EXHIBIT 10.4

 

OFFICEMAX INCORPORATED

 

2005 DIRECTORS DEFERRED COMPENSATION PLAN

 

(Effective January 1, 2005)

 

--------------------------------------------------------------------------------

 

OFFICEMAX INCORPORATED

2005 DIRECTORS DEFERRED COMPENSATION PLAN

 

1.                                       Purpose of the Plan.  The purpose of
the OfficeMax Incorporated 2005 Directors Deferred Compensation Plan (the
“Plan”) is to further the growth and development of OfficeMax Incorporated (the
“Company”) by providing nonemployee directors of the Company the opportunity to
defer all or a portion of their cash compensation and thereby encourage their
productive efforts on behalf of the Company.  The Plan is an unfunded plan
intended to provide Participants with an opportunity to supplement their
retirement income through deferral of current compensation.

 

2.                                       Definitions.

 

2.1                                 Change in Control.  A Change in Control
shall be deemed to have occurred if:

 

(a)                                  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 Section 2.1(c)(i) shall not be deemed to be a
Change in Control of the Company; or

 

(b)                                 The following individuals cease for any
reason to constitute at least a majority of the number of directors then
serving:  individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for election
by the Company’s stockholders was approved by a vote of at least 2/3rds of the
directors then still in office who either were directors on the date hereof or
whose appointment, election, or nomination for election was previously so
approved (the “Continuing Directors”); or

 

(c)                                  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) Continuing Directors 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

 

1

--------------------------------------------------------------------------------

 

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 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 Section 2.1(c)(i)
shall not be deemed to be a Change in Control of the Company; or

 

(d)                                 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 2.1(c) which is not a Change in Control of
the Company solely due to the operation of Subsection 2.1(c)(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.

 

For purposes of this Section, “Beneficial Owner” shall have the meaning set
forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).

 

For purposes of this Section, “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 (i) the Company or any of
its subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) 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 (v) 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

 

2

--------------------------------------------------------------------------------

 

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 as of the first date on which the individual, person or group becomes
required to or does report its ownership on Schedule 13D.

 

2.2                                 Committee.  The Executive Compensation
Committee of the Company’s Board of Directors or any successor to the Committee.

 

2.3                                 Compensation.  A Participant’s fees, payable
in cash, for services rendered by a Participant as a Director of the Company
during a calendar year.  Compensation shall not include any amounts paid by the
Company to a Participant that are not strictly in consideration for personal
services, such as expense reimbursements.

 

2.4                                 Deferred Account.  The record maintained by
the Company for each Participant of the cumulative amount of (a) Compensation
deferred pursuant to this Plan plus (b) imputed gains or losses on those amounts
accrued as provided in Section 4.6.

 

2.5                                 Deferred Compensation Agreement.  A written
agreement between a Participant and the Company in substantially the form set
forth in Appendix A, whereby a Participant agrees to defer a portion of his or
her Compensation and the Company agrees to make benefit payments in accordance
with the provisions of the Plan.

 

2.6                                 Deferred Compensation and Benefits Trust. 
The irrevocable trust (the “DCB Trust”) established by the Company with an
independent trustee for the benefit of persons entitled to receive payments or
benefits hereunder, the assets of which will be subject to claims of the
Company’s creditors in the event of bankruptcy or insolvency.

 

2.7                                 Director.  An individual who is not an
employee of the Company and who is a member of the Board of Directors of the
Company.

 

2.8                                 Normal Retirement Date.  The date specified
in the Company’s Bylaws for the retirement of any Director.

 

2.9                                 Participant.  A Director who has entered
into a written Deferred Compensation Agreement with the Company in accordance
with the provisions of the Plan.

 

2.10                           Termination.  The Participant’s ceasing to be a
Director of the Company for any reason whatsoever, whether voluntarily or
involuntarily, including by reason of early retirement, normal retirement, or
death.

 

3.                                       Administration and Interpretation.  The
Committee shall have final discretion, responsibility, and authority to
administer and interpret the Plan.  This includes the discretion and authority
to determine all questions of fact, eligibility, or benefits relating to the
Plan.  The Committee may also adopt any rules it deems

 

3

--------------------------------------------------------------------------------

 

necessary to administer the Plan.  The Committee’s responsibilities for
administration and interpretation of the Plan shall be exercised by employees of
the Company or its subsidiaries who have been assigned those responsibilities by
management.  Any employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee.  Any Participant
may appeal any action or decision of these employees to the Company’s General
Counsel and may request that the Committee reconsider decisions of the General
Counsel.  Claims for benefits under the Plan and appeals of claim denials shall
be in accordance with Sections 10 and 11.  Any interpretation by the Committee
shall be final and binding on the Participants.

 

4.                                       Participant Deferral and Distribution
Elections.

 

4.1                                 Execution of Agreement.  A Director who
wishes to participate in the Plan must execute a Deferred Compensation Agreement
either (a) for newly eligible individuals, within 30 days after first becoming
eligible to participate in the Plan (to defer Compensation for the remainder of
that calendar year and subsequent years), or (b) prior to January 1 of the first
calendar year for which the Deferred Compensation Agreement is to be effective.

 

4.2                                 Deferral Election.  Each Director shall have
the opportunity to elect the amount of his or her Compensation, to be earned in
calendar years subsequent to the date of election, which will be deferred in
accordance with this Plan, subject to limits specified by the Company.  The
Compensation otherwise earned by a Participant during each calendar year
beginning after the date of the deferral election shall be reduced by the amount
elected to be deferred.  Elections to defer Compensation are irrevocable except
as otherwise provided in this Plan.  The amount of Compensation to be deferred
will be specified in the Deferred Compensation Agreement.

 

4.3                                 Change of Deferral Election.

 

(a)                                  A Participant who wishes to change an
election to defer Compensation may do so at any time by notifying the Committee
in writing prior to January 1 of the year for which the change in election is to
be effective.

 

(b)                                 A Participant who wishes to change an
election to defer Compensation after January 1 of any calendar year for which
the change in election is to be effective must submit a written request to the
Committee to revoke his or her deferral election.  The request must state why
the Participant believes he or she should be permitted to revoke the prior
election.  Requests will be reviewed as soon as administratively feasible and,
if a change is permitted, the change will be effective for all remaining pay
periods following the date of the determination.

 

4.4                                 Distribution Election.  At the time a
Participant first elects to defer Compensation under Section 4.2, he or she
shall elect a distribution option for the Compensation so deferred, including
gains or losses thereon, as specified in the Deferred Compensation Agreement. 
The distribution election shall apply to all amounts

 

4

--------------------------------------------------------------------------------

 

in the Participant’s Deferred Account under this Plan.  Elections regarding
distribution of Deferred Accounts under this Plan are irrevocable except as
otherwise provided in this Plan.  If a Participant does not make an election,
his or her account shall be paid out in quarterly installments over 15 years
beginning January 1 of the year following Termination.

 

4.5                                 Change of Distribution Election. 
Participants who are active Directors may request, in writing, a change in their
distribution election.  The changed distribution election must be one of the
distribution options in the original Deferred Compensation Agreement.  The
Committee must receive the request at least 12 months prior to the date benefits
are first scheduled to be paid under the original election and at least
12 months before the commencement of payment under the changed election.  The
changed election must defer payment for at least 5 years after the original
election would have commenced.  The request shall be approved or denied at the
Committee’s sole discretion.  No change will be permitted that would allow a
payment to be made earlier than originally elected in the Deferred Compensation
Agreement.  Requests that do not meet all of the requirements of this
Section will not be permitted.

 

4.6                                 Deferred Account Allocations and
Adjustments.  The Company shall maintain a record of each Participant’s Deferred
Account balance and allocations.  Each Participant’s Deferred Account shall be
adjusted on a monthly basis to reflect imputed interest.  Imputed interest will
be credited to a Participant’s account on the last day of each month. 
Computation of imputed interest shall be at the Company’s sole discretion.

 

5.                                       Distributions.

 

5.1                                 Distributions in General.  The Company shall
distribute Participants’ Deferred Accounts as elected by each Participant in the
applicable Deferred Compensation Agreement, except as otherwise provided in this
Section 5.

 

5.2                                 Plan Benefits Upon Termination.  Upon
Termination, a Participant shall be paid his or her account in the manner
elected by the Participant in the Deferred Compensation Agreement.  Unpaid
balances under the installment election continue to earn interest at the
applicable imputed interest rate.

 

5.3                                 Distributions Following Participant Death. 
The Company shall make all payments to the Participant, if living.  If a
Participant dies either before benefit payments have commenced under this Plan
or after his or her benefits have commenced but before his or her entire
Deferred Account has been distributed, the beneficiary designated pursuant to
Section 6.2 shall receive any benefit payments in accordance with the Deferred
Compensation Agreement.  If no designation is in effect when any benefits
payable under this Plan become due, the beneficiary shall be the spouse of the
Participant, or if no spouse is then living, the Participant’s estate.  In
determining the existence or identity of anyone entitled to a benefit payment,
the Company may rely conclusively upon information supplied by the Participant’s
personal representative, executor, or administrator.  If a question arises as to
the existence or identity of anyone entitled to receive a benefit payment, or if
a dispute arises with

 

5

--------------------------------------------------------------------------------

 

respect to any benefit payment, then, notwithstanding the foregoing, the
Company, in its sole discretion, may cause the payment to be made to the
Participant’s estate without liability for any tax or other consequences that
might flow therefrom or may take such other action as the Company deems
appropriate.

 

6.                                       Miscellaneous.

 

6.1                                 Assignability.  A Participant’s rights and
interests under the Plan may not be assigned or transferred except, in the event
of the Participant’s death, as described in Sections 5.3 and 6.2.

 

6.2                                 Designation of Beneficiary.  A Participant
shall designate a beneficiary by filing a written notice of designation with the
Company in such form as the Company may prescribe, and the Participant may
change this designation from time to time by filing a new designation.  Each
designation will revoke all prior designations by the Participant and will be
effective only when filed in writing with the Company during the Participant’s
lifetime.

 

6.3                                 Inability to Locate  Participants or
Beneficiaries.  Any communication, statement, or notice addressed to a
Participant or a beneficiary at his/her last mailing address as shown on the
Company’s records shall be binding on the Participant or beneficiary for all
purposes of the Plan.  The Company shall not be obligated to search for any
Participant or beneficiary beyond sending a registered letter to the last known
address.  If the Company notifies any Participant or beneficiary that he or she
is entitled to an amount under the Plan and the Participant or beneficiary fails
to claim such amount within 3 years thereafter, then, except as otherwise
required by law, the Company shall have the right to direct that the amount
payable shall be deemed to be a forfeiture, except that the dollar amount of the
forfeiture, unadjusted for imputed interest in the interim, shall be paid by the
Company if a claim for the benefit is subsequently made by the Participant or
beneficiary to whom it was payable.  If a benefit payable to an unlocated
Participant or beneficiary is subject to escheat pursuant to applicable state
law, the Company shall not be liable to any person for any payment made in
accordance with such law.

 

6.4                                 Taxes.  The Company shall deduct from all
payments made under this Plan all applicable federal or state taxes required by
law to be withheld.

 

6.5                                 Form of Communication.  Any election,
application, claim, notice or other communication required or permitted to be
made by a Participant to the Committee or the Company shall be made in writing
and in such form as the Company may prescribe.  Such communication shall be
effective upon receipt by the Company’s senior human resources officer at 150
Pierce Road, Itasca, IL  60143.

 

6.5                                 Service Providers.  The Company may, in its
sole discretion, retain one or more independent entities to provide services to
the Company in connection with the operation and administration of the Plan. 
Except as may be specifically delegated or assigned to any such entity in
writing, the Company shall retain all discretionary authority under this Plan. 
No Participant or other person shall be a third party

 

6

--------------------------------------------------------------------------------

 

beneficiary with respect to, or have any rights or recourse under, any
contractual arrangement between the Company and any such service provider.

 

7.                                       Amendment and Termination.  The
Company, acting through its Board of Directors or any committee of the Board of
Directors, may, at its sole discretion, amend or terminate the Plan at any time,
provided that the amendment or termination shall not adversely affect the vested
or accrued rights or benefits of any Participant without the Participant’s prior
consent.

 

8.                                       Unsecured General Creditor.  Except as
provided in Section 9, Participants and their beneficiaries, heirs, successors,
and assigns shall have no legal or equitable rights, interest, or claims in any
property or assets of the Company.  The assets of the Company shall not be held
under any trust for the benefit of Participants, their beneficiaries, heirs,
successors, or assigns, or held in any way as collateral security for the
fulfilling of the obligations of the Company under this Plan.  Any and all
Company assets shall be, and remain, the general, unpledged, unrestricted assets
of the Company.  The Company’s obligation under the Plan shall be an unfunded
and unsecured promise of the Company to pay money in the future.

 

9.                                       Deferred Compensation and Benefits
Trust.  Upon the occurrence of a Change in Control of the Company or at any time
thereafter, the Company, in its sole discretion, may transfer to the DCB Trust
cash, marketable securities, or other property acceptable to the trustee to pay
the Company’s obligations under this Plan in whole or in part (the “Funding
Amount”).  Any cash, marketable securities, and other property so transferred
shall be held, managed, and disbursed by the trustee subject to and in
accordance with the terms of the DCB Trust.  In addition, from time to time, the
Company may make additional transfers of cash, marketable securities, or other
property acceptable to the trustee as desired by the Company in its sole
discretion to maintain or increase the Funding Amount with respect to this
Plan.  The assets of the DCB Trust, if any, shall be used to pay benefits under
this Plan, except to the extent the Company pays such benefits.  The Company and
any successor shall continue to be liable for the ultimate payment of those
benefits.

 

10.                                 Claims Procedure.  Claims for benefits under
the Plan shall be filed in writing, within 90 days after the event giving rise
to a claim, with the Company’s senior human resources officer (the “Manager”),
who shall have absolute discretion to interpret and apply the Plan, evaluate the
facts and circumstances, and make a determination with respect to the claim in
the name and on behalf of the Committee.  The claim shall include a statement of
all relevant facts and copies of all documents, materials, or other evidence
that the claimant believes relevant to the claim.  The Company shall notify the
claimant in writing of the disposition of the claim within 90 days after the
claim is filed.  The Manager, in his or her sole discretion, may extend this
90-day period an additional 90 days by providing written notice of the extension
to the claimant before the original 90-day period expires.  If the claim is
denied, the specific reasons for the denial shall be set forth in writing,
pertinent provisions of the Plan shall be cited and, where appropriate, an
explanation as to how the claimant may perfect the claim or submit the claim for
further review will be provided.

 

7

--------------------------------------------------------------------------------

 

11.                                 Claims Review Procedure.  Any Participant,
former Participant, or beneficiary of either, who has been denied a benefit
claim, shall be entitled, upon written request, to a review of the denied
claim.  The request, together with a written statement of the claimant’s
position, must be filed no later than 60 days after receiving the written notice
of denial provided for in Section 10 with the Manager, who shall promptly inform
the Committee.  The Committee shall review the claim and notify the claimant, in
writing, of its decision within 60 days after receiving the request for review. 
The Committee, in its discretion, may extend this 60-day period an additional
60 days by providing written notice of the extension to the claimant before the
original 60-day period expires.  The Committee’s written decision shall state
the facts and Plan provisions upon which the decision is based and shall be
final and binding on all parties.

 

12.                                 Lawsuits, Jurisdiction, and Venue.  No
lawsuit claiming entitlement to benefits under this Plan may be filed prior to
exhausting the claims and claims review procedures described in Sections 10 and
11.  Any such lawsuit must be initiated no later than (a) one year after the
event(s) giving rise to the claim occurred, or (b) 60 days after a final written
decision was provided to the claimant under Section 11, whichever is sooner. 
Any legal action involving benefits claimed or legal obligations relating to or
arising under this Plan may be filed only in Federal District Court in the city
of Itasca, Illinois.  Federal law shall be applied in the interpretation and
application of this Plan and the resolution of any legal action.  To the extent
not preempted by federal law, the laws of the state of Delaware shall apply.

 

13.                                 Effective Date of Plan.  This Plan shall
become effective January 1, 2005.

 

8

--------------------------------------------------------------------------------

 

EXHIBIT A

 

IMPUTED INTEREST

 

Deferred Accounts shall be credited with imputed interest equal to an annualized
rate of interest equal to 130% of Moody’s Composite Average of Yields on
Corporate Bonds (“Moody’s”) as determined each month from Moody’s Bond Record
(as published by Moody’s Investor’s Service, Inc.) or any successor thereto, or,
if such monthly report is no longer published, a substantially similar rate
determined by the Company, in its sole discretion.  Moody’s, for purposes of
this Plan, shall be based for any given month on such published rate for the
immediately preceding calendar month.

 

9

--------------------------------------------------------------------------------

 

APPENDIX A

OfficeMax Incorporated

Form of Director Compensation Election Agreement

 

This agreement constitutes my election, if any, under OfficeMax’s Director Stock
Compensation Plan and 2005 Directors Deferred Compensation Plan and is subject
to the provisions of these plans.  I agree that my requests to receive
compensation in the form of a stock option and/or to defer cash compensation
into the deferred compensation plan are irrevocable by me for compensation to be
earned in 200  .

 

I wish to receive my cash compensation (retainer and meeting fees) as follows:

 

 

 

200   ELECTIONS

 

NEW
200   ELECTIONS

 

Deep Discount Stock Options under the Director Stock Compensation Plan

 

 

%

 

%

Directors Deferred Compensation Plan*

 

 

%

 

%

Cash

 

 

%

 

%

 

 

100

%

100

%

 

--------------------------------------------------------------------------------

*The dollar value of the percent you defer must be at least $5,000 per year.
OfficeMax believes, but does not guarantee, that a deferral election made under
the terms of the plan is effective to defer the receipt of taxable income. You
are advised to consult with your attorney or accountant regarding the federal
and state tax law implications of this deferral.

 

Date:

 

Signed:

 

 

 

 

 

Director

 

 

This form must be returned before December 31, 200  , to:

 

Matthew R. Broad

Executive Vice President, General Counsel and Corporate Secretary

OfficeMax Incorporated

150 Pierce Rd.

Itasca, IL 60143

 

FAX: 208-384-7945

 

10

--------------------------------------------------------------------------------

 

OfficeMax Incorporated

FORM OF DIRECTOR DEFERRED COMPENSATION DISTRIBUTION ELECTION AGREEMENT

 

THIS AGREEMENT dated                 , is between OFFICEMAX INCORPORATED (“the
Company”) and                        (the “Director”). Director is a Participant
in the Company’s 2005 Directors Deferred Compensation Plan (the “Plan”), which
is incorporated into this Agreement.

 

The Company and the Director agree to the following distribution of Director’s
account balance under the Plan:

 

DISTRIBUTION ELECTION

 

THIS ELECTION WILL APPLY TO ALL YOUR DEFERRED COMPENSATION UNDER THE PLAN.

 

1.                                       The Director elects the following form
of distribution of his or her Deferred Account balance:

o

A.

Lump-sum payment.

o

B.

Quarterly installment payments (estimated to be level payments) over a period of
                     years (not to exceed 15 years).

o

C.

As set forth in Exhibit A (alternative distribution plan not to exceed
15 years).

 

2.                                       The Director elects the following
distribution beginning date:

o

A.

January 1 of the year following Termination.

o

B.

The later of age 55 or Termination.

o

C.

The later of age 65 or Termination.

o

D.

The later of                            (date) or his or her Normal Retirement
Date.

 

3.                                       If the Director dies before his or her
distributions from the Plan begin, the Company will pay the Director’s
designated beneficiary the Deferred Account balance as a (choose one):

o

A.

Lump-sum payment.

o

B.

Quarterly installment payments over a period of                years (not to
exceed 15 years).

o

C.

As set forth in Exhibit A (alternative distribution plan not to exceed
15 years).

 

4.                                       If the Director dies after installment
payments have begun, the Company will pay the Director’s designated beneficiary
(choose one):

o

A.

Lump sum of the remaining Deferred Account balance.

o

B.

The remaining installment payments, if any.

 

IN WITNESS WHEREOF, the parties have entered into this Agreement on the day
first written above.

 

OFFICEMAX INCORPORATED

DIRECTOR

 

 

 

 

By

 

 

By

 

 

 

11

--------------------------------------------------------------------------------