Exhibit 10.2

 

AMENDMENT NO. 1 TO MANAGEMENT EQUITY AGREEMENT

 

THIS AMENDMENT NO. 1 TO MANAGEMENT EQUITY AGREEMENT (this “Agreement”) is made
and entered into as of February 20, 2009 and effective as of May 23, 2008, by
and between Forest Products Holdings, L.L.C., a Delaware limited liability
company (the “Company”) and the individual listed on the signature pages hereto
as the “2006 Employee Investor” (the “2006 Employee Investor”).

 

Pursuant to that certain Management Equity Agreement, dated as of April 3, 2006,
by and among the Company, the 2006 Employee Investor and the Investor (the
“Original Management Equity Agreement” and, as amended, modified, supplemented
or waived from time to time (including by this Agreement), the “Management
Equity Agreement”), the 2006 Employee Investor received the number of Series C
Common Units of the Company set forth under the 2006 Employee Investor’s name on
the signature pages attached hereto “Original Series C Common Units Received”.
Capitalized terms used, but not otherwise defined, herein shall have the
meanings given to such terms in the Original Management Equity Agreement.

 

The Company, the 2006 Employee Investor and the Investor are executing and
delivering this Agreement in order to provide for certain amendments,
modifications, supplements and waivers to the Original Management Equity
Agreement, as set forth in further detail herein.

 

NOW, THEREFORE. the parties hereto, in consideration of their mutual covenants
and agreements hereinafter set forth and intending to be legally bound hereby,
covenant and agree as follows:

 

1.             Certain Amendments.  By its execution and delivery hereof, each
of the Company, the Investor and the 2006 Employee Investor acknowledges and
agrees that Section 2(d)(iii) of the Original Management Equity Agreement is
hereby amended by replacing the word “quarterly” in the second sentence thereof
with “annually”.

 

2.             Certain Additional Amendments and Acknowledgments.

 

(a)           Each of the Company and the 2006 Employee Investor acknowledges
and agrees that, as of February 22, 2008, (x) a number of the 2006 Employee
Investor’s Original Series C Common Units Received equal to (i) 0.3145
multiplied by (ii) the 2006 Employee Investor’s Original Series C Common Units
Received (such product, for the 2006 Employee Investor, the 2006 Employee
Investor’s “2/22/08 Vested Series C Common Units”) were vested and are “Vested
Series C Common Units” and “Vested Units” for all purposes of the Management
Equity Agreement, (y) a number of the 2006 Employee Investor’s Original Series C
Common Units Received equal to (i) 0.6855 multiplied by (ii) the 2006 Employee
Investor’s Original Series C Common Units Received (such product, for the 2006
Employee Investor, the 2006 Employee Investor’s “2/22/08 Unvested

 

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Series C Common Units”) were not vested and are “Unvested Series C Common Units”
and “Unvested Units” for all purposes of the 2006 Employee Investor’s Management
Equity Agreement, and (z) the number of 2/22/08 Vested Series C Common Units and
2/22/08 Unvested Series C Common Units for the 2006 Employee Investor is set
forth underneath the 2006 Employee Investor’s name on the signature
page hereto.  Each of the Company and the 2006 Employee Investor agree that,
notwithstanding anything to the contrary in Section 2(c)(i),
Section 2(c)(ii) and Section 2(d) of the 2006 Employee Investor’s Management
Equity Agreement for the 2006 Employee Investor, but without otherwise limiting
the provisions of Section 2(c)(iii), Section 2(c)(iv) and Section 2(c)(v) of the
Management Equity Agreement with respect to such Remaining Time Vesting Series C
Common Units (as hereinafter defined) and without otherwise limiting the
provisions of Section 2(d) of the Management Equity Agreement with respect to
the Remaining Performance Vesting Series C Common Units, a number of 2/22/08
Unvested Series C Common Units determined by multiplying (A) 0.7294 by (B) the
2/22/08 Unvested Series C Common Units (such product, the “Remaining Time
Vesting Series C Common Units” (being 50% of the 2006 Employee Investor’s
Original Series C Common Units Received)) shall be “Time Vesting Class C Units”
and shall vest ratably on a daily basis during the period from February 22, 2008
through and including December 31, 2010; provided that, without limiting the
provisions of Section 2(c)(iv) of the Management Equity Agreement, if the 2006
Employee Investor ceases to be a full-time of the Company or any of its
Subsidiaries prior to December 31, 2010, the total number of Remaining Time
Vesting Series C Common Units that shall have vested in accordance with this
sentence shall be determined as the total number of Remaining Time Vesting
Series C Common Units multiplied by a fraction, the numerator of which is the
number of days from February 22, 2008 through and including the date of
termination and the denominator of which is the total number of days from
February 22, 2008 through and including December 31, 2010.  The 2006 Employee
Investor’s Remaining Time Vesting Series C Common Units are set forth underneath
the 2006 Employee Investor’s name on the signature page hereto.

 

(b)           Each of the Company and the 2006 Employee Investor acknowledges
and agrees that, as of February 22, 2008, a number of 2/22/08 Unvested Series C
Common Units determined as the excess of (i) the 2/22/08 Unvested Series C
Common Units minus (ii) the Remaining Time Vesting Series C Common Units (such
excess, the “Remaining Performance Vesting Series C Common Units” (being 18.55%
of the 2006 Employee Investor’s Original Series C Common Units  Received)) shall
be “Performance Vesting Series C Common Units” for all purposes of the 2006
Employee Investor’s Management Equity Agreement and shall vest, if at all, in
accordance with Section 2(d) of the Management Equity Agreement.  The 2006
Employee Investor’s Remaining Performance Vesting Series C Common Units are set
forth underneath the 2006 Employee Investor’s name on the signature page hereto.

 

(c)           Each of the Company and the 2006 Employee Investor acknowledges
and agrees that, as of February 22, 2008, that clause (b) of Section 2(d)(i) of
the Original Management Equity Agreement is, with respect to the 2006 Employee
Investor, amended by deleting “December 31, 2009” and replacing the same with
“December 31, 2010”.

 

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(d)           Each of the Company and the 2006 Employee Investor acknowledges
and agrees that Section 2(d)(iv) and Section 2(d)(v) of the Original Management
Equity Agreement are, with respect to the 2006 Employee Investor, amended and
restated as follows:

 

“(iv)        The Board shall provide to any 2006 Employee Investor, within 30
days of the 2006 Employee Investor’s written request, a reasonably detailed
description of the calculations and values employed in determining the IRR Fair
Value, IRR, Cash Inflows, Cash Outflows and Indebtedness, in each case to the
extent relevant to the calculation of IRR Fair Value and IRR for the 2006
Employee Investor.  The Board shall also provide to the 2006 Employee Investor
copies of or access to all related underlying financial statements, third-party
valuation reports and accounting and business records subject to the 2006
Employee Investor agreeing to appropriate confidentiality restrictions.

 

(v)           If the Series B Common Units are publicly traded, the “IRR Fair
Value” will be equal to the Fair Market Value of the Series B Common Units.  If
the Series B Common Units are not publicly traded but the Company’s sole asset
is an interest in a publicly traded security (or an indirect interest in such a
security through the ownership of other equity securities), then the “IRR Fair
Value” will be equal to the aggregate Fair Market Value of such publicly traded
security to the holders of Series B Common Units, divided by the number of
Series B Common Units.  If the Series B Common Units are not publicly traded and
the Company has assets other than a direct or indirect interest in a publicly
traded security, then the IRR Fair Value of the Series B Common Units will be
determined as follows: (1) first, the enterprise value of Boise Holdings will be
determined utilizing the most recent (relative to the Determination Date)
third-party valuation for Boise Holdings received by the Company or Boise
Holdings and shall be determined without regard to any valuation of the debt or
equity securities of Boise Inc. then owned or held by Boise Holdings or any of
its Subsidiaries; (2) second, the equity value of Boise Holdings will be
determined by (x) without any duplication to any amount used in computing
enterprise value, increasing such enterprise value by (a) the Fair Market Value
of the Boise Inc. common stock owned or held by Boise Holdings or any of its
Subsidiaries, (b) the aggregate principal amount plus accrued and unpaid
interest of any promissory note of Boise Inc. owned or held by Boise Holdings
(provided that if any portion of such promissory note has been sold or
transferred to a third party, ascribing the value to the remainder of such
promissory note implied by such sale or transfer), and (c) the aggregate cash of
Boise Holdings and its Subsidiaries and (y) without any duplication to any
amount used in computing enterprise value, reducing such enterprise value by
(a) the total amount of Indebtedness of Boise Holdings and its Subsidiaries and
(b) any equity securities of any Subsidiaries of Boise Holdings as of the
Determination Date owned by any Person other than Boise Holdings or any of its
wholly-owned Subsidiaries; (3) third, by assuming the equity value of Boise
Holdings is distributed in accordance with the distribution provisions of the
Boise Holdings Operating Agreement, and (4) the value of a Series B Common Unit
will be determined by assuming an amount (the “Company Equity Value Amount”)
equal to (I) the distributions to the Company from Boise Holdings as determined
in accordance with clause (3) foregoing, plus (II) the fair

 

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market value of any assets of the Company (as determined by the Board), other
than the equity securities of Boise Holdings, and minus (III) any Indebtedness
and other liabilities of the Company (as determined by the Board) and assuming
the Company Equity Value Amount was distributed to the holders of Units in
accordance with the LLC Agreement and determining the amount distributed to each
Series B Common Unit as a result of such distribution (which will be determined
on a fully diluted basis, assuming full vesting of all of all Units that are or
would become vested at the time of such IRR calculation).”

 

3.             No Transfer or Assignment.  No interest or right any 2006
Employee Investor or any of its beneficiaries has to receive payment under this
Agreement shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind, except
as required by law; nor may such interest or right to receive payment be taken,
voluntarily or involuntarily, for the satisfaction of the obligations or debts
of, or other claims against the 2006 Employee Investor or any of its
beneficiaries, except to the extent required by law.

 

4.             Survival of Representations and Warranties.  All representations
and warranties contained herein or made by any 2006 Employee Investor in
connection herewith shall survive the execution and delivery of this Agreement
and the Closing hereunder.

 

5.             Continued Existence of Operating Agreement and Management Equity
Agreement.  Each of the Company and the 2006 Employee Investor acknowledges and
agrees that the Operating Agreement and the Management Equity Agreement remains
in full force and effect and that the 2006 Employee Investor remains bound by
the Operating Agreement and the Management Equity Agreement with respect to all
units of the Company, other than the Repurchased Units.

 

6.             Complete Agreement.  This Agreement, together with the Management
Equity Agreement and the Operating Agreement, constitute the entire agreement
between the parties hereto regarding the subject matter of this Agreement and
supersede and preempt any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof.  When used
herein, “including” means “including, without limitation” regardless of whether
such or similar terminology is actually used.  Nothing herein shall limit, amend
or otherwise change the rights or obligations of the 2006 Employee Investor with
respect to that certain Management Equity Agreement, dated as December 21, 2004
(as amended, modified, supplemented or waived from time to time), or the
Employee Units purchased and granted thereunder.

 

8.             Counterparts.  This Agreement may be executed in separate
counterparts (including by means of facsimile transmission or other electronic
transmission), each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

 

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9.             Further Assurances.  After the Closing, as and when requested by
the Company and the 2006 Employee Investor shall, without further consideration,
execute and deliver all such instruments of purchase, conveyance and transfer
and shall take such further actions as the Company may reasonably deem necessary
or desirable in order to sell, transfer and assign the Repurchased Units as
contemplated hereby and to otherwise carry out fully the provisions and purposes
of this Agreement.

 

10.           Successors and Assigns.  This Agreement is intended to bind, inure
to the benefit of and be enforceable by the Company and the 2006 Employee
Investor and their respective successors and permitted assigns; provided,
however, that no 2006 Employee Investor may  assign this Agreement or any rights
or obligations hereunder without the Company’s prior written consent.

 

11.           Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with the law of the State of Idaho,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Idaho or any other jurisdiction) that would
cause the applications of the law of any jurisdiction other than the State of
Idaho.

 

12.           Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in a manner to be effective and valid under applicable law,
but if any provision shall be held to be prohibited or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting the remainder of such provision
or any of the remaining provisions of this Agreement.

 

13.           Notices.  Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested), telecopied or sent by reputable
overnight courier service (charges prepaid) to an 2006 Employee Investor at the
address set forth under the 2006 Employee Investor’s name on the signature
page attached hereto and to any other recipient at the address or telecopy
number below indicated:

 

If to the Company:

 

 

Forest Products Holdings, L.L.C.

 

c/o Boise Cascade, L.L.C.

 

1111 W. Jefferson St., Boise, ID 83702-5389

 

Attention: General Counsel

 

Telecopy: (208) 384-6566

 

with a copy to:

 

 

Kirkland & Ellis LLP

 

200 East Randolph Drive

 

Chicago, IL 60601

 

Attention: Richard J. Campbell P.C.

 

Telecopy: (312) 861-2200

 

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If to the Investor:

 

 

Madison Dearborn Capital Partners IV, L.P.

 

Three First National Plaza, 38th Floor

 

70 W. Madison Street

 

Chicago, IL 60602

 

Telecopy: (312) 895-1001

 

or to such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the sending
party.  Any notice under this Agreement will be deemed to have been given, if
personally delivered, when so delivered, if mailed by first class mail as
provided above, five days after deposit in the U.S. mail, if telecopied, upon
confirmation of successful transmission, on the date of transmission if such
transmission is completed at or prior to 5:00 p.m. local time of the recipient
party on a business day (or otherwise on the next business day), or if sent by
reputable overnight courier service as provided above, one business day after
delivery to such courier service.

 

*     *     *     *     *

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

 

COMPANY

 

 

 

FOREST PRODUCTS HOLDINGS, L.L.C.

 

 

 

 

 

By:

/s/ Tom Carlile

 

 

 

Its:

Executive Vice President & Chief Financial Officer

 

 

 

 

 

2006 EMPLOYEE INVESTOR:

 

 

 

 

 

/s/ David G. Gadda

 

 

 

Name: David G. Gadda

 

 

 

[Address]

 

 

 

 

 

Original Series C Common Units Received:

 

 

 

2/22/08 Vested Series C Common Units:

 

 

 

2/22/08 Unvested Series C Common Units:

 

 

 

Remaining Time Vesting Series C Common Units:

 

 

 

Remaining Performance Vesting Series C Common Units:

 

 

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