Document:

Exhibit
10.1

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made by and between
OfficeMax Incorporated, a Delaware corporation (the “Company”), and Sam Duncan
(the “Executive”), dated April 14, 2005 and effective as of the Effective
Date (as hereinafter defined).

 

W I T N E S S E T H:

 

WHEREAS, the Company wishes to provide for
the employment by the Company of the Executive, and the Executive wishes to
serve the Company, in the capacities and on the terms and conditions set forth
in this Agreement;

 

NOW, THEREFORE, it is agreed as follows:

 

1.                                       TERM.  The term of this Agreement (the “Term”) and
Executive’s employment hereunder shall commence on April 18, 2005 (the “Effective
Date”) and end on April 17, 2008, provided that, commencing on April 17,
2008 and on each subsequent anniversary thereof (each, a “Renewal Date”), the
Term shall be extended by an additional year unless either party shall have
given written notice of non-renewal to the other at least 90 days prior to the
applicable Renewal Date.

 

2.                                       POSITION
AND DUTIES.

 

(a)                                  During the Term the
Executive shall serve as the Chief Executive Officer and President of the
Company; in each case with such duties and responsibilities as are customarily
assigned to such positions, and have such other duties and responsibilities not
inconsistent therewith as may from time to time be assigned to him by the
Board.  As of the Effective Date or as
soon thereafter as practicable, the Company shall cause the Executive to be
elected as a member of the board of directors of the Company (the “Board”) to
serve as a member of the class of directors with a term expiring in 2006.  Thereafter, while Executive is employed
during the Term, the Company shall cause the Executive to be included in the
slate of persons nominated to serve as directors on the Board following the end
of each term of the Executive’s service as a director.  Upon any termination of his employment with
the Company, the Executive shall promptly resign from the Board and from all
other offices held with the Company and its subsidiaries.

 

(b)                                 During the Term, and
excluding any periods of vacation and sick leave to which the Executive is
entitled, the Executive shall devote his full attention and time to the
business and affairs of the Company and use the Executive’s reasonable best
efforts to carry out such responsibilities faithfully and efficiently.  It

 

1

 

shall not be considered a violation of the foregoing for the Executive
to manage his personal investments or, subject to the approval of the Board, to
serve on corporate, industry, civic or charitable boards or committees, so long
as such activities do not interfere with the performance of the Executive’s
responsibilities as an executive officer of the Company in accordance with this
Agreement.

 

(c)                                  During the Term, the
Executive shall be based at the Company’s principal headquarters in Itasca,
Illinois, except for travel reasonably required for the performance of the
Executive’s duties hereunder.

 

3.                                       COMPENSATION.

 

(a)                                  BASE
SALARY.  During the Term, the Executive
shall receive an annual base salary (“Annual Base Salary”) of $850,000.  The Annual Base Salary shall be payable in
accordance with the Company’s regular payroll practice for its senior
executives, as in effect from time to time. 
During the Term, the Annual Base Salary shall be periodically reviewed
by the Executive Compensation Committee of the Board (the “Compensation
Committee”) for possible increase. 
Following any such increase, the term “Annual Base Salary” shall
thereafter refer to the Annual Base Salary as so increased.

 

(b)                                 CASH BONUSES.

 

(i)                                     SIGN-ON
BONUS.  If, within 60 days following the
Effective Date, the Executive’s prior employer takes steps to rescind or seek
reimbursement of the Executive’s 2004 bonus in the amount of $400,557 (the “2004
Bonus”), which was paid on or about April 5, 2005, the Executive shall use
his reasonable best efforts to resist his prior employer’s actions.  If, despite Executive’s efforts, he is
unsuccessful in causing his prior employer to reinstate the 2004 Bonus, the
Company shall pay to the Executive a sign-on bonus of $400,557 (the “Sign-on
Bonus”), which amount is in lieu of the Executive’s 2004 bonus from his prior
employer.  If the Company pays the
Sign-on Bonus and Executive is subsequently successful in causing his prior
employer to reinstate the 2004 Bonus, the Executive  shall immediately notify the Company of any
amount of such bonus paid to him by his prior employer and promptly reimburse
such amount to the Company.

 

(ii)                                  ANNUAL
INCENTIVE AWARD.  For fiscal years during
the Term, the Executive shall participate in annual cash incentive compensation
plans, as adopted and approved by the Board or the Compensation Committee from
time to time, with targets and performance measures determined by the
Compensation Committee.  The Executive’s
annual target cash incentive opportunity pursuant to such plans for each fiscal
year shall equal 100% (or such

 

2

 

greater percentage as the Board may establish
for Executive from time to time) of the Annual Base Salary in effect for the
Executive at the end of such fiscal year, with a maximum potential award equal
to 225% of the Annual Base Salary in effect for the Executive at the beginning
of such fiscal year, subject to any limitations set by the Compensation
Committee from time to time.  With
respect to the award for the Company’s 2005 fiscal year, the Executive’s annual
cash incentive award shall be governed by the provisions of the 2003 OfficeMax
Incentive and Performance Plan (the “Plan”) and an award agreement
substantially in the form attached as Exhibit A.  Any annual cash incentive awards payable to
the Executive will be paid at the time the Company normally pays such awards to
its senior executives.

 

(c)                                  OPTION GRANTS.

 

(i)                                     INITIAL
OPTION GRANT.  As soon as practicable
following the Effective Date, the Compensation Committee shall grant to the
Executive a ten-year nonqualified option (the “Initial Option”) to purchase
70,000 shares of the Company’s common stock (“Company Stock”).  The Initial Option shall have a per share
exercise price equal to the closing price of the Company Stock on the New York
Stock Exchange on the date of grant.  The
Initial Option shall vest and become fully exercisable with respect to 33.3% of
the shares subject thereto on each of the first three anniversaries of the
grant date and shall be governed by the provisions of the Plan and an option
agreement substantially in the form attached hereto as Exhibit B.

 

(ii)                                  OTHER
OPTION GRANT.  As soon as practicable
following the Effective Date, the Compensation Committee shall grant to the
Executive an additional ten-year nonqualified option (the “Other Option”) to
purchase 180,000 shares of Company Stock. 
The Other Option shall vest with respect to 20% of the Company Stock
subject to the Other Option on each of the first five anniversaries of the
grant date and shall be governed by the provisions of the Plan and an option
agreement substantially in the form attached hereto as Exhibit C.

 

(d)                                 RESTRICTED STOCK UNIT
GRANTS.

 

(i)                                     INITIAL
RESTRICTED STOCK UNITS.  As soon as
practicable following the Effective Date, the Compensation Committee shall
grant to the Executive an aggregate of 35,000 restricted Company Stock units
under the Plan (such units, the “Initial Restricted Stock Units”).  Each Initial Restricted Stock Unit shall be
governed by the provisions of the Plan and an agreement substantially in the
form attached hereto as Exhibit D. 
Subject to the provisions of the agreement and the Plan, 33.3% of the
Initial Restricted Stock Units shall vest and immediately be paid on each of
the first three anniversaries of the grant date; provided, however, that

 

3

 

if, in the good faith determination of the
Company (which shall be made immediately prior to the scheduled vesting date),
some or all of the remuneration attributable to the payment of the Initial
Restricted Stock Units shall fail to be deductible by the Company for federal
income tax purposes pursuant to Section 162(m) of the Internal Revenue
Code, as amended (the “Code”), the payment of such Initial Restricted Stock
Units shall be automatically deferred (the “Automatic Deferral”) and shall
instead take place on the day following the six month anniversary of the Date
of Termination (as defined below); provided further, however, that if, in the
good faith determination of the Company such Automatic Deferral can reasonably
be expected to result in the imposition of tax on the Executive with respect to
the Initial Restricted Stock Units prior to payment being made with respect to
such Initial Restricted Stock Units pursuant to Section 409A of the Code,
this provision shall be reformed to provide that all of the Initial Restricted
Stock Units shall be paid out on the day following the six month anniversary of
the Date of Termination.

 

(ii)                                  OTHER
RESTRICTED STOCK UNITS.  As soon as
practicable following the Effective Date, the Compensation Committee shall
grant to the Executive an additional grant of an aggregate of 15,000 restricted
Company Stock units under the Plan (such units, together with any additional
units credited hereunder, the “Other Restricted Stock Units”).  Each Other Restricted Stock Unit shall vest
with respect to 20% of the Other Restricted Stock Units on each of the first
five anniversaries of the grant date and shall otherwise be governed by the
provisions of the Plan and an agreement substantially in the form attached
hereto as Exhibit E, provided that the provisions set forth above with respect
to Automatic Deferral shall also apply to the Other Restricted Stock Units.

 

(e)                                  OTHER LONG-TERM
INCENTIVE COMPENSATION.  Commencing with
the Company’s 2006 fiscal year and annually thereafter while the Executive is
employed during the Term, the Company shall grant to the Executive long-term
incentive compensation awards (which may consist of equity awards, long-term
cash awards or other forms of long-term incentive compensation, as determined
by the Compensation Committee) with a present value (as determined by the
Compensation Committee) approximately equal to 350% of the Executive’s
then-current Annual Base Salary.  Such
awards shall have terms and conditions (including performance criteria, vesting
schedules and acceleration provisions, if any) determined by the Compensation
Committee.

 

(f)                                    OTHER
BENEFITS.  While the Executive is
employed during the Term: (1) the Executive shall be entitled to participate in
all tax-qualified retirement plans of the Company and shall be entitled to
participate in all fringe benefit and perquisite practices, policies and
programs of the Company, in each case

 

4

 

as are made available to the senior officers of the Company and (2) the
Executive and/or the Executive’s eligible dependents, as the case may be, shall
be eligible to participate in all welfare benefit plans, practices, policies
and programs provided by the Company, including any medical, prescription,
dental, disability, employee life insurance, group life insurance, accidental
death and travel accident insurance plans and programs to the same extent, and
subject to the same terms and conditions, as such arrangements are made
available to the senior officers of the Company.

 

(g)                                 PAID TIME OFF AND
RELOCATION.  The Executive shall be
entitled to 5 weeks paid time off per year in accordance with the Company’s
paid time off policy.  Carryover of
unused paid time off from year to year shall be according to the terms of the
policy.  Executive shall be provided
relocation benefits consistent with the Company’s relocation policy, attached
as Exhibit F, for expenses incurred in connection with the relocation of
Executive and his spouse to the Itasca, Illinois, area.

 

(h)                                 CHANGE OF CONTROL AGREEMENT.  Following the Effective Date, the Executive
and the Company shall enter into a change of control agreement (the “Change of
Control Agreement”) substantially similar to those which the Company has
offered or will offer to its other senior executives in 2005 (and attached
hereto as Exhibit G), it being understood that if the Executive’s employment is
terminated under circumstances entitling him to severance benefits under this
Agreement and the Change of Control Agreement, the severance payments described
in Section 5(a) shall be offset (but not below zero) by similar payments
and benefits provided under the Change of Control Agreement.

 

(i)                                     SUPPLEMENTAL
PENSION BENEFIT.  Upon the fifth
anniversary of the Effective Date, the Executive (if employed by the Company on
such anniversary) shall vest in a supplemental pension benefit (the “Supplemental
Pension Benefit”) in an annual amount equal to the product of (A) two percent
(2%) of the sum of (1) the average amount of Annual Base Salary earned by the Executive
with respect to the five most recently completed years of the Executive’s
employment with the Company (such years to be calculated by reference to
calendar years) plus (2) the average amount of the annual cash bonuses earned
by the Executive pursuant to Section 3(b)(ii) for the Company’s five
completed fiscal years immediately preceding the termination of the Executive’s
employment and (B) the number of completed full years of Executive’s employment
with the Company (also calculated by reference to calendar years, provided that
Executive shall be deemed to have completed a full calendar year of employment
with the Company for 2005).  The amount
of the Executive’s Supplemental Pension Benefit shall be offset by any amounts
payable to the Executive under any qualified or nonqualified pension plans of
the Company (with the amount of any balance in a defined contribution plan

 

5

 

converted into a single life annuity for purposes of calculating the
amount of such offset) and by the amount of the Executive’s benefit from Social
Security.  The Supplemental Pension
Benefit shall be payable according to Executive’s election on the election form
attached as Exhibit H.

 

4.                                       TERMINATION OF EMPLOYMENT.

 

(a)                                  DEATH OR DISABILITY.  The Executive’s employment shall terminate
automatically upon the Executive’s death during the Term.  The Company shall be entitled to terminate
the Executive’s employment because of the Executive’s Disability during the
Term.  “Disability” means that the
Executive is disabled within the meaning of the Company’s long-term disability
policy or, if there is no such policy in effect, that (i) the Executive has
been substantially unable, for 120 calendar days within a period of 180
consecutive calendar days, to perform the Executive’s duties under this
Agreement, as a result of physical or mental illness or injury, and (ii) a
physician selected by the Company or its insurers, and reasonably acceptable to
the Executive or the Executive’s legal representative, has determined that the
Executive is disabled.  A termination of
the Executive’s employment by the Company for Disability shall be communicated
to the Executive by written notice, and shall be effective on the 30th day
after receipt of such notice by the Executive (the “Disability Effective Time”),
unless the Executive returns to full-time performance of the Executive’s duties
before the Disability Effective Time.

 

(b)                                 TERMINATION BY THE
COMPANY.

 

(i)                                     The Company may
terminate the Executive’s employment during the Term for Cause or without
Cause.  “Cause” means that the Executive’s
(1) willful and continued failure to substantially perform his duties with the
Company, or (2) the Executive’s willful engagement in conduct which is
materially injurious to the Company, monetarily or otherwise.  For purposes of this Section 4(b)(i), no
act or failure to act on the Executive’s part shall be considered “willful”
unless done or omitted to be done by the Executive not in good faith and
without reasonable belief that the Executive’s act or omission was in the best
interest of the Company.  Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated for
Cause unless and until (X) a resolution is duly adopted by the affirmative vote
of not less than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for the purpose (after reasonable notice
to the Executive and an opportunity for the Executive, together with his
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board the Executive was guilty of conduct set forth above in clauses (1)
or (2) of this Section 4(b)(i) and specifying the particulars of the
Executive’s conduct in detail, and (Y) a copy of this resolution is delivered
to the Executive.  All decisions by the

 

6

 

Company regarding termination for Cause must be supported by clear and
convincing evidence.

 

(ii)                                  Following
a Change in Control, a termination of the Executive’s employment for Cause
shall not be effective unless it is accomplished in accordance with the
procedures set forth in Section 3.B. of the Change of Control Agreement.

 

(c)                                  GOOD  REASON.

 

(i)                                     The Executive may
terminate employment for Good Reason or without Good Reason. “Good Reason”
shall mean, without the Executive’s consent, (a) a reduction in the Executive’s
title or the assignment to him of any duties inconsistent in any material
respect with his position, authority, duties or responsibilities as
contemplated by this Agreement, unless the action is remedied by the Company
within fifteen (15) days after receipt of notice thereof given by the
Executive; (b) any failure by the Company to comply with any of the provisions
of this Agreement, unless such action is remedied by the Company within fifteen
(15) days after receipt of notice thereof given by the Executive; (c) a
reduction in the Annual Base Salary (other than in connection with an across
the board reduction similarly affecting all of the Company’s executive
officers); (d) a reduction in the Executive’s target annual incentive award
(other than in connection with an across the board reduction affecting all of
the Company’s executive officers or a reduction due to a demonstrable change in
comparable market data) or (d) a delivery by the Company of a notice of
non-renewal as contemplated by Section 1.

 

(ii)                                  A
termination of employment by the Executive for Good Reason shall be effectuated
by giving the Company written notice (“Notice of Termination for Good Reason”)
of the termination, setting forth in reasonable detail the specific conduct of
the Company that constitutes Good Reason and the specific provision(s) of this
Agreement on which the Executive relies. 
A termination of employment by the Executive for Good Reason shall be
effective fifteen (15) days following the date when the Notice of Termination
for Good Reason is given, unless the event constituting Good Reason is remedied
by the Company in accordance with the foregoing.

 

(iii)                               A
termination of the Executive’s employment by the Executive without Good Reason
shall be effected by giving the Company 30 days written notice of the
termination.

 

(d)                                 DATE OF
TERMINATION.  The “Date of Termination”
means the date of the Executive’s death, the Disability Effective Time or the
date on

 

7

 

which the termination of the Executive’s employment by the Company for
Cause or without Cause or by the Executive for Good Reason or without Good
Reason is effective.

 

5.                                       OBLIGATIONS
OF THE COMPANY UPON TERMINATION.

 

(a)                                  OTHER
THAN FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON.  If, during the Term, the Company terminates
the Executive’s employment for any reason other than Cause, death or
Disability, or the Executive terminates his employment for Good Reason, then,
subject to Section 12(h) hereof, the Company shall pay to the Executive,
not later than 30 days following the Date of Termination, (i) a lump sum equal
to two times the sum of the Executive’s Annual Base Salary immediately prior to
the Date of Termination, plus the greater of (A) the Executive’s annual target
bonus for the fiscal year in which the Date of Termination occurs or (B) the
annual target bonus described in Section 3(b)(ii) (in each case without
giving effect to any reduction constituting Good Reason); and (ii) any portion of the Executive’s
Annual Base Salary and previously earned but unpaid bonus through the Date of
Termination that has not yet been paid.  In addition, all of the Executive’s then
outstanding equity awards shall be treated in accordance with the terms of the
plan and agreements evidencing such equity awards. The Company shall also pay
or provide to the Executive, in the event of such a termination, all
compensation and benefits payable to the Executive under the terms of the
Company’s compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination.

 

(b)                                 DEATH AND
DISABILITY.  If the Executive’s
employment is terminated by reason of the Executive’s death or Disability
during the Term, the Company shall pay to the Executive or, in the case of the
Executive’s death, to the Executive’s designated beneficiaries (or, if there is
no such beneficiary, to the Executive’s estate or legal representative), in a
lump sum in cash within 30 days after the Date of Termination, any portion of
the Executive’s Annual Base Salary and previously earned but unpaid bonus
through the Date of Termination that has not yet been paid.  The Company shall also pay or provide to the
Executive, in the event of such a termination, all compensation and benefits
payable to the Executive under the terms of the Company’s compensation and
benefit plans, programs or arrangements as in effect immediately prior to the
Date of Termination.  If the Executive’s
employment is terminated by reason of the Executive’s death or Disability
during the Term, all of the Executive’s then outstanding equity awards shall be
treated in accordance with the terms of the plan and agreements evidencing such
equity awards.

 

(c)                                  BY THE COMPANY FOR
CAUSE; BY THE EXECUTIVE

 

8

 

OTHER THAN FOR GOOD REASON.  If
the Executive’s employment is terminated by the Company for Cause or the
Executive voluntarily terminates employment other than for Good Reason during
the Term then, (1) the Company shall pay to the Executive in a lump sum in cash
within thirty (30) days after the Date of Termination, any portion of the
Executive’s Annual Base Salary and bonus earned through the Date of Termination
that has not been paid; (2) all outstanding equity awards shall be treated
according to the provisions of the plan and agreements under which such awards
were granted; and (3) the Company shall also pay or provide to the Executive
all compensation and benefits payable to the Executive under the terms of the
Company’s compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination.

 

6.                                       NON-EXCLUSIVITY
OF RIGHTS.  Nothing in this Agreement
shall prevent or limit the Executive’s continuing or future participation in
any plan, program, policy or practice provided by the Company or any of its
affiliated companies for which the Executive may qualify.

 

7.                                       FULL
SETTLEMENT.  Except as provided herein,
the Company’s obligation to make the payments provided for in, and otherwise to
perform its obligations under, this Agreement shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action that
the Company may have against the Executive or others.  In no event shall the Executive be obligated
to seek other employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of this Agreement
and such amounts shall not be reduced, regardless of whether the Executive
obtains other employment.

 

8.                                       CONFIDENTIAL
INFORMATION; SOLICITATION; DISPARAGEMENT; COMPETITION.

 

(a)                                  The
Executive agrees that he will not, directly or indirectly, use, make available,
sell, disclose or otherwise communicate to any person, other than in the course
of the Executive’s assigned duties and for the benefit of the Company, either
during the period of the Executive’s employment or at any time thereafter, any
nonpublic, proprietary or confidential information, knowledge or data relating
to the Company, any of its subsidiaries, affiliated companies or businesses,
which the Executive obtained during the Executive’s employment by the
Company.  This restriction will not apply
to information that (i) was known to the public before its disclosure to the
Executive; (ii) becomes known to the public after disclosure to the Executive
through no wrongful act of the Executive; or (iii) the Executive is required to
disclose by applicable law, regulation or legal process (provided that the
Executive shall provide the Company with prior notice of the contemplated

 

9

 

disclosure and reasonably cooperate with the
Company at its expense in seeking a protective order or other appropriate
protection of such information).

 

(b)                                 During the Executive’s
employment with the Company and for one year after the Date of Termination, the
Executive agrees that he will not, directly or indirectly, individually or on
behalf of any other person, firm, corporation or other entity, knowingly
solicit, aid or induce any managerial level employee of the Company or any of
its subsidiaries or affiliates to leave employment in order to accept
employment with or render services to or with any other person, firm,
corporation or other entity unaffiliated with the Company or knowingly take any
action to materially assist or aid any other person, firm, corporation or other
entity in identifying or hiring any such employee.

 

(c)                                  The Executive agrees
that during and after his employment with the Company he shall not make any
public statements that disparage the Company, its respective affiliates,
employees, officers, directors, products or services.  Notwithstanding the foregoing, statements
made in the course of sworn testimony in administrative, judicial or arbitral
proceedings (including, without limitation, depositions in connection with such
proceedings) shall not be subject to this Section 8(c).

 

(d)                                 For a period of 12
months after Executive’s termination of employment with the Company (or for a
period of 12 months after a final judgment or injunction enforcing this
covenant), Executive agrees not to, directly as an employee or indirectly as a
consultant or contractor, without the prior written consent of the Company, be
employed in the same or similar capacity as Executive was employed by the
Company immediately prior to Executive’s termination of employment, by another
business entity or person deriving more than 10% of its gross revenues in the
Territory from the sale or distribution of office supplies, office furniture,
computer consumables or related office products or services.  For purposes hereof, the Territory shall be
all of North America.

 

(e)                                  The Executive agrees
that the restrictions set forth in Section 8(a), 8(b), 8(c) and 8(d)
hereof are reasonable and necessary to protect the legal interests of the
Company.  The Executive further agrees
that the Company shall be entitled to injunctive relief in the event of any
actual or threatened breach of such restrictions.

 

9.                                       DISPUTE
RESOLUTION.  Except for the Company’s
right to seek injunctive relief as set forth in Section 8(e), all disputes
arising under, related to, or in connection with this Agreement arising prior
to a Change of Control shall be settled by expedited arbitration conducted
before a panel of three arbitrators sitting in

 

10

 

Chicago, Illinois, in accordance with the
rules of the American Arbitration Association then in effect.  The decision of the arbitrators in that
proceeding shall be binding on the Company and the Executive.  Judgment may be entered on the award of the
arbitrators in any court having jurisdiction. 
All expenses of such arbitration, including legal fees, shall be borne
by the non-prevailing party in such arbitration.

 

10.                                 SUCCESSORS.

 

(a)                                  This
Agreement is personal to the Executive and, without the prior written consent
of the Company, shall not be assignable by the Executive otherwise than by will
or the laws of descent and distribution. 
This Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representatives.

 

(b)                                 This Agreement shall
inure to the benefit of and be binding upon the Company and its successors and
assigns.

 

(c)                                  The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would have been
required to perform it if no such succession had taken place.  As used in this Agreement, the “Company”
shall mean both the Company as defined above and any such successor that
assumes and agrees to perform this Agreement, by operation of law or otherwise.

 

11.                                 NO VIOLATIONS.  As a material inducement to the Company’s
willingness to enter into this Agreement, the Executive represents to the
Company that neither the execution of this Agreement by the Executive, the
employment of the Executive by the Company nor the performance by the Executive
of his duties hereunder will constitute a violation by the Executive of any
employment, non-competition or other agreement to which the Executive is a
party.

 

12.                                 MISCELLANEOUS.

 

(a)                                  This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
without reference to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

 

(b)                                 All notices and other communications
under this Agreement

 

11

 

shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:

 

If to the Executive:

 

Sam Duncan

1122 Pleasant Valley Drive

Oneida, WI 
54115

 

If to the Company:

 

Matthew R. Broad

Executive Vice President and General Counsel

OfficeMax Incorporated

150 E. Pierce Rd.

Itasca, IL 
60143

 

or to such other address as either party furnishes to the other in
writing in accordance with this paragraph (b) of Section 12.  Notices and communications shall be effective
when actually received by the addressee.

 

(c)                                  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.  If any provision of this Agreement shall be
held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and
enforceable and continue in full force and effect to the fullest extent
consistent with law.

 

(d)                                 Notwithstanding any
other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that
are required to be withheld by applicable laws or regulations.

 

(e)                                  The Executive’s or
the Company’s failure to insist upon strict compliance with any provisions of,
or to assert any right under, this Agreement shall not be deemed to be a waiver
of such provision or right or of any other provision of or right under this
Agreement.

 

(f)                                    The Executive and
the Company acknowledge that this Agreement and the Change of Control Agreement
constitute the entire understanding

 

12

 

of the parties with respect to the subject matter hereof and supersede
any other prior agreement or other understanding, whether oral or written,
express or implied, between them concerning, related to or otherwise in
connection with, the subject matter hereof and that, following the date hereof,
no such agreement or understanding shall be of any further force or effect.

 

(g)                                 The rights and
benefits of the Executive under this Agreement may not be anticipated,
assigned, alienated or subject to attachment, garnishment, levy, execution or
other legal or equitable process except as required by law.  Any attempt by the Executive to anticipate,
alienate, assign, sell, transfer, pledge, encumber or charge the same shall be
void.

 

(h)                                 In connection with any
termination of the Executive’s employment, the Executive agrees to execute a
customary release from liability in favor of the Company and it is understood
that no payments shall be made pursuant to Section 5(a) hereof prior to
the expiration of the required revocation period with respect to such release.

 

(i)                                     The Company and
the Executive agree to fully cooperate with respect to the timing and content
of any public announcement regarding the hiring of the Executive or the
execution of this Agreement.

 

(j)                                     To the extent
necessary to effectuate the terms of this Agreement, terms of this Agreement
which must survive the termination of the Executive’s employment or the
termination of this Agreement shall so survive.

 

(k)                                  This Agreement may be
executed in several counterparts, each of which shall be deemed an original,
and said counterparts shall constitute but one and the same instrument.

 

(l)                                     The Company shall
pay all reasonable legal fees and expenses incurred by the Executive in
connection with the preparation and negotiation of this Agreement, up to a
maximum of $20,000.

 

13

 

IN WITNESS WHEREOF, the Executive has
hereunto set the Executive’s hand and, pursuant to the authorization of its
Board, the Company has caused this Agreement to be executed in its name on its
behalf, all as of the day and year first above written.

 

	
   

  	
  OFFICEMAX INCORPORATED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Lorene Flewellen

  	
   

  
	
   

  	
  Title: 
  Senior Vice President, Human Resources

  
	
   

  	
   

  
	
   

  	
  /s/ Sam K.
  Duncan

  
	
   

  	
  EXECUTIVE

  

 

14Exhibit
10.2

 

OFFICEMAX INCORPORATED

Nonstatutory
Stock Option Award Agreement

 

This Nonstatutory Stock Option Award (the “Award”), is granted as of 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
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.                                       You are
awarded a nonstatutory stock option to purchase up to 70,000 shares of Stock at
a price of $32.66 per share (the “Grant Price”).

 

3.                                       The Option
shall become exercisable as follows:

 

a.                                       On each of
the first three anniversaries of the Award Date, the Option shall become
exercisable with respect to one-third of the shares of Stock subject to the
Option.

 

b.                                      If at any
time prior to the third anniversary of the Award Date:  (i) you are involuntarily terminated not for
Cause, as such term is defined in the Employment Agreement between you and
OfficeMax dated April 14, 2005 (the “Employment Agreement”), as determined by
OfficeMax (or any successor), (ii) you terminate employment as a result of
death or Disability, as such term is defined in the Employment Agreement, or
(iii) you voluntarily terminate employment for Good Reason, as such term is
defined in the Employment Agreement, then a pro rata portion of the unvested
shares of Stock subject to the Option, calculated as follows, shall become
exercisable.

 

•                  If
termination occurs before the first anniversary of the Award Date, you will
receive:

•                  A pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 12 months, plus

•                  A pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 24 months, plus

•                  A pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 36 months.

 

•                  If
termination occurs on or after the first anniversary of the Award Date but
before the second anniversary of the Award Date, you will receive:

•                  A pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 24 months, plus

•                  A pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 36 months.

 

•                  If
termination occurs on or after the second anniversary of the Award Date but
before the third anniversary of the Award Date, you will receive a pro rata
portion of one-third of the shares of Stock subject to the Option based on the
number of months worked since the Award Date divided by 36 months.

 

c.                                       If you
terminate employment for any reason other than as stated in paragraph 3.b
before the third anniversary of the Award Date (including involuntary
termination for Cause), any portion of the Option which is not then exercisable
pursuant to subsection 3.a or 3.b will be forfeited upon your termination
of employment.

 

 

4.                                       The Option
must be exercised on or before the earliest of the following:

 

(a)                                  the tenth
anniversary of the Award Date;

(b)                                 one year
after your termination of employment as a result of your retirement, death, or
Disability, provided that you have not, as of the date of the exercise of the
Option, commenced Employment with any Competitor (see paragraph 8 below);

(c)                                  one year
after your termination of employment pursuant to paragraph 3.b, provided that
you have not, as of the date of the exercise of the Option, commenced
Employment with any Competitor (see paragraph 8 below); or

(d)                                 one year
after your termination of employment for any other reason, subject to
paragraph 5.

 

5.                                       The Option
shall be canceled immediately if you are terminated for Disciplinary Reasons,
as that term is defined in the Executive Officer Severance Pay Policy.

 

6.                                       In
the event of a Change in Control prior to the third anniversary of the Award
Date, the continuing entity may either continue this Award or replace this
Award with an award of substantially equivalent value with terms and conditions
not less favorable than the terms and conditions provided in this Award
Agreement, in which case the Award will vest according to the terms of the
applicable Award Agreement.  If the
continuing entity does not so continue or replace this Award, or if you
experience a “qualifying termination” (as defined in the letter agreement
between you and OfficeMax regarding benefits upon a change in control), the
Option shall become fully vested and exercisable immediately upon the Change in
Control, or, in the case of your termination, upon the date of termination.

 

7.                                       You may
exercise the Option upon notice and payment of the Grant Price by any of the
following methods, unless disallowed by law:

 

(a)                                  broker
assisted exercise;

(b)                                 Stock
already owned by you; or

(c)                                  cash.

 

You
may elect to receive the proceeds of the exercise in either cash or Stock.

 

8.                                       “Competitor”
means any business, foreign or domestic, which is engaged, at any time relevant
to the provisions of this Agreement, in the sale or distribution of products,
or in the provision of services in competition with the products sold or
distributed or services provided by OfficeMax or any subsidiary, partnership,
or joint venture of OfficeMax.  The
determination of whether a business is a Competitor shall be made by OfficeMax’s
General Counsel, in his or her sole discretion. 
“Employment with a Competitor” means providing significant services as
an employee or consultant, or otherwise rendering services of a significant
nature for remuneration, to a Competitor.

 

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 VanDeventor,
OfficeMax, 150 Pierce Road, Itasca, IL 
60143, or fax your signed form to 630-438-2463.

 

	
  OfficeMax Incorporated

  	
  Awardee

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Matthew
  R. Broad

  	
   

  	
  /s/ Sam Duncan

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Sam Duncan

  
	
   

  	
  Printed Name

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00083-of-00352.parquet"}]]