BUILDING
MATERIALS HOLDING CORPORATION
Change
in Control Severance Plan for Officers
Effective
May 1, 2008
This
Severance Plan (the " Plan
") was
adopted by the Compensation Committee of the Board of
Directors of Building Materials Holding Corporation, a
Delaware corporation (the " Company
") on
April, 28, 2008 for the benefit of certain executive officers,
senior management and key employees of the Company and its
subsidiaries. The effective date of the Plan is May 1, 2008
("Effective Date"). The Plan supersedes and replaces the
Severance Plan for Certain Executive Officers, Senior
Management and Key Employees of the Company and its
Subsidiaries ("Prior Plan"). The Prior Plan shall terminate
effective as of April 30, 2008 and shall have no force or
effect thereafter.
The
Company desires to attract and retain well-qualified officers
who are an integral part of the management of the Company and
to encourage continuity of management. The principal purposes
of the Plan are (i) to provide an incentive to the
Designated Employees (as defined below) to remain in the
employ of the Company, notwithstanding uncertainty and job
insecurity which may be created by an actual or prospective
Change in Control, (ii) to encourage the Designated
Employees' full attention and dedication to the Company
currently and in the event of an actual or prospective Change
in Control, and (iii) to provide an incentive for the
Designated Employees to be objective concerning any potential
Change in Control and to fully support any Change in Control
transaction approved by the Board of Directors.
Terms
not otherwise defined in the Plan shall have the meanings set
forth in this Section 2.
(a)
Cash
Compensation . "Cash
Compensation" shall mean the sum of (i) the highest
annual base salary paid to the Designated Employee for the
three (3) fiscal years immediately preceding the fiscal year
in which the Notice of Termination is given and (ii) the
highest cash bonus paid to the Designated Employee under the
Company's bonus program for the three (3) fiscal years
immediately preceding the fiscal year in which the Notice of
Termination is given. In determining the amount set forth
under (ii) above, if a Designated Employee has received a cash
bonus with respect to a portion of a fiscal year that is one
of the three (3) fiscal years immediately preceding the fiscal
year in which the Notice of Termination is given, that amount
shall be annualized.
(b)
Cause
. For
purposes of the Plan only, "Cause" shall mean: (i) the
conviction by a court of competent jurisdiction of, or entry
of a plea of guilty or of no contest to, any felony involving
moral turpitude or dishonesty, (ii) a willful dereliction
of duty or intentional and malicious conduct contrary to the
best interests of the Company or its business if such
dereliction of duty or misconduct is not corrected within
thirty (30) days after written notice thereof from the
Company, or (iii) a refusal to perform reasonable
services customarily performed by such Designated Employee
(other than by reason of a Disability) if such refusal is not
corrected within thirty (30) days after written notice thereof
from the Company; provided, however, that the Designated
Employee shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the
Designated Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Company's Board of Directors at a meeting of
the Board called and held for the purpose (after reasonable
notice to the Designated Employee and an opportunity for the
Designated Employee, together with the Designated Employee's
counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Designated Employee was
guilty of the conduct set forth above and specifying the
particulars thereof in detail. Notwithstanding the foregoing,
the Designated Employee shall have the right to contest his
termination for Cause (for purposes of this Agreement) by
arbitration in accordance with the provisions of the
Plan.
(c)
Change
in Control . A
"Change in Control" of the Company shall be deemed to have
occurred if (i) there shall be consummated (x) any
consolidation, merger or similar reorganization or other
transaction involving the Company, other than a transaction in
which those persons that are holders of the Company's Common
Stock immediately prior to the transaction both (I) each have
the same proportionate ownership of common stock of the
Company or voting equity securities of another surviving
entity in the transaction (when compared to all other holders
of the Company's Common Stock immediately prior to the
transaction) immediately after the transaction and (II) in the
aggregate possess beneficial ownership (as determined in
accordance with Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act")) of at least
a majority of the common stock of the Company or the voting
equity securities of another surviving entity immediately
after the transaction, 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 Exchange Act,
including any group), shall become the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of thirty-five (35%) 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 (2/3rds) 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.
(d)
Code
.
"Code" shall refer to the Internal Revenue Code of 1986 and
the regulations promulgated thereunder, as amended from time
to time.
(e)
Designated
Employees .
"Designated Employees" shall refer to those employees of the
Company and its subsidiaries who hold the title of Vice
President or above.
(f)
Good
Reason . A
Designated Employee's termination of employment with the
Company shall be deemed for "Good Reason" if any of the
following events occur without the Designated Employee's
express written consent and the Designated Employee provides
his Notice of Termination upon or within one hundred eighty
(180) days after such event occurring; provided
,
however
, that
the Designated Employee must have previously provided written
notice to the Company within ninety (90) days after the
occurrence of the event allegedly constituting Good Reason,
and the Company shall have thirty (30) days after such notice
is given to cure:
(i)
The
assignment to the Designated Employee by the Company of duties
materially inconsistent with, or a material alteration in the
nature or status of, the Designated Employee's
responsibilities immediately prior to a Change in Control of
the Company (or thereafter if such duties and responsibilities
change following a Change in Control with the Designated
Employee's consent), other
than any such alteration primarily attributable to the fact
that the Company's securities are no longer publicly
traded;
(ii)
A
material reduction by the Company in the Designated Employee's
annual base salary or annual cash bonus opportunity as in
effect immediately prior to a Change in Control of the Company
or as in effect thereafter if such base salary and/or bonus
opportunity has been increased;
(iii)
Relocation
to any place more than twenty-five (25) miles from the office
regularly occupied by the Designated Employee prior to the
time of a Change in Control; or
(iv)
Any
material breach by the Company of any provision of the Plan or
any material agreement between the Company or any subsidiary
and the Designated Employee.
(g)
Independent
Director .
"Independent Director" shall have the meaning ascribed to such
term in the Company's Rights Plan as initially adopted by the
Board of Directors.
(h)
Specified
Employee .
"Specified Employee" shall have the meaning ascribed to such
term in Section 409A of the Code.
Each of
the Designated Employees shall be a beneficiary of the Plan
and entitled to receive the Benefits set forth
herein.
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4.
|
Termination
in Connection with Change in Control
|
(a)
Termination
of Employment .
If a
Change in Control of the Company shall have occurred while the
Designated Employee is still an employee of the
Company, the
Designated Employee shall be entitled to the compensation
provided in Section 5 upon the subsequent termination,
within one (1) year of such Change in Control, of the
Designated Employee's employment with the Company unless such
termination is as a result of (i) the Designated
Employee's death; (ii) the Designated Employee's
Disability (as defined in Section 4(b) below);
(iii) the Designated Employee's retirement in accordance
with the Company's retirement policies; (iv) the
Designated Employee's termination by the Company for Cause; or
(v) the Designated Employee's decision to terminate his
employment with the Company other than for Good Reason.
In
addition, if, prior to a Change in Control, (A) the Designated
Employee's employment with the Company shall be terminated
other than as a result of one of the circumstances enumerated
in Section 4(a)(i) through (v), and, (B) either (I)
within one (1) month following the date of such termination of
employment, a Change in Control shall occur or (II) the events
causing the termination occurred at the direction of a person
acquiring control of the Company in a Change in Control, then
the Designated Employee shall be entitled to the compensation
provided in Section 5, which compensation shall be
reduced by any other severance compensation previously paid to
the Designated Employee in respect of such termination of
employment.
(b)
Disability
. If,
as a result of the Designated Employee's incapacity due to
physical or mental illness, the Designated Employee shall have
been absent from his duties with the Company on a full-time
basis for six (6) months and the Company thereafter gives the
Designated Employee thirty (30) days' written notice of its
intention to terminate his employment, upon the expiration of
such thirty (30) day period the Company may terminate the
Designated Employee's employment for "Disability" if the
Designated Employee shall not have returned to the full-time
performance of the Designated Employee's duties.
(c)
Notice
of Termination . Any
termination of the Designated Employee's employment by the
Company or the Designated Employee hereunder shall be
communicated by a Notice of Termination given to the other
party. For purposes of the Plan, a "Notice of Termination"
shall mean a written notice which shall indicate whether or
not the termination is as a result of any of the situations
enumerated in Section 4(a)(i) through (v) above and which
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for asserting that the termination
of the Designated Employee's employment is or is not under the
provision so indicated.
(d)
Date
of Termination . "Date
of Termination" shall mean (i) if the Designated Employee
is terminated by the Company for Disability, thirty (30) days
after the Notice of Termination is given to the Designated
Employee (provided that the Designated Employee shall not have
returned to the performance of the Designated Employee's
duties on a full-time basis during such thirty (30) day
period) or (ii) if the Designated Employee's employment
is terminated by the Company for any other reason or by the
Designated Employee, the date on which a Notice of Termination
is given.
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5.
|
Severance
Compensation upon Termination of
Employment
|
If the
Designated Employee's employment with the Company shall be
terminated either (1) within one (1) month before (or earlier
if the termination occurs at the direction of a person
acquiring control of the Company in a Change in Control) or
(2) upon or within one (1) year after a Change in Control,
other than as a result of one of the circumstances enumerated
in Section 4(a)(i) through (v) of the Plan, then the
Company shall, subject to the execution and non-revocation of
a release of claims by the Designated Employee in the form set
forth on Exhibit A hereto:
(a)
Pay to
the Designated Employee as severance pay in a lump sum, in
cash, on or before the tenth day following the Date of
Termination, an amount equal to the Designated Employee's Cash
Compensation times the multiple specified on Schedule A
attached hereto and incorporated by reference herein
("Schedule A");
(b)
Arrange
to provide the Designated Employee for a period of eighteen
(18) months starting from the Date of Termination with health
and life insurance substantially similar (including the cost
to the Designated Employee) to those insurance benefits which
the Designated Employee was receiving immediately prior to
either (A) the Change in Control or (B) the Notice
of Termination, as elected by the Designated Employee.
Benefits to which the Designated Employee otherwise is
entitled pursuant to this Section&
