, programs or arrangements, then the Company shall arrange to provide you with benefits, at substantially the same cost to you as determined immediately prior to your last day of employment, which are substantially similar to those which you are entitled to receive under such plans, programs and arrangements.

        Notwithstanding the foregoing, the Company shall continue to pay the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) for [twenty-four for CEO][twelve for presidents, EVPs and SVPs] months following the Date of Termination.

        For a Qualifying Early Termination, any portion of the period commencing on the day after your last day of employment through and including the Date of Termination during which the Company provides you with benefit continuation or pays the Company-paid premium under the Company's Executive Life Insurance Program (or a successor plan) will apply toward the payment period required above.

        C.    In addition to the aggregate retirement benefits to which you may be entitled under the Company's qualified pension plan, the Company's Supplemental Pension Plan, any other nonqualified pension agreement or arrangement (excluding the Company's Supplemental Early Retirement Plan for Executive Officers (the "SERP")), or any successor plans, the Company shall pay you amounts equal to (1), (2), (3), or (4), whichever is applicable:

        (1)   If you have satisfied the service, but not the age, requirements of the SERP, as in effect immediately prior to the change in control of the Company, you shall receive a monthly benefit, commencing on your 55th birthday equal to the benefit to which you would have been entitled under the SERP, 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

        (2)   If you have satisfied the age, but not the service, requirement of the SERP, 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 SERP, 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

        (3)   If you have satisfied neither the age nor the service requirements of the SERP, as in effect immediately prior to the change in control of the Company, you shall receive a monthly benefit, commencing on your 55th birthday equal to the benefit to which you would have been entitled under the

6


 

SERP, 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

        (4)   If you have satisfied both the age and the service requirements of the SERP, as in effect immediately before the change in control of the Company, you shall receive the benefits to which you are entitled under the terms of the SERP.

        The benefits under this Section 5.C 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 SERP as in effect immediately prior to the change in control of the Company.

        For purposes of this Section 5.C, with respect to a Qualifying Early Termination, references to the terms of the SERP as in effect immediately prior to a change in control of the Company shall mean the terms of the SERP as in effect immediately prior to your last day of employment.

        D.    You shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 5.A or 5.C 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 5.B(1) shall be reduced to the extent comparable benefits are actually received by you during the [12-month][24-month] period following your termination, and you must report any such benefits actually received by you to the Company.

        6.    Legal Fees.    The Company shall pay to you all reasonable legal fees and expenses which you incur following a change in control of the Company (a) as a result of contesting or disputing your termination, (b) in seeking in good faith to obtain or enforce any right or benefit provided by this Agreement (provided, in the case of clauses (a) and (b) that you shall refund all such fees and expenses to the Company should you not substantially prevail in the applicable proceeding), or (c) in connection with any tax audit or proceeding to the extent applicable to the application of Section 4999 of the Internal Revenue Code of 1986 as amended, to any payment or benefit provided under this Agreement. This payment shall be made within 10 business days after the Company receives your written request for payment accompanied by reasonable evidence of fees and expenses incurred.

        7.    Excise Tax Provisions.    

        A.    Notwithstanding any provision of this Agreement to the contrary (but except as provided in the following sentence), if you would receive payments under this Agreement or under any other plan, program, or policy sponsored by the Company which relate to a change in control of the Company (the "Total Payments") and which are determined by the Company to be subject to excise tax under Section 4999 of the Code (the "Excise Tax"); then 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 taxes, employment taxes and Excise Tax upon the Gross-up Payment, shall be equal to the Total Payments. Notwithstanding the preceding sentence, if it shall be determined that the Total Payments do not exceed 110% of the greatest amount (the "Reduced Amount") that could be paid to you such that the receipt of Total Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to you, and the portion of the Total Payments that are payable hereunder shall be reduced such that the Total Payments equal the Reduced Amount. The reduction of the amounts payable hereunder shall be made in consultation with you and in such a manner as to maximize the value of all Total Payments actually made to you.

        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, the 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, the 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

7


 

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 state and local taxes.

        C.    The Company will pay you the amount of the Gross-up Payment as soon as the amount can be determined, but in no event later than the 30th day after the Date of Termination. 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 the payments were calculated and the basis for the calculations including, without limitation, any opinions or other advice the Company has received from its tax counsel, its auditor, or other advisors or consultants (and any opinions or advice which are in writing shall be attached to the statement).

        D.    If the Excise Tax is finally determined to be less than the amount taken into account in calculating the Gross-up Payment, you shall repay to the Company, within 5 business days following the time that the amount of the reduction in Excise Tax is finally determined, the portion of the Gross-up Payment attributable to the 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). If the Excise Tax is determined, for any reason, to exceed the amount taken into account in calculating the Gross-up Payment, the Company shall make an additional Gross-up Payment in respect of the excess (including any interest, penalties, or additions payable by you with respect to the Excise Tax) within 5 business days following the time that the amount of the 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.

        8.    Employee Covenants; Release.    

        A.    You agree that you will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of your assigned duties and for the benefit of the Company, either during the period of your employment or at any time thereafter, any nonpublic, proprietary or confidential information, knowledge or data relating to the Company, any of its subsidiaries, affiliated companies or businesses, which you obtained during your employment by the Company. This restriction will not apply to information that (i) was known to the public before its disclosure to you; (ii) becomes known to the public after disclosure to you through no wrongful act of yours; or (iii) you are required to disclose by applicable law, regulation or legal process (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at its expense in seeking a protective order or other appropriate protection of such information).

        B.    During your employment with the Company and for one year after your termination, you agree that you will not, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, knowingly solicit, aid or induce any managerial level employee of the Company or any of its subsidiaries or affiliates to leave employment in order to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or knowingly take any action to materially assist or aid any other person, firm, corporation or other entity in identifying or hiring any such employee.

        C.    You agree that during and after your employment with the Company you shall not make any public statements that disparage the Company, its respective affiliates, employees, officers, directors, products or services. Notwithstanding the foregoing, (i) statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 8.C, and (ii) nothing in this Section 8.C shall in any way be interpreted to preclude or limit you from pursuing your legal rights or from otherwise communicating with governmental agencies pursuant to legislation or regulations permitting or requiring such communications.

        D.    For a period of 12 months after your termination of employment with the Company (or for a period of 12 months after a final judgment or injunction enforcing this covenant), you agree not to, directly as an employee or indirectly as a consultant or contractor, without the prior written consent of the Company, be employed in the same or similar capacity as you were employed by the Company immediately prior to termination of your employment, by another business entity or person engaged in the sale or distribution of

8


 

office supplies, office furniture, computer consumables or related office products or services, in the Territory (as defined below). For purposes hereof, the Territory shall be all of [North America][Australasia].

        In agreeing to this restriction, you specifically acknowledge the substantial value to the Company of Confidential Information and your intimate knowledge of the Company's business and agrees that such constitutes goodwill and a protectable interest of the Company.

        E.    Notwithstanding anything in this Agreement to the contrary, the payment to you of the benefits provided in Section 5 is conditioned upon your execution and delivery to the Company (and your failure to revoke) a customary general release of claims.

        9.    Deferred Compensation and Benefits Trust.    The Company has established a Deferred Compensation and Benefits Trust, and shall comply with the terms of that Trust.

        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, the assets of which nevertheless will be subject to claims of the Company's creditors in the event of bankruptcy or insolvency.

        10.    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 succession had taken place. Failure of the Company to obtain an assumption and agreement prior to the effectiveness of any succession which occurs during your employment with the Company and the term of this Agreement 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 experience a Qualifying Termination or Qualifying Early Termination, except that for purposes of this Section 10.A, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean OfficeMax Incorporated and any successor to its business and/or assets which assumes and agrees to perform this Agreement.

        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 under this Agreement if you had continued to live, all such amounts, unless otherwise provided in this Agreement, 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, provided that the Company is entitled to seek equitable relief in a court of competent jurisdiction in connection with the enforcement of the covenants set forth in Section 8. Under no circumstance will a violation or alleged violation of those covenants entitle the Company to withhold or offset a payment or benefit due under this Agreement.

        11.    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 with this Section 11, except that notice of change of address shall be effective only upon receipt.

        12.    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 an officer designated by the Board. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the 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 of this Agreement 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 those sections. If the obligations of the

9


 

Company under Sections 4, 5, 6 and 7 arise prior to the expiration of the term of this Agreement, those obligations shall survive the expiration of the term.

        13.    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.

        14.    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.

        15.    No Guaranty of Employment.    Neither this Agreement nor any action taken under this Agreement shall be construed as giving you a right to be retained as an employee or an executive officer of the Company.

        16.    Governing Law.    This Agreement shall be governed by and construed in accordance with Delaware law.

        17.    Other Benefits.    Any payments made to you pursuant to this Agreement 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, except that payments made to you pursuant to Section 5.A(2) shall be in lieu of any severance payment to which you would otherwise be entitled under any severance pay policy of the Company and payments made to you pursuant to Section 5.C shall be in lieu of any payments under the SERP.

        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,

 


OFFICEMAX INCORPORATED


 


By


 


    



 

 

 

Name

 

    


 

 

 

Title

 

    


 


Agreed to this [    ] day of [                             ], 200  


 


    


[Name of Officer]


 

10


 

 

 

 

 

EX-10.7 6 a2188889zex-10_7.htm EX-10.7

Exhibit 10.7

 

FORM OF AMENDMENT TO EMPLOYMENT AGREEMENT

 

THIS AMENDMENT to the Employment Agreement by and between OfficeMax Incorporated, a Delaware corporation (the “Company”), and Sam Duncan (the “Executive”), dated April 18, 2005 (the “Agreement”) is made as of                       , 2008.

 

W I T N E S S E T H:

 

WHEREAS, the Executive is currently employed by Company as Chairman of the Board and Chief Executive Officer;

 

WHEREAS, Executive and Company originally entered into the Agreement dated April 18, 2005;

 

WHEREAS, the parties now desire to amend the Agreement solely to comply with Section 409A of the Internal Revenue Code of 1986, as amended, with such changes effective January 1, 2009.

 

NOW, THEREFORE, it is agreed that the following amendments are effective as of January 1, 2009:

 

1.             Section 4(c) of the Agreement is amended in its entirety to read as follows:

 

“(c)         GOOD  REASON.

 

(i)            The Executive may terminate employment for Good Reason or without Good Reason. ‘Good Reason’ shall mean, without the Executive’s consent, (a) a reduction in the Executive’s title or the assignment to him of any duties inconsistent in any material respect with his position, authority, duties or responsibilities as contemplated by this Agreement; (b) any material failure by the Company to comply with any of the provisions of this Agreement; (c) a material reduction in the Annual Base Salary (other than in connection with an across the board reduction similarly affecting all of the Company’s executive officers); (d) a material reduction in the Executive’s target annual incentive award (other than in connection with an across the board reduction affecting all of the Company’s executive officers or a reduction due to a demonstrable change in comparable market data) or (d) a delivery by the Company of a notice of non-renewal as contemplated by Section 1.

 

(ii)           A termination of employment by the Executive for Good Reason shall be effectuated by giving the Company written notice (“Notice of Termination for

 

1



 

Good Reason”) of the termination within ninety (90) days of the initial existence of the condition, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies.  A termination of employment by the Executive for Good Reason shall be effective thirty (30) days following the date when the Notice of Termination for Good Reason is given, unless the event constituting Good Reason is remedied by the Company.

 

(iii)          A termination of the Executive’s employment by the Executive without Good Reason shall be effected by giving the Company 30 days written notice of the termination.”

 

2.             A new paragraph (d) is added at the end of Section 5 of the Agreement to read as follows:

 

“(d)         SECTION 409A PROVISION.  Notwithstanding anything in this Agreement to the contrary, in all cases, if the Executive is a “specified employee” of the Company for purposes of Section 409A of the Code at the time of his separation from service (as determined pursuant to Section 409A of the Code) with the Company and if an exception under Section 409A of the Code does not apply, any severance payment(s) that are otherwise scheduled to be paid immediately after the Executive’s separation from service shall be delayed in their entirety by 6 months from the date of his separation from service.  On the first regularly scheduled payroll date following the 6-month anniversary of the date of the Executive’s separation from service, the Company shall pay the Executive a lump sum payment equal to the severance payment(s) that he would otherwise have received through such payroll date.  The Company believes such delay in payment shall prevent the application of adverse taxation to the Executive under Section 409A of the Code.  However, the Company does not guarantee such tax treatment and the Executive is strongly encouraged to consult his own tax, financial and legal advisors regarding the effects of this Agreement on his personal tax situation.

 

*   *   *

 

2



 

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of its Board, the Company has caused this Amendment to be executed in its name on its behalf, all as of the day and year first above written.

 

 

 

OFFICEMAX INCORPORATED

 

 

 

 

 

 

 

 

By:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

 

3



EX-99.3 5 a09-5787_1ex99d3.htm EX-99.3

Exhibit 99.3

 

WAIVER AND RATIFICATION

 

THIS WAIVER AND RATIFICATION is entered into as of this 12th day of February, 2009, by and between OfficeMax Incorporated, a Delaware corporation (the “Company”), and Sam Duncan (“Duncan”).

 

WHEREAS, Duncan and the Company are parties to an Employment Agreement dated April 14, 2005 (the “Agreement”); and

 

WHEREAS, in 2008 and 2009 Duncan agreed to waive one of the requirements of Section (3)(e) of the Agreement; and

 

WHEREAS, the parties now desire to formalize the terms of the waiver.

 

NOW, THEREFORE, in consideration of Duncan’s continued employment and other good and valuable consideration, the parties agree as follows:

 

1.  Waiver.  For 2008 and 2009 only, Duncan hereby waives the requirement in Section (3)(e) of the Agreement calling for the issuance of annual long-term incentive compensation awards with a present value (as determined by the Compensation Committee) approximately equal to 350% of Duncan’s then-current Annual Base Salary.  For 2008, the parties agreed upon an award with a then-present value of approximately 300% of Duncan’s Annual Base Salary, and for 2009 the parties agreed upon an award approximately equal to 146% of Duncan’s Annual Base Salary, which reductions are commensurate with reductions in annual long-term incentive compensation awards provided to other senior executives.

 

2.  Ratification.  To the extent the waiver of the 2008 grant referenced in Section 1 above was initially made orally, Duncan hereby ratifies and confirms such waiver, and except as waived herein the parties ratify and confirm that all other provisions of the Agreement shall remain in full force and effect, including the original provisions of Section (3)(e) of the Agreement for years subsequent to 2009.

 

3.  Defined Terms.  All capitalized terms not specifically defined in this Waiver and Ratification shall have the meanings set forth in the Agreement.

 

IN WITNESS WHEREOF, Duncan has hereunto set his hand and, pursuant to the authorization of its Board, the Company has caused this Amendment to be executed in its name on its behalf, all as of the day and year first above written.

 

OFFICEMAX INCORPORATED

 

By:

  /s/ Matthew R. Broad

 

/s/ Sam Duncan

Title:

    EVP

 

   Sam Duncan