EXHIBIT 10.6

 

OFFICEMAX INCORPORATED

 

2005 Annual Incentive Award Agreement

 

This Annual Incentive Award (the “Award”), is granted on April 18, 2005 (the
“Award Date”), by OfficeMax Incorporated (“OfficeMax”) to Sam Duncan (“Awardee”
or “you”) pursuant to the 2003 OfficeMax Incentive and Performance Plan (the
“Plan”) and pursuant to the following terms:

 

1.                                       The Award is subject to all the terms
and conditions of the Plan.  All capitalized terms not defined in this Agreement
shall have the meaning stated in the Plan.

 

2.                                       For purposes of this Award, the
following terms shall have the meanings stated below.

 

2.1.                              “Award Period” means the 2005 fiscal year.

 

2.2.                              “Base Salary” means your annual pay rate in
effect at the end of the Award Period, without taking into account (a) any
amounts deferred pursuant to an election under any 401(k) plan, pre-tax premium
plan, deferred compensation plan, or flexible spending account sponsored by
OfficeMax or any subsidiary, (b) any incentive compensation, employee benefit,
or other cash benefit paid or provided under any incentive, bonus or employee
benefit plan sponsored by OfficeMax or any subsidiary, or (c) any excellence
award, gains upon stock option exercises, restricted stock grants or vesting,
moving or travel expense reimbursement, imputed income, or tax gross-ups,
without regard to whether the payment or gain is taxable income to you.

 

2.3.                              “EBIT dollars” means OfficeMax’s earnings from
operations before interest and taxes, as calculated by OfficeMax in its sole
discretion.

 

2.4.                              “Net sales” means the gross sales or revenues
less returns, allowances, rebates, and coupons for OfficeMax, as calculated by
OfficeMax in its sole discretion.

 

2.5.                              “Return on sales” means the ratio of reported
operating profit to reported net sales, expressed as a percentage, for OfficeMax
during the Award Period, as calculated by OfficeMax in its sole discretion.

 

2.6.                              “Sales growth” means the percentage change in
overall same location net sales for OfficeMax during the Award Period, adjusted
for store closures, store openings, acquisitions, divestitures, and changes in
fiscal periods, as calculated by OfficeMax in its sole discretion.

 

3.                                       Your target award percentage is 100% of
your Base Salary.

 

4.                                       The Performance Goals applicable to
your Award are sales growth, return on sales, and EBIT dollars.  Your Award will
be calculated based on these Performance Goals, as follows:

 

4.1.                              Payout.  Each Performance Goal is weighted
equally.  Using the payout charts attached as Exhibit 1, a payout multiple will
be identified for each Performance Goal.  Your target award percentage will be
divided by three, that number will be multiplied by the identified multiple, and
the resulting percentage will be applied to your Base Salary to determine your
actual Award for each Performance Goal.

 

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4.2.                              General Terms.  Payout multiples between
numbers indicated on the chart will be calculated using straight-line
interpolation.  Total payout (aggregate amount paid for all three Performance
Goals) is capped at 2.25 times your target award percentage.  Individual payout
for each Performance Goal is capped at 2.25 times the applicable target award
percentage.  Notwithstanding the Performance Goals and formulas set forth above,
no award will be earned or paid for the Award Period unless OfficeMax has net
income for the Award Period, as calculated by OfficeMax in its sole discretion.

 

5.                                       This Award will be paid in cash.

 

6.                                       If you terminate employment before
December 31, 2005, your Award will be treated as follows:

 

6.1.                              If your termination of employment is a result
of your death or Disability, as defined in the Employment Agreement between you
and OfficeMax dated April 14, 2005 (the “Employment Agreement”), you will
receive a pro rata Award, if an Award is paid, based on the number of days
during the Award Period that you were employed and eligible compared to the
total number of days in the Award Period.

 

6.2.                              If you are involuntarily terminated by the
Company other than for death, Disability, or Cause (as defined in the Employment
Agreement), or if you terminate employment for Good Reason (as defined in the
Employment Agreement), you will receive a pro rata Award, if an Award is paid,
based on the number of days during the Award Period that you were employed and
eligible compared to the total number of days in the Award Period.

 

6.3.                              Except as described in paragraphs 6.1 and 6.2,
you must be employed by OfficeMax or its subsidiary on the last day of the Award
Period to be eligible to receive payment of an Award.  If your employment is
terminated for Cause or for any other reason except as described in paragraph
6.1 or 6.2, you will not be eligible to receive payment of any Award for 2005.

 

7.                                       Notwithstanding the Performance Goals,
you will receive a minimum Award of 100% of your Base Salary, provided that this
minimum Award will not apply to payments occurring pursuant to paragraph 6.

 

8.                                       The Committee reserves the right to
reduce the Award (but not below the minimum Award payable pursuant to paragraph
7), whether or not the Performance Goals have been met.

 

9.                                       In the event of a Change in Control (as
defined in the Plan) prior to December 31, 2005, the provisions of the Plan
shall apply.

 

You must sign this Agreement and return it to OfficeMax’s Compensation
Department on or before May 13, 2005, or the Award will be forfeited.    Return
your executed Agreement to:  Linda VanDeventer, OfficeMax, 150 E Pierce Road,
Itasca, IL 60143, or fax your signed form to 630-438-2463.

 

OfficeMax Incorporated

Awardee

 

 

 

 

By:

/s/ Matt Broad

 

/s/ Sam Duncan

 

 

 

 

 

 

Sam Duncan

 

 

Printed Name

 

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