FOR PURPOSES OF THIS AGREEMENT, "AFFILIATES" SHALL MEAN ANY
CORPORATION OR OTHER ENTITY WHICH IS DIRECTLY OR INDIRECTLY CONTROLLED BY OR
UNDER COMMON CONTROL WITH THE COMPANY OR ITS SUBSIDIARIES; PROVIDED THAT, FOR
PURPOSES OF THIS AGREEMENT, IN NO EVENT SHALL AN "AFFILIATE" BE DEEMED TO
INCLUDE MADISON DEARBORN CAPITAL PARTNERS IV, L.P. ("MDCP") OR ANY DIRECT OR
INDIRECT PORTFOLIO COMPANY OF MDCP, OTHER THAN FOREST PRODUCTS HOLDINGS, L.L.C.
("FPH") AND ITS SUBSIDIARIES AND OTHER CONTROLLED INVESTMENTS OF FPH.
3.
COMPENSATION AND BENEFITS.
(A)
DURING THE EMPLOYMENT PERIOD, EXECUTIVE'S BASE SALARY SHALL BE
EIGHT HUNDRED THOUSAND DOLLARS ($800,000) PER ANNUM (AS ADJUSTED FROM TIME TO
TIME IN ACCORDANCE WITH THE FOLLOWING SENTENCE, THE "BASE SALARY"), WHICH SALARY
SHALL BE PAYABLE BY THE COMPANY IN REGULAR INSTALLMENTS IN ACCORDANCE WITH THE
COMPANY'S GENERAL PAYROLL PRACTICES (IN EFFECT FROM TIME TO TIME).
EXECUTIVE
AND THE COMPANY SHALL REVIEW THE BASE SALARY EACH YEAR DURING THE EMPLOYMENT
PERIOD (BEGINNING JANUARY 1, 2010), AND EXECUTIVE MAY RECEIVE INCREASES IN HIS
BASE SALARY FROM TIME TO TIME, BASED UPON HIS PERFORMANCE, SUBJECT TO APPROVAL
OF THE COMPENSATION COMMITTEE OF THE BOARD (THE "COMPENSATION COMMITTEE").
DURING THE PERIOD BEGINNING ON THE DATE OF THIS AGREEMENT AND ENDING
DECEMBER 31, 2008, THE BASE SALARY SHALL BE PRO RATED ON AN ANNUALIZED BASIS.
IN ADDITION, DURING THE EMPLOYMENT PERIOD, EXECUTIVE SHALL, SUBJECT TO
SATISFYING THE ELIGIBILITY CRITERIA THEREFOR, BE ENTITLED TO PARTICIPATE IN THE
COMPANY'S WELFARE BENEFIT PROGRAMS, 401(K) PLANS, KEY EXECUTIVE DEFERRED
COMPENSATION PLAN AND OTHER EMPLOYEE BENEFIT PLANS AND SHALL BE ENTITLED TO
PARTICIPATE IN OTHER PERQUISITE PROGRAMS OF THE COMPANY, IN EACH CASE FOR WHICH
OTHER SIMILARLY SITUATED SENIOR EXECUTIVE EMPLOYEES OF THE COMPANY THAT ARE
FIRST BEGINNING EMPLOYMENT ON THE EFFECTIVE DATE ARE GENERALLY ELIGIBLE, AND
EXECUTIVE SHALL BE ENTITLED TO FOUR WEEKS OF PAID VACATION EACH CALENDAR YEAR IN
ACCORDANCE WITH THE COMPANY'S POLICIES.
NOTWITHSTANDING THE FOREGOING, THE
COMPANY MAY MODIFY OR TERMINATE ANY EMPLOYEE BENEFIT PLAN OR PERQUISITE PROGRAM
AT ANY TIME.
(B)
IN ADDITION TO BASE SALARY, DURING THE EMPLOYMENT PERIOD,
EXECUTIVE WILL HAVE AN OPPORTUNITY TO EARN A CASH BONUS EACH YEAR AS DETERMINED
BY THE COMPENSATION COMMITTEE OR THE BOARD, WITH A TARGET ANNUAL BONUS EQUAL TO
ONE HUNDRED PERCENT (100%) OF EXECUTIVE'S BASE SALARY (THE "TARGET BONUS") WITH
RESPECT TO ANY CALENDAR YEAR.
THE TARGET BONUS WILL BE BASED ON FINANCIAL AND
OTHER OBJECTIVE TARGETS THAT THE COMPENSATION COMMITTEE OR THE BOARD REASONABLY
BELIEVES ARE REASONABLY ATTAINABLE AT THE TIME THAT THEY ARE SET.
(C)
ON THE DATE HEREOF, FPH AND EXECUTIVE SHALL EXECUTE AND DELIVER
THAT CERTAIN MANAGEMENT EQUITY AGREEMENT, DATED AS OF THE EFFECTIVE DATE, IN
SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT A.
(D)
DURING THE EMPLOYMENT PERIOD, THE COMPANY SHALL REIMBURSE
EXECUTIVE FOR ALL REASONABLE BUSINESS EXPENSES INCURRED BY HIM IN THE COURSE OF
PERFORMING HIS DUTIES AND RESPONSIBILITIES UNDER THIS AGREEMENT WHICH ARE
CONSISTENT WITH THE COMPANY'S POLICIES IN EFFECT FROM TIME TO TIME WITH RESPECT
TO TRAVEL, ENTERTAINMENT AND OTHER BUSINESS EXPENSES