Exhibit 10.2
CHANGE OF CONTROL
EMPLOYMENT
AGREEMENT
AGREEMENT by and between
Louisiana-Pacific Corporation, a Delaware corporation (the
“Company”), and Jeffrey N. Wagner (the
“Executive”), dated as of the 1 st day of
February, 2005.
The Board of Directors of the
Company (the “Board”), has determined that it is in the
best interests of the Company and its shareholders to assure that
the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control and to encourage the
Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that
the compensation and benefits expectations of the Executive will be
satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1.
Certain Definitions
.
(a)
The “Effective Date”
shall mean the first date during the Change of Control Period (as
defined in Section (b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to
the contrary notwithstanding, if a Change of Control occurs during
the Change of Control Period and if the Executive’s
employment with the Company is terminated prior to the date on
which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment
(i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Agreement the
“Effective Date” shall mean the date immediately prior
to the date of such termination of employment.
(b)
The “Change of Control
Period” shall mean the period commencing on the date hereof
and ending on the first anniversary of the date hereof.
2.
Change of Control
. For the purpose of this Agreement,
a “Change of Control” shall mean:
(a)
The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding
shares of common stock of the Company (the “Outstanding
Company
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Common Stock”) or (ii) the
combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors
(the “Outstanding Company Voting Securities”);
provided, however, that for purposes of this subsection (a),
the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or (iv) any
acquisition pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of subsection (c) of this Section 2;
or
(b)
Individuals who, as of the date
hereof, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were
a member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(c)
Consummation by the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another entity (a
“Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more
of, respectively, the then outstanding shares of common stock of
the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
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(d)
Approval by the shareholders of the
Company of a complete liquidation or dissolution of the
Company.
3.
Employment Period
. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company subject to the terms
and conditions of this Agreement, for the period commencing on the
Effective Date and ending on the third anniversary of such date
(the “Employment Period”).
4.
Terms of Employment
.
(a)
Position and Duties
.
(i)
During the Employment Period, (A)
the Executive’s position (including status, offices, titles
and reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the
most significant of those held, exercised and assigned to the
Executive at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s services
shall be performed at the location where the Executive was employed
immediately preceding the Effective Date or any office or location
less than 25 miles from such location.
(ii)
During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive’s reasonable best efforts to perform faithfully
and efficiently such responsibilities. During the Employment Period
it shall not be a violation of this Agreement for the Executive to
(A) serve on corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an
employee of the Company in accordance with this Agreement. It is
expressly understood and agreed that to the extent that any such
activities have been conducted by the Executive prior to the
Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto)
subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s
responsibilities to the Company.
(b)
Compensation
.
(i)
Base Salary
. During the Employment Period, the
Executive shall receive an annual base salary (“Annual Base
Salary”), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or
payable, including any base salary which has been earned but
deferred, to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately
preceding the month in which the Effective
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Date occurs. During the Employment
Period, the Annual Base Salary shall be reviewed no more than 12
months after the last salary increase awarded to the Executive
prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement,
the term “affiliated companies” shall include any
company controlled by, controlling or under common control with the
Company.
(ii)
Annual Bonus
. In addition to Annual Base Salary,
the Executive shall be awarded, for each fiscal year ending during
the Employment Period, an annual bonus (the “Annual
Bonus”) in cash at least equal to the Executive’s
target bonus under the Company’s annual incentive plans for
the fiscal year in which the Effective Date occurs (or; if no
target bonus has been set for such fiscal year, the
Executive’s target bonus for the immediately preceding fiscal
year (the “Target Bonus”)). Each such Annual Bonus
shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(iii)
Incentive, Savings and Retirement
Plans . During the
Employment Period, the Executive shall be entitled to participate
in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
incentive opportunities (measured with respect to both regular and
special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement
benefit opportunities, in each case, less favorable, in the
aggregate, than the most favorable of those provided by the Company
and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during
the 120-day period immediately preceding the Effective Date or if
more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(iv)
Welfare Benefit Plans
. During the Employment Period, the
Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of the
Company and its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the Executive with
benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect
for the Executive at any time during the
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120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and its affiliated
companies.
(v)
Expenses . During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with
the most favorable policies, practices and procedures of the
Company and its affiliated companies in effect for the Executive at
any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(vi)
Fringe Benefits
. During the Employment Period, the
Executive shall be entitled to fringe benefits, including, without
limitation, tax and financial planning services, payment of club
dues, and, if applicable, use of an automobile and payment of
related expenses, in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(vii)
Office and Support
Staff . During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to exclusive personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided to the
Executive by the Company and its affiliated companies at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as provided generally at
any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
(viii)
Vacation . During the Employment Period, the Executive
shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company
and its affiliated companies as in effect for the Executive at any
time during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Executive, as in effect generally
at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.
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5.
Termination of
Employment .
(a)
Death or Disability
. The Executive’s employment
shall terminate automatically upon the Executive’s death
during the Employment Period. If the Company determines in
good faith that the Disability of the Executive has occurred during
the Employment Period (pursuant to the definition of Disability set
forth below), it may give to the Executive written notice in
accordance with Section 12(b)of this Agreement of its
intention to terminate the Executive’s employment. In such
event, the Executive’s employment with the Company shall
terminate effective on the 30th day after receipt of such notice by
the Executive (the “Disability Effective Date”),
provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the
Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive
from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity
due to mental or physical illness which is determined to be total
and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s
legal representative.
(b)
Cause . The Company may terminate the
Executive’s employment during the Employment Period for
Cause. For purposes of this Agreement, “Cause” shall
mean:
(i)
the willful and continued failure of
the Executive to perform substantially the Executive’s duties
with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive
Officer of the Company which specifically identifies the manner in
which the Board or Chief Executive Officer believes that the
Executive has not substantially performed the Executive’s
duties, or
(ii)
the willful engaging by the
Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.
For purposes of this provision, no act or
failure to act, on the part of the Executive, shall be considered
“willful” unless it is done, or omitted to be done, by
the Executive in bad faith or without reasonable belief that the
Executive’s action or omission was in the best interests of
the Company. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done,
by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution 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 such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together with
counsel, to be heard before the Board), finding that, in the good
faith opinion of the
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Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the
particulars thereof in detail.
(c)
