Unassociated Document


     

    Exhibit
      10.91


    EMPLOYMENT
      AGREEMENT

     

    This
      Employment
      Agreement (the "Agreement")
      is made and
      entered into effective April 1, 2006, by and between William M. Smartt
      ("Executive"),
      and Building
      Materials Holding Corporation, a Delaware corporation (the "Company").

     

    WITNESSETH

     

    WHEREAS,
      Executive
      is currently employed by the Company as its Senior Vice President and Chief
      Financial Officer;

     

    WHEREAS,
      the
      Company desires to obtain the benefit of the services of Executive, and
      Executive desires to provide his service to the Company as provided for in
      this
      Agreement; and

     

    WHEREAS,
      the
      Company wishes to extend the duration of Executive's services and further
      clarify the terms and conditions of his employment by entering into this
      Agreement with Executive and Executive is willing to commit his services to
      the
      Company, on the terms and conditions set forth below.

     

    NOW,
      THEREFORE, in
      consideration of the premises and the mutual covenants herein contained,
      Executive and the Company hereto agree as follows:

     

    1.    Term

     

    This
      Agreement
      shall commence on April 1, 2006 (the "Effective
      Date")
      and shall
      continue in effect until the later of (i) May 31, 2009 or (ii) the date that
      the
      employment contract between the Company and Robert E. Mellor is terminated,
      such
      period being referred to herein as the "Employment
      Term."

     

    2.    Employment

     

    2.1    Engagement.
      The Company
      hereby employs Executive and Executive hereby agrees to be employed by the
      Company, subject to the terms and conditions herein set forth. During the
      Employment Term, Executive shall be employed as Senior Vice President and Chief
      Financial Officer of the Company, and shall be responsible for the duties
      normally and customarily attendant to such offices. Executive shall report
      directly to the Company's Chairman, Chief Executive Officer and President,
      and
      also shall render such other services and duties of an executive nature
      consistent with the duties of a senior executive officer of the Company as
      may
      from time to time be designated by the Board of Directors (the "Board").

     

    2.2    Exclusive
      Employment.
      During the
      Employment Term, Executive shall devote his full business time to his duties
      and
      responsibilities set forth in Section 2.1. Without limiting the generality
      of
      the foregoing, Executive shall not, without the prior written approval of the
      Board, during the Employment Term, render services of a business, professional
      or commercial nature to any other person, firm or corporation, whether for
      compensation or otherwise, except that Executive may engage in civic,
      philanthropic and community service activities so long as such activities do
      not
      materially interfere with Executive’s ability to comply with this Agreement and
      are not otherwise in conflict with the policies or interest of the Company,
      and
      Executive may serve on the board of directors of two companies without Company
      approval provided that such companies are not competitive with the Company
      or
      inconsistent with Executive’s role with the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.    Compensation
      and General Benefits

     

    3.1    Base
      Salary.
      During the
      Employment Term, the Company shall pay Executive a base salary in an annualized
      amount equal to three hundred and sixty five thousand dollars ($365,000)
      ("Base
      Salary")
      payable pro rata
      on the Company's regular payday, and subject to adjustment as hereinafter
      provided.

     

    3.2    Salary
      Reviews.
      Executive's Base
      Salary shall be reviewed annually by the Compensation Committee of the Board
      for
      the purpose of considering increases thereof. In conducting this review, the
      Compensation Committee of the Board shall consider appropriate factors,
      including, without limitation, Executive's performance, the Company's financial
      condition and compensation afforded to senior executives of comparable
      corporations. The Base Salary shall not be decreased without the written consent
      of Executive.

     

    3.3    Bonus.
      During the
      Employment Term, Executive shall be eligible to participate in and to receive
      benefits under the Company’s regular officers’ bonus plan or such successor
      annual incentive or bonus plans that the Company may adopt from time to time
      for
      the benefit of its senior executives (collectively referred to as the "Annual
      Bonus Plan") and to earn incentive or bonus awards under the Annual Bonus Plan,
      in accordance with the terms of the Annual Bonus Plan as in effect from time
      to
      time. Notwithstanding any provision in the Annual Bonus Plan to the contrary,
      if
      Executive's employment is terminated for any reason, except in the case the
      Executive is involuntarily terminated by the Company for Cause during the
      Employment Term, then the Executive shall be paid at the end of the then-current
      performance cycle an amount equal to the Executive’s target bonus under the
      Annual Bonus Plan for such performance cycle multiplied by a fraction, the
      numerator of which is equal to the number of whole calendar months that the
      Executive worked during such performance cycle and the denominator of which
      is
      equal to 12. To the extent that the foregoing referenced target bonus is based
      upon a percentage of the Executive’s base compensation, then such target bonus
      shall be based upon the Executive’s annualized base compensation as of the date
      his employment is terminated.

     

    3.4    Equity
Incentive
      Compensation.


     

    (a)    Equity
      Bonus.
      Company agrees to
      provide Executive with the opportunity to earn an equity bonus (the
      "Equity
      Bonus")
      that grants to
      Executive 20,000 units. At the end of the first year of the Employment Term,
      Executive will earn a cash bonus equal to the greater of (1) 20,000 multiplied
      by the average closing price of the company's stock over the five (5) business
      days immediately preceding the Equity Bonus Payment Date or (2) $150,000. The
      Equity Bonus shall be paid within thirty (30) days after March 31, 2007.
      Executive must be employed by the Company on March 31, 2007 in order to receive
      payment of the Equity Bonus, and the Equity Bonus shall be forfeited in its
      entirety if Executive voluntarily terminates employment without Good Reason
      or
      Executive is involuntarily terminated for Cause before March 31, 2007. Company
      agrees to provide Executive with the opportunity to earn an Equity Bonus for
      the
      period of April 1, 2007 through March 31, 2008 and the period of April 1, 2008
      through March 31, 2009 calculated for each such period as follows: the greater
      of (1) 10,000 multiplied by the average closing price of the Company’s stock
      over the five (5) business days immediately preceding April 1, 2008 and April
      1,
      2009 or (2) $300,000. The Equity bonus will be paid within 30 days of the
      calculation date of each year. Executive must be employed by the Company on
      the
      respective payment dates in order to receive payment of the Equity Bonus, and
      the Equity Bonus shall be forfeited in its entirety if Executive voluntarily
      terminates employment without Good Reason of Executive is involuntarily
      terminated for Cause before the respective payment dates.

     

    
      
        
        

      

      
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    (b)    Adjustment
      to
      Equity Units.
      The number of
      equity units granted to the Executive under Section 3.4(a) and the related
      minimum value per unit shall be proportionately adjusted for any increase or
      decrease in the number of issued shares of common stock (“Shares”) of the
      Company resulting from a stock split, reverse stock split, stock dividend,
      combination or reclassification of Shares, or any other increase or decrease
      in
      the number of issued Shares effected without receipt of consideration by the
      Company; provided, however, that conversion of any convertible securities of
      the
      Company shall not be deemed to have been "effected without receipt of
      consideration." Such adjustments shall be made by the Board, whose determination
      in that respect shall be final, binding and conclusive.

     

    (c)    Equity
      Incentive
      Plan.
      Executive may be
      eligible to receive additional incentive compensation subject to the discretion
      of the Compensation Committee which may take into consideration the Equity
      Bonus
      in the form of stock option or restricted stock grants under the 2004 Incentive
      and Performance Plan. All grants made under the 2004 Incentive and Performance
      Plan shall be at the discretion of the Compensation Committee of the Board.
      Except as expressly provided herein, Executive shall be eligible for incentive
      compensation under the 2004 Incentive and Performance Plan on at least the
      same
      basis as other similarly situated members of senior management of the Company,
      and pursuant to the terms and conditions of such plan as in effect from time
      to
      time.

     

    (d)    LTIP.
      The Long-Term
      Incentive Plan ("LTIP") provides for the award of long-term incentive
      compensation based upon the attainment of pre-defined performance goals with
      respect to each applicable three-year performance cycle. As of the Effective
      Date, Executive participated in and was entitled to receive compensation under
      the LTIP for each of the following three-year performance cycles: January 1,
      2004 through December 31, 2006; January 1, 2005 through December 31, 2007;
      and
      January 1, 2006 through December 31, 2008 (each a "Participating Performance
      Cycle"); provided, however, that Executive shall receive 100% of the amount
      otherwise payable for the period January 1, 2004 through December 31, 2006;
      66.67% of the amount otherwise payable for the period January 1, 2005 through
      December 31, 2007; and 33.33% of the amount otherwise payable for the period
      January 1, 2006 through December 31, 2008. Executive will not participate in
      and
      is not eligible to receive compensation under the LTIP for each of the following
      three-year performance cycles: January 1, 2007 through December 31, 2009;
      January 1, 2008 through December 31, 2010; and January 1, 2009 through December
      31, 2011. Notwithstanding any provision of the LTIP to the contrary, if for
      any
      reason Executive’s participation in the LTIP is terminated prior to the
      completion of the Participating Performance Cycle, except in the case where
      such
      termination is due to the Executive’s involuntary termination for Cause or
      voluntary termination not including termination for Good Reason, death or
      disability, then the Executive shall be paid at the end of such Participating
      Performance Cycle an amount equal to the Executive’s target bonus under the LTIP
      multiplied by a fraction the numerator of which is equal to the number of whole
      years that the Executive has worked during the Participating Performance Cycle
      and the denominator of which is equal to 3. To the extent that the foregoing
      referenced target bonus is based upon a percentage of the Executive’s base
      compensation, then such target bonus shall be based upon the Executive’s
      annualized base compensation as of the date his participation in the LTIP
      terminated. Except as expressly provided herein, Executive shall be eligible
      on
      at least the same basis as other similarly situated members of senior management
      of the Company to receive amounts payable under the LTIP in accordance with
      normal plan rules at the end of each Participating Performance
      Cycle.

     

    
      
        
        

      

      
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    (e)    Change
      of
      Control.
      If there is a
      Change of Control of the Company, any Equity Bonus to which Executive otherwise
      is entitled under Section 3.4(a) will immediately vest in full upon such Change
      of Control. Such vested payment(s) shall be paid within five (5) business days
      following a Change of Control. Any Equity Bonus payable pursuant to this Section
      3.4(e) shall be calculated using the price of the Company’s stock on the date of
      the Change of Control. A "Change in Control" of the Company shall be deemed
      to
      have occurred if (i) there shall be consummated (x) any consolidation or merger
      of the Company in which the Company is not the continuing or surviving
      corporation or pursuant to which shares of the Company's Common Stock are to
      be
      converted into cash, securities or other property, other than a merger of the
      Company in which the holders of the Company's Common Stock immediately prior
      to
      the merger have the same proportionate ownership of common stock of the
      surviving corporation immediately after the merger, or (y) any sale, lease,
      exchange or other transfer (in one transaction or a series of related
      transactions) of all, or substantially all, of the business and/or assets of
      the
      Company, or (ii) the stockholders of the Company approve a plan or proposal
      for
      the liquidation or dissolution of the Company, or (iii) any "person" (as defined
      in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
      (the "Exchange Act"), including any group), shall become the "beneficial owner"
      (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
      of
      fifty (50%) percent or more of the Company's outstanding Common Stock, or (iv)
      if for any reason a majority of the Board is not comprised of "Continuing
      Directors," where a "Continuing Director" of the Corporation as of any date
      means a member of the Board who (x) was a member of the Board two years prior
      to
      such date and at all times through such date or (y) was nominated for election
      or elected to the Board with the affirmative vote of at least two-thirds of
      the
      directors who were Continuing Directors at the time of such nomination or
      election; provided,
however,
      that no
      individual initially elected or nominated as a director of the Corporation
      as a
      result of an actual or threatened election contest with respect to directors
      or
      any other actual or threatened solicitation of proxies or consents by or on
      behalf of any person other than the Board shall be deemed to be a Continuing
      Director. Payments made under this Section 3.4(e) shall be taken into account
      under Paragraph 6 of the Severance Plan (as defined below) to the extent
      applicable for purposes of calculation of the “gross up” under such Paragraph
      6.

     

    3.5    Vacation.
      Executive shall
      be entitled to four weeks paid vacation in any fiscal year during the Employment
      Term in accordance with Company vacation and leave policies. Vacation time
      shall
      be planned and taken consistent with Executive's duties and obligations
      hereunder.

     

    
      
        
        

      

      
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    3.6    Other
      Benefits.
      During the
      Employment Term, Executive (and his spouse and dependents) shall be entitled
      to
      participate in the Company's executive perquisite plan, supplemental retirement
      plan, liability insurance, life insurance, disability insurance, dental
      insurance, hospitalization insurance, medical, accident, and other employee
      benefit plans from time to time adopted by the Company on the same basis as
      other similarly situated members of senior management of the Company and
      pursuant to the terms and conditions of such plans and programs. The Company
      shall have the right to change insurance carriers and benefit plans as may
      be
      appropriate in light of future market conditions and shall have the right to
      purchase individual policies covering Executive if necessary.

     

    3.7    Post-Termination
      Health Care Coverage.
      Upon termination
      of employment, but only as provided in Section 7, Executive shall be eligible
      to
      participate in the Company’s health care plan, either on an individual basis or
      family basis to include his dependent spouse, until such time as he becomes
      eligible to participate in the BMHC Retirement Health Care Plan (“Retiree Health
      Care Plan”). If Executive wishes to participate in the Company’s health care
      plan after his termination of employment, then Executive must pay each month
      to
      the Company an amount equal to one-half of the COBRA benefit cost applicable
      to
      the selected coverage (i.e.,
      individual or
      family coverage).

     

    3.8    Retiree
      Health
      Care Coverage.
      Executive shall
      be eligible to participate in the Retiree Health Plan in accordance with its
      terms and conditions. For purposes of determining whether the Executive has
      met
      the Retiree Health Plan’s eligibility requirements, the Executive’s prior
      periods of employment with organizations that provide services similar to the
      Company shall be taken into account. If for any reason the Executive is unable
      to participate in the Retiree Health Plan, then the Company shall pay to the
      Executive each month an amount equal to the Retiree Health Plan’s “Monthly
      Cost.” Assuming that the Executive had participated in and received coverage
      under the Retiree Health Plan, the Monthly Cost shall equal the Company’s
      hypothetical monthly cost of providing such coverage. 
      After the
      Executive attains age 65, the Retiree Health Plan shall be secondary to
      Medicare.

     

    3.9    Reimbursement
      of
      Expenses.
      Upon submission
      of appropriate documentation in accordance with Company policy, the Company
      will
      promptly reimburse Executive for all reasonable business expenses incurred
      by
      Executive in pursuing the business of the Company, including, without
      limitation, expenditures for entertainment and travel. The Company shall make
      such reimbursement to the Executive no later than thirty (30) days after
      Executive’s submission to the Company of all required expense documentation. The
      Executive’s right to reimbursement in accordance with this Section 3.9 and the
      Company’s policies as in effect from time to time shall survive termination of
      the Agreement.

     

    3.10    Director
      and
      Officers Insurance.
      During the
      Employment Term, the Company shall obtain and maintain a Director and Officers
      insurance policy which covers Executive and provides for a level of insurance
      coverage and benefits that are customary and usual for a publicly-held
      company.

     

    
      
        
        

      

      
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    3.11    Supplemental
      Executive Retirement Plan Benefits.
      Executive
      participates in the Executives’ Supplemental Retirement Income Plan of Building
      Materials Holding Corporation (“SERP”). Notwithstanding any provision of the
      SERP to the contrary, if the Executive’s employment with the Company is
      involuntarily terminated without Cause, voluntarily terminated due to Good
      Reason as described in Section 7.7 (d), or terminates upon expiration of this
      Agreement , then the Executive shall immediately become fully vested in his
      benefits under the SERP. Notwithstanding any provision of this Agreement to
      the
      contrary, no provison of this Agreement shall be construed as limiting, in
      any
      manner or form, Executive’s right to benefits under the SERP.

     

    4.    Confidential
      Information

     

    During
      the term of
      this Agreement and forever thereafter, Executive agrees to keep confidential
      all
      information provided by the Company, including any such information and material
      relating to any customer, vendor, licensor, licensee, or other party transacting
      business with the Company (collectively, "Confidential Information"), and not
      to
      release, use, or disclose the Confidential Information, except with the prior
      written permission of the Company. Executive further covenants and agrees that
      every document, computer disk, computer software program, notation, record,
      diary, memorandum, development, investigation, or the like, and any method
      or
      manner of doing business, of the Company (or containing any other secret or
      confidential information of the Company) made or acquired by Executive during
      his employment, is and shall be the sole and exclusive property of the Company.
      Confidential Information does not include, however, information which (i) is
      or
      becomes generally available to the public other than as a result of a disclosure
      by Executive, [(ii)
      was available
      to Executive on a non-confidential basis prior to its disclosure by Company,
      (iii) becomes available to Executive on a non-confidential basis from a person
      other than Company who is not otherwise bound by a confidentiality agreement
      with Company, or is not otherwise prohibited from transmitting the information
      to Executive, or (iv) the Executive is required to disclose pursuant to court,
      administrative hearing officer or other judicial or duly authorized governmental
      representative request or demand for such disclosure, unless the Company has
      obtained an appropriate protective order that prohibits such disclosure and
      the
      Company has advised the Executive of such protective order prior to the
      Executive’s fulfillment of such request or demand. 

     

    5.    Covenants
      of Executive.
      

     

    5.1    Non-Compete.
      Executive agrees
      that, during the Employment Term and for a period of one year following a
      termination of employment other than following a Change of Control, he will
      not,
      directly or indirectly, engage in any business or activity competitive with
      the
      business activities of the Company. The foregoing shall not apply to passive
      investments by Executive of up to 5% of the outstanding stock of any publicly
      traded company or to service by Executive on boards of directors of companies
      as
      permitted under this Agreement, regardless of whether such company competes
      with
      the Company.

     

    5.2    Solicitation
      of
      Employees.
      During the
      Employment Term and for a period of one year following a termination of
      employment other than following a Change of Control, (i) he shall not, directly
      or indirectly, individually, or together through any other person, firm,
      corporation or entity, hire any member of senior management of the Company
      (defined as an officer with a title of vice president or higher) who is then
      in
      the employ of the Company, or (ii) solicit for hire any employee of the Company,
      provided, however, that general solicitations not targeted to Company employees
      shall not be deemed to violate this clause (ii).

     

    
      
        
        

      

      
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    5.3    Solicitation
      of
      Customers and Suppliers.
      Executive agrees
      that, during the Employment Term and for a period of one year following a
      termination of employment other than following a Change of Control, he shall
      not, directly or indirectly, individually, or together through any other person,
      firm, corporation or entity, (i) solicit the business of any material customers
      of or supplies to the Company, or (ii) discourage any person or entity which
      is
      a customer of the Company from continuing its business relationship with the
      Company. 

     

    5.4    Compliance
      with
      Company Policies.
      Executive agrees
      that, during the Employment Term, he shall comply with the Company's employee
      manual and other policies and procedures reasonably established by the Company
      from time to time concerning matters such as management, supervision,
      recruiting, diversity, and sexual harassment.

     

    5.5    Cooperation.
      For a period of
      three years following his termination of employment under this Agreement, he
      shall, upon Company’s reasonable request and in good faith and with his best
      efforts, subject to his reasonable availability, cooperate and assist Company
      in
      any dispute, controversy, or litigation in which Company may be involved and
      with respect to which Executive obtained knowledge while employed by the Company
      or any of its affiliates, successors, or assigns, including, but not limited
      to,
      his participation in any court or arbitration proceedings, giving of testimony,
      signing of affidavits, or such other personal cooperation as counsel for the
      Company shall request. Any such activities shall be scheduled, to the extent
      reasonably possible, to accommodate Executive’s business and personal
      obligations at the time. The Company shall pay Executive’s reasonable travel and
      incidental out-of-pocket expenses incurred in connection with any such
      cooperation, as well as the reasonable costs of an attorney Executive engages
      to
      advise him in connection with the foregoing.

     

    5.6    Return
      of
      Business Records and Equipment.
      Upon termination
      of Executive's employment hereunder, Executive shall promptly return to the
      Company: (i) all documents, records, procedures, books, notebooks, and any
      other
      documentation in any form whatsoever, including but not limited to written,
      audio, video or electronic, containing any information pertaining to the Company
      which includes confidential information, including any and all copies of such
      documentation then in Executive's possession or control regardless of whether
      such documentation was prepared or compiled by Executive, Company, other
      employees of the Company, representatives, agents, or independent contractors,
      and (ii) all equipment or tangible personal property entrusted to Executive
      by
      the Company. Executive acknowledges that all such documentation, copies of
      such
      documentation, equipment, and tangible personal property are and shall at all
      times remain the sole and exclusive property of the Company.

     

    6.    Covenants
      of the Company

     

    Indemnification.
      In the event
      Executive is made, or threatened to be made, a party to any legal action or
      proceeding, by reason of the fact that Executive is or was an employee, director
      or officer of the Company or serves or served any other entity in any capacity
      at the Company's request, Executive shall be indemnified by the Company, and
      the
      Company shall pay Executive's related expenses when and as incurred, including
      but not limited to attorney fees, all to the fullest extent permitted by law.
      

     

    
      
        
        

      

      
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    7.    Termination.

     

    7.1    Termination
      Upon
      Death or Disability.
      If Executive's
      employment is terminated as a result of death or Disability prior to the
      expiration of the Employment Term, Executive (or Executive's estate, or other
      designated beneficiary(s) as shown in the records of the Company in the case
      of
      death) shall be entitled to receive (i) any earned but unpaid Base Salary;
      (ii)
      payment of any accrued and unpaid vacation pay through the Date of Termination;
      (iii)
      payment of any unreimbursed business expenses; (iv) a pro-rata amount of the
      annual bonus that Executive would be eligible to receive under the Company's
      Annual Bonus Plan for the year in which Executive's termination occurs;
(v)
      LTIP benefits in accordance with the terms of the LTIP, as modified by Section
      3.4(d) hereof; (vi) benefits under the Supplemental Retirement Plan ("SERP"),
      provided that Executive shall become fully vested in his benefits under the
      SERP
      upon termination pursuant to this Section 7.1; (vii) the benefits provided
      for
      in Sections 3.7 and 3.8 hereof; and (viii) any other benefits that Executive
      is
      entitled to receive as of the Date of Termination under applicable benefit
      plans
      of the Company,
      less standard
      withholdings for tax and social security purposes. Except as required by law,
      after the Date of Termination, the Company shall have no obligation to make
      any
      other payment, including severance or other compensation, of any kind to
      Executive (or
      Executive's
      estate, or other designated beneficiary(s) as shown in the records of the
      Company in the case of death) upon
      a termination
      of employment by death or Disability.

     

    7.2    Voluntary
      Termination.
      If Executive
      terminates employment with the Company without Good Reason, Executive agrees
      to
      provide the Company with ninety (90) days' prior written notice. The Company
      may
      accelerate the termination of Executive's employment and the right to any
      further compensation to a date prior to the 90th day upon written notice thereof
      being delivered to Executive by the Company. In the event that Executive's
      employment is terminated under this Section 7.2, Executive shall receive payment
      for (i) any earned and unpaid Base Salary; (ii) payment of any accrued and
      unpaid vacation pay through the Date of Termination; (iii) payment of any
      unreimbursed business expenses; (iv) earned but unpaid amount of the annual
      bonus that Executive would be eligible to receive under the Company's Annual
      Bonus Plan, but only those amounts that were earned during the fiscal year
      immediately preceding the fiscal year during which the Executive's termination
      occurs; and (v) benefits the Executive is entitled to receive under the employee
      benefit plans of the Company, including the SERP, if any, less standard
      withholdings for tax and social security purposes, through the Date of
      Termination. Except
      as required
      by law,
      after
      the Date of
      Termination the Company shall have no further obligation to pay any compensation
      of any kind or severance payment of any kind nor to make any further payment
      in
      lieu of notice to Executive.

     

    7.3    Termination
      for
      Cause.
      The Company may
      terminate Executive's employment with the Company at any time for Cause. In
      the
      event that Executive's employment is terminated under this Section 7.3,
      Executive shall receive (i) payment for all earned but unpaid Base Salary;
      (ii)
      payment for accrued but unused vacation; (iii) payment of any unreimbursed
      business expenses; and (iv) benefits the Executive is then entitled to receive
      under the employee benefit plans of the Company, if any, but excluding bonuses
      otherwise payable under the Company's Annual Bonus Plan, less standard
      withholdings for tax and social security purposes, through the Date of
      Termination. Except
      as required
      by law,
      after
      the Date of
      Termination the Company shall have no further obligation to pay any severance
      or
      compensation of any kind nor to make any payment in lieu of notice to Executive.
      Except as required by law, all benefits provided by the Company to Executive
      under this Agreement or otherwise shall cease as of the Date of
      Termination.

     

    
      
        
        

      

      
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    7.4    Termination
      Without Cause.
      The Company may,
      at any time and without prior written notice, terminate Executive without Cause.
      In the event that Executive's employment with the Company is terminated without
      Cause, Executive shall receive (i) payment for all earned but unpaid Base
      Salary; (ii) payment for accrued but unused vacation; (iii) payment of any
      unreimbursed business expenses; (iv) a pro-rata amount of the annual bonus
      that
      Executive would be eligible to receive under the Company's Annual Bonus Plan
      for
      the year in which Executive's termination occurs; (v) LTIP benefits in
      accordance with the terms of the LTIP, as
      modified by
      Section 3.4(d) hereof; (vi) benefits under the SERP, provided that Executive
      shall become fully vested in his benefits under the SERP upon termination
      pursuant to this Section 7.4; (vii) the benefits provided for in Sections 3.7
      and 3.8 hereof; (viii) payment of the Equity Bonus as provided in Section 3.4
      hereof, provided
      that
      Executive shall become fully vested in his benefits under Section 3.4 upon
      termination pursuant to this Section 7.4,
      and (ix) any other
      benefits that Executive is entitled to receive as of the Date of Termination
      under applicable benefit plans of the Company,
      less standard
      withholdings for tax and social security purposes.
      Except as
      specifically provided in this Section 7.4 and except as required by law, all
      benefits provided by the Company to Executive under this Agreement or otherwise
      shall cease as of the Date of Termination.

     

    7.5    Termination
      for
      Good Reason.
      Notwithstanding
      anything in this Section 7 to the contrary, Executive may voluntarily terminate
      his employment with the Company and receive the benefits detailed in Section
      7.4
      upon or within 180 days following the occurrence of an event constituting Good
      Reason.

     

    7.6    Certain
      Definitions.
      For purposes of
      this Agreement, the following term shall have the meanings set forth
      below.

     

    (a)    "Cause"
      shall mean that
      Executive shall: (i) commit an act of fraud, embezzlement or misappropriation
      involving the Company; (ii) be convicted by a court of competent jurisdiction
      of, or enter a plea of guilty of no contest to, any felony involving moral
      turpitude or dishonesty (other than driving while intoxicated or while under
      the
      influence of alcohol or drugs); (iii) commit an act, or fail to commit an act,
      involving the Company which amounts to, or with the passage of time would amount
      to, willful misconduct, gross negligence or a breach of this Agreement and
      which
      results or will result in material harm to the Company; or (iv) willfully fail
      to perform the responsibilities and duties specified herein for a period of
      ten
      (10) days following receipt of written notice from the Company which
      specifically describes past instances of willful failure of performance;
      provided that in the case of (iv) above, during the 10-day period following
      receipt of such notice, Executive shall be given the opportunity to take
      reasonable steps to cure any such claimed past failure of
      performance.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (b)    "Date
      of
      Termination"
      shall mean
      (i) if Executive is terminated by the Company for Disability, 30 days after
      written notice of termination is given to Executive (provided that Executive
      shall not have returned to the performance of his duties on a full-time basis
      during such 30-day period) or (ii) if Executive's employment is terminated
      by the Company for any other reason or by Executive, the date on which a written
      notice of termination, specifying in reasonable detail the facts and
      circumstances claimed to provide a basis for termination of Executive's
      employment is given; provided that, in the case of a termination for Cause,
      Executive shall not have cured the matter or matters stated in the notice of
      termination within the 10-day notice period provided in Section 7.6(a)
      above.

     

    (c)    "Disability"
      shall mean a
      physical or mental disability that renders Executive unable, as determined
      in
      good faith by a licensed physician, to perform the essential functions of his
      position, even with reasonable accommodation, for 180 days within any 12-month
      period. The Company and Executive or his legal representative shall use their
      best efforts to agree on the physician to determine Disability. If they cannot
      agree within 10 days after the first party makes a written proposal stating
      the
      name of a physician, then the other party shall select a physician within 10
      days and within 10 days thereafter the two physicians shall select a third
      physician. All such physicians must be board certified in the medical area
      giving rise to the alleged Disability. The determination of the third physician
      shall be final and binding. If one party fails to select a physician within
      the
      10-day period, the physician named by the other party shall make the
      determination of Disability.

     

    (d)    "Good
      Reason"
      shall mean
      Executive's resignation from employment within 180 days after the occurrence
      of
      one of the following events:

     

    (i)
      a change of
      Executive's title as Chief Financial Officer or a material reduction in
      Executive's responsibilities without Executive's written consent;

     

    (ii)
      any one of the
      following reductions in Executive’s compensation by the Company: (1) reduction
      in Base Salary at any time during the Employment Term; (2) reduction in the
      number of Equity Bonus units granted to Executive for a fiscal year to a number
      of Equity Bonus units that is less than the number of such units required to
      be
      granted to Executive under Section 3.4(a) of the Agreement; (3) reduction in
      the
      amount of cash bonus paid to Executive under the Company's Bonus Plan to an
      amount that is less than the highest cash bonus paid to Executive under the
      Bonus Plan for any of the three fiscal years immediately preceding the fiscal
      year in which the Executive provides notice to the Company of his termination
      for Good Reason (“Good Reason Notice”); (4) reduction in the amount contributed
      as a Company matching or profit-sharing contribution (“Employer Contribution”)
      made on behalf of Executive under the Company's 401(k) plan (or any successor
      plan) to an amount that is less than the highest Employer Contribution made
      on
      behalf of the Executive for any of the three fiscal years immediately preceding
      the fiscal year in which Good Reason Notice occurs, unless such reduction is
      required to comply with the requirements under the Internal Revenue Code that
      are applicable to tax-qualified retirement plans; and (5) reduction in amounts
      allocated or accrued (whether or not funded) as a Company contribution on behalf
      of Executive under the Company's SERP (or any successor plan) (“SERP Accrual”)
      to an amount that is less than the highest SERP Accrual made on behalf of
      Executive for any of the three fiscal years immediately preceding the year
      in
      which Good Reason Notice occurs;

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (iii)
      relocation to
      any place more than twenty-five (25) miles from the office regularly occupied
      by
      the Executive as of the Effective Date, except for required travel by the
      Executive on the Company's business to an extent substantially consistent with
      the Executive's business travel obligations as of the Effective Date;


     

    (iv)
      any material
      breach by the Company of any provision of this Agreement; or 

     

    (v)
      the failure by
      the Company or by any successor or assign of the Company (whether by operation
      of law or otherwise, including any surviving company in a merger or similar
      transaction involving the Company), within ten business days following a Change
      in Control to deliver to the Executive an agreement expressly reaffirming its
      obligations under or agreeing to assume and comply with the obligations of
      the
      Company under this Agreement.

     

    8.    Change
      of Control.

     

    8.1    Severance
      Benefits.
      Upon the
      occurrence of a Change of Control, Executive shall be entitled to severance
      payments as specified in Section 5 of the Building Materials Holding Corporation
      Severance Plan for Certain Executive Officers, Senior Management and Key
      Employees of the Company and its Subsidiaries, including any amendments thereto,
      as of the Effective Date ("Severance Plan"); for avoidance of doubt, reference
      to the provisions of the Severance Plan made herein shall be without regard
      to
      any amendments to the Severance Plan made after the Effective Date unless such
      subsequent amendments have the effect of increasing any benefit pursuant to
      the
      Severance Plan. A copy of the Severance Plan in effect as of the Effective
      Date
      of this Agreement is attached as Exhibit 1. The multiple used to calculate
      the
      amount payable under Section 5(i), 5(ii) and 5(iii) of the Severance Plan shall
      be the number of whole years remaining in the Employment Term plus a fraction
      representing any partial year remaining in the Employment Term. The payments
      to
      Executive under the Severance Plan shall be increased as provided in Section
      6
      of the Severance Plan to the extent such payments trigger the provisions of
      Section 6. For avoidance of doubt, Executive shall not participate in the
      Severance Plan and shall not be entitled to severance benefits except as
      expressly provided in this Section 8.

     

    8.2    Severance
      Calculation.
      Notwithstanding
      any provision of the Severance Plan to the contrary, the definition of “Cash
      Compensation" shall include the sum of the highest Equity Bonus paid under
      Section 3.4 hereunder to Executive or any annualized comparable bonus paid
      to
      Executive under any predecessor employment agreement (all such bonuses shall
      be
      referred to as “Equity Bonus”) with the Company during any of the three fiscal
      years immediately preceding the year in which the Change of Control occurs
      or,
      if greater, the annualized value of any pro rata Equity Bonus paid during the
      year in which the Change of Control occurs. 

     

    8.3    Code
      Section
      409A.
      Notwithstanding
      anything herein or in the Severance Plan to the contrary, to the extent that
      the
      Board determines, in its sole discretion, that any payment or benefit to be
      provided under Section 8.1 to or for the benefit of Executive would be subject
      to the additional tax imposed under Section 409A(a)(1)(B) of the Internal
      Revenue Code of 1986, as amended (the "Code")
      or a successor
      or comparable provision, the commencement of such payments and/or benefits
      shall
      be delayed until the earlier of (x) the date that is six months following
      the Date of Termination or (y) the date of Executive's death or disability
      (within the meaning of Section 409A(a)(2)(C) of the Code) (such date is referred
      to herein as the "Distribution Date"). In the event that the Board determines
      that the commencement of any of the benefits to be provided under Section 8.1
      are to be delayed pursuant to the preceding sentence, the Company shall require
      Executive to bear the full cost of such benefits until the Distribution Date
      at
      which time the Company shall reimburse Executive for all such
      costs.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    8.4    Termination
      of
      Obligations.
      Upon the
      consummation of a Change of Control, Executive's obligations under this
      Agreement shall terminate, except as otherwise provided in Sections 4 and
      5.

     

    8.5    Payment
      of
      Severance.
      Payment of the
      Severance benefit to Executive shall occur within 10 days of the Change of
      Control notwithstanding Section 8.3 of this agreement or any provisions in
      the
      Severance Agreement.

    


    9.    Warranties
      and Representations.
      Executive hereby
      represents and warrants to the Company that he is not now under any obligation
      of a contractual or quasi-contractual nature known to him that is inconsistent
      or in conflict with this Agreement or that would prevent, limit or impair the
      performance by Executive of his obligations hereunder; and has been or has
      had
      the opportunity to be represented by legal counsel in the preparation,
      negotiation, execution and delivery of this Agreement and understands fully
      the
      terms and provisions hereof

     

    10.    Notices

     

    All
      notices
      required or permitted to be given by either party hereunder shall be in writing
      and shall be deemed sufficiently given if mailed by registered or certified
      mail, or personally delivered to the party entitled thereto at the address
      stated below, or to such changed address as the addressee may have given by
      a
      similar notice:

     

    
      	
              To
                the
                Company:

            	
              Building
                Materials Holding Corporation

              Four
                Embarcadero Center, Suite 3200

              San
                Francisco, California 94111

              Attn:
                Chairman of the Compensation Committee 

              Fax:
                (415)
                627-9119

               

            
	
              With
                a Copy
                to:

            	
              Building
                Materials Holding Corporation

              720
                Park
                Blvd., Suite 200

              P.O.
                Box
                7006

              Boise,
                Idaho,
                83707

              Fax:
                (208)
                387-4367

              Attention:
                Paul Street, Esq.

               

            
	
              To
                Executive:

            	
              William
                M.
                Smartt

              Building
                Materials Holding Corporation

              Four
                Embarcadero Center, Suite 3200

              San
                Francisco, California 94111

              Telecopier:
                (415) 627-9119

            


    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    11.    General
      Provisions

     

    11.1    Waiver.
      No waiver by any
      party hereto of any failure of any other party to keep or perform any covenant
      or condition of this Agreement shall be deemed to be a waiver of any preceding
      or succeeding breach of the same, or any other covenant or
      condition.

     

    11.2    Amendments.
      No provision of
      this Agreement may be amended, modified or waived unless such amendment,
      modification or waiver shall be agreed to in writing and signed by Executive
      and
      a duly authorized officer of the Company.

     

    11.3    Severability.
      If any provision
      of this Agreement shall be determined to be invalid or unenforceable by a court
      of competent jurisdiction, the remaining provisions of this Agreement shall
      remain in full force and effect to the fullest extent permitted by
      law.

     

    11.4    Assignment.
      No right to or
      interest in any payments shall be assignable by either party; provided; however,
      that this provision shall not preclude Executive from designating one or more
      beneficiaries to receive any amount that may be payable after his death and
      shall not preclude his executor or administrator from assigning any right
      hereunder to the person or persons entitled hereto. Further, the Company may
      assign this Agreement: (a) to an affiliate so long as such affiliate assumes
      the
      Company's obligations hereunder, or (b) in connection with a merger or
      consolidation involving the Company or a sale of substantially all its assets
      or
      shares to the surviving corporation or purchaser as the case may be so long
      as
      such assignee assumes the Company's obligations hereunder.

     

    11.5    Successors
      and
      Assigns.
      This Agreement
      and the obligations of the Company and Executive hereunder shall be binding
      upon
      and shall be assumed by their respective successors including, without
      limitation, any corporation or corporations acquiring the Company, whether
      by
      merger, consolidation, sale or otherwise.

     

    11.6    Governing
      Law.
      The validity,
      interpretation, performance, and enforcement of this Agreement shall be governed
      by the laws of the State of California without regard to the principles of
      conflict of laws thereof.

     

    11.7    Attorney's
      Fees
      and Costs.
      If any action at
      law or in equity is necessary to enforce or interpret the terms of this
      Agreement, the prevailing party shall be entitled to reasonable attorneys'
      fees,
      costs, and necessary disbursements in addition to any other relief to which
      that
      party may be entitled, provided that in the case of any dispute involving
      payment or calculation of the amount of payment under the Severance Plan and
      as
      provided for in Section 8 of this Agreement, the Company shall pay Executive’s
      legal fees incurred including and costs incurred in enforcing the terms of
      the
      Severance Agreement and this Agreement. This provision shall be construed as
      applicable to the entire contract.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    11.8    No
      Representation.
      No officer,
      employee or representative of the Company has any authority to make any
      representation or promise in connection with this Agreement or the subject
      matter hereto which is not contained herein, and Executive agrees that he has
      not executed this Agreement in reliance upon any such representation or
      promise.

     

    11.9    Interpretation
      of Agreement.
      Each of the
      parties has been represented by counsel in the negotiation and preparation
      of
      this Agreement. The parties agree that this Agreement is to be construed as
      jointly drafted. Accordingly, this Agreement will be construed according to
      the
      fair meaning of its language, and the rule of construction that ambiguities
      are
      to be resolved against the drafting party will not be employed in the
      interpretation of this Agreement.

     

    11.10    Headings.
      The headings of
      sections and subsections are included solely for convenience of reference and
      shall not control the meaning or interpretation of any of the provisions of
      this
      Agreement.

     

    11.11    Entire
      Agreement.
      This document
      constitutes the entire understanding and Agreement of the parties with respect
      to the subject matter of this Agreement, and any and all prior agreements,
      understandings and representations are hereby terminated and cancelled in their
      entirety and are of no further force or effect.

     

    11.12    Counterparts.
      This Agreement
      may be executed in two or more counterparts with the same effect as if the
      signatures to all such counterparts was upon the same instrument, and all such
      counterparts shall constitute but one instrument.

     

    11.13    Remedies.
      In view of the
      position of confidence which Executive will enjoy with the Company and the
      anticipated relationship with the clients, customers, and employees of the
      Company and its affiliates pursuant to his employment hereunder, and recognizing
      both the access to confidential financial and other information which Executive
      will have pursuant to his employment, Executive expressly acknowledges that
      the
      restrictive covenants set forth in Section 5 are reasonable and necessary in
      order to protect and maintain the proprietary interests and other legitimate
      business interests of the Company and its affiliates. Executive further
      acknowledges that (1) it would be difficult to calculate damages to the Company
      and its affiliates from any breach of his obligations under this Section 5,
      (ii)
      that injury to the Company and its affiliates from any such breach would be
      irreparable and impossible to measure, and (iii) that the remedy at law for
      any
      breach or threatened breach of Section 5 would therefore be an inadequate remedy
      and, accordingly, the Company shall, in addition to all other available remedies
      (including without limitation seeking such damages as it can show it and its
      affiliates has sustained by reason of such breach and/or the exercise of all
      other rights it has under this Agreement), be entitled to injunctive and other
      similar equitable remedies.

     

    11.14    No
      Mitigation of
      Damages.
      Executive shall
      not be required to mitigate damages or the amount of any payment provided for
      under this Agreement by seeking other employment or otherwise, nor shall the
      amount of any payment provided for under this Agreement be reduced by any
      compensation earned by Executive as a result of employment by another employer
      or by retirement benefits after the Date of Termination, except as specifically
      provided hereunder. The provisions of this Agreement, and any payment provided
      for hereunder, shall not reduce any amounts otherwise payable, or in any way
      diminish the Executive's then existing rights, or rights which would accrue
      solely as a result of the passage of time, under any Company benefit plan or
      other contract, plan or arrangement.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    11.15    Dispute
      Resolution and Binding Arbitration.
      Executive and the
      Company agree that in the event a dispute arises concerning or relating to
      Executive's employment with the Company, such dispute shall be submitted to
      binding arbitration in accordance with the employment arbitration rules of
      Judicial Arbitration and Mediation Services ("JAMS")
      by a single
      impartial arbitrator selected as follows: if the Company and Executive are
      unable to agree upon an impartial arbitrator within ten (10) days of a request
      for arbitration, the parties shall request a panel of employment arbitrators
      from JAMS and alternative strike names until a single arbitrator remains. The
      arbitration shall take place in San Francisco, California, and both Executive
      and the Company agree to submit to the jurisdiction of the arbitrator selected
      in accordance with JAMS' rules and procedures. Except as set forth in
      Section 10.13 hereof, Executive and the Company agree that the arbitration
      procedure provided for in this section will be the exclusive avenue of redress
      for any disputes relating to or arising from Executive's employment with the
      Company, and that the award of the arbitrator shall be final and binding on
      both
      parties, and nonappealable. The arbitrator shall have discretion to award
      monetary and other damages, or no damages, and to fashion such other relief
      as
      the arbitrator deems appropriate. The arbitration charges will be shared equally
      by the parties up to the cost of a first appearance fee in state court; any
      arbitration charge in excess of the first appearance fee shall be paid by the
      Company. THE COMPANY AND EXECUTIVE ACKNOWLEDGE AND AGREE THAT BY AGREEING TO
      ARBITRATE, THEY ARE WAIVING ANY RIGHT TO BRING AN ACTION AGAINST THE OTHER
      IN A
      COURT OF LAW, EITHER STATE OR FEDERAL, AND ARE WAIVING THE RIGHT TO HAVE CLAIMS
      AND DAMAGES, IF ANY, DETERMINED BY A JURY.

     

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

     

    
      	 	 	 
	
              

              William
                M.
                Smartt  

            	
              BUILDING
                MATERIALS HOLDING CORPORATION

            
	 
 	 
 	 
 
	 	By:  	 
	 	 	
              
 
	 	Title:  	 
	 	
              

            
	 	 


    

     

    
      
        
        

      

      15