SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
Commission file number 1-5057
A Delaware BOISE CASCADE CORPORATION I.R.S. Employer
Corporation One Jefferson Square Identification
P.O. Box 50 No. 82-0100960
Boise, Idaho 83728-0001
(208)384-6161
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $2.50 par value New York, Chicago, and
Pacific Stock Exchanges
Boise Cascade Corporation 7% Convertible
Subordinated Debentures due 2016 New York Stock Exchange
American & Foreign Power Company Inc.
Debentures, 5% Series due 2030 New York Stock Exchange
Common Stock Purchase Rights New York, Chicago, and
Pacific Stock Exchanges
$1.79 Depositary Shares, evidenced by
Depositary Receipts for Series E,
Conversion Preferred Stock New York Stock Exchange
$2.35 Depositary Shares, evidenced by
Depositary Receipts for Series F,
Cumulative Preferred Stock New York Stock Exchange
$1.58 Depositary Shares, evidenced by
Depositary Receipts for Series G,
Conversion Preferred Stock New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
Conversion Preferred Stock, Series E
Cumulative Preferred Stock, Series F
Conversion Preferred Stock, Series G
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [X].
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the price at which the stock was sold as
of the close of business on February 28, 1994: $1,713,874,486.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date.
Shares Outstanding
Class as of February 28, 1994
Common Stock, $2.50 par value 38,030,681
Documents incorporated by reference
Listed hereunder are certain documents any portions of which are incorporated
by reference and the Parts of this Form 10-K into which such portions are
incorporated:
1. The registrant's annual report for the fiscal year ended December 31,
1993, portions of which are incorporated by reference into Parts I,
II, and IV of this Form 10-K, and
2. The registrant's definitive proxy statement dated March 7, 1994, for
use in connection with the annual meeting of shareholders to be held
on April 22, 1994, portions of which are incorporated by reference
into Part III of this Form 10-K.
BOISE CASCADE CORPORATION
TABLE OF CONTENTS
PART I
Item Page
1. Business....................................................... 1
2. Properties..................................................... 10
3. Legal Proceedings.............................................. 11
4. Submission of Matters to a Vote of Security Holders............ 11
PART II
5. Market for Registrant's Common Equity and Related Stockholder
Matters...................................................... 12
6. Selected Financial Data........................................ 12
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................ 13
8. Financial Statements and Supplementary Data.................... 13
9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure..................................... 14
PART III
10. Directors and Executive Officers of the Registrant............. 14
11. Executive Compensation......................................... 16
12. Security Ownership of Certain Beneficial Owners and
Management................................................... 16
13. Certain Relationships and Related Transactions................. 16
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K..................................................... 16
PART I
Item 1. Business
As used in this annual report, the term "Company" includes Boise
Cascade Corporation and its consolidated subsidiaries and predecessors.
The terms "Boise Cascade" and "Company" refer, unless the context otherwise
requires, to Boise Cascade Corporation and its consolidated subsidiaries.
Boise Cascade Corporation is an integrated paper and forest
products company headquartered in Boise, Idaho, with operations located in
the United States and Canada. The Company manufactures and distributes paper
and paper products, office products, and building products and owns and
manages timberland to support these operations. The Company was incorporated
under the laws of Delaware in 1931 under the name Boise Payette Lumber
Company of Delaware, as a successor to an Idaho corporation formed in 1913;
in 1957, its name was changed to its present form.
Financial information pertaining to each of the Company's industry
segments and to each of its geographic areas for the years 1993, 1992, and
1991 is presented in Note 8, "Segment Information," of the Notes to Financial
Statements of the Company's 1993 Annual Report and is incorporated herein by
this reference.
The Company's sales and income are affected by the industry supply
of product and changing economic conditions in the markets it serves. Demand
for paper and paper products and for office products correlates closely with
real growth in the gross domestic product. Paper and paper products
operations are also affected by demand in international markets and by
inventory levels of users of these products. The Company's building products
businesses are dependent on repair-and-remodel activity, housing starts, and
commercial and industrial building, which in turn are influenced by the
availability and cost of mortgage funds. Declines in building activity that
may occur during winter affect the Company's building products businesses,
and demand for office products generally is somewhat lower during the second
quarter. In addition, energy and some operating costs may increase at
facilities affected by cold weather. However, seasonal influences are
generally not significant.
The management practices followed by the Company with respect to
working capital conform to those of the paper and forest products industry
and common business practice in the United States.
The Company occasionally engages in acquisition discussions with
other companies and makes acquisitions from time to time. It is also the
Company's policy to review its operations periodically and to dispose of
assets which fail to meet its criteria for return on investment or which
cease to warrant retention for other reasons. (See Note 1 of the Notes to
Financial Statements of the Company's 1993 Annual Report. This information
is incorporated herein by this reference.)
Paper and Paper Products
The products manufactured by the Company, made both from virgin
and recycled fibers, include uncoated business, printing, forms, and
converting papers; coated white papers for magazines, catalogs, and direct-
mail advertising; newsprint; containerboard; uncoated groundwood papers for
newspaper inserts and books; and market pulp. These products are available
for sale to the related paper markets, and certain of these products are sold
through the Company's office products distribution operations. In addition,
containerboard is used by the Company in the manufacture of corrugated
containers.
The Company is a major North American pulp and paper producer with
8 U.S. and 2 Canadian paper mills. The total annual practical capacity of
the mills was approximately 4.1 million tons at December 31, 1993. The
Company's products are sold to distributors and industrial customers
primarily by the Company's own sales personnel.
The Company's paper mills are supplied with pulp principally from
the Company's own integrated pulp mills. Pulp mills in the Northwest manu-
facture chemical and thermomechanical pulp primarily from wood waste pro-
duced as a byproduct of wood products manufacturing. In 1993, the Company
started up a recycled pulp mill at its existing paper mill in Steilacoom
(West Tacoma), Washington. Pulp mills in the Midwest, Northeast, South, and
Canada manufacture chemical, thermomechanical, and groundwood pulp mainly
from pulpwood logs and, to some extent, from purchased wood waste. Wood
waste is provided by Company sawmills and plywood mills in the Northwest and,
to a lesser extent, in the South, and the remainder is purchased from outside
sources.
The Company currently manufactures corrugated containers at
7 plants, which have annual practical capacity of approximately 3.3 billion
square feet. The containers produced at the Company's plants are used to
package fresh fruit and vegetables, processed food, beverages, and many other
industrial and consumer products. The Company primarily sells its corrugated
containers through its own sales personnel.
The following table sets forth sales volumes of paper and paper
products for the years indicated:
1993 1992 1991 1990 1989
Paper (thousands of short tons)
Uncoated free sheet papers 1,215 1,110 1,050 891 835
Newsprint 860 831 838 873 859
Containerboard 559 560 540 529 536
Coated papers 418 397 371 365 389
Uncoated groundwood papers 299 319 319 314 305
Market pulp 205 260 284 307 286
Other(1) - - - 43 91
______ ______ ______ ______ ______
3,556 3,477 3,402 3,322 3,301
(millions of square feet)
Corrugated containers(2) 2,961 4,715 6,478 7,087 7,091
(1) Includes specialty paperboard and carbonless paper. The Company sold
its specialty paperboard mills on June 30, 1989. In 1990, the Company
discontinued production of carbonless paper.
(2) On June 30, 1992, the Company sold 11 corrugated container plants.
In keeping with the Company's periodic reviews of the opportunities
and challenges for each of its businesses, in February 1994, the Company
announced its intention to combine the majority of its newsprint, uncoated
groundwood, and related assets into an independently managed Canadian company
which would have access to financial markets. Locations involved include
Kenora and Fort Frances, Ontario, Canada, and Steilacoom (West Tacoma),
Washington. The new entity also would have responsibility for the sale of
newsprint produced at the Company's DeRidder, Louisiana, mill.
Office Products
The Company distributes a broad line of items for the office,
including office supplies, paper, and office furniture. All of the products
sold by this segment are purchased from other manufacturers or from industry
wholesalers, except for copier and similar papers, which are primarily
sourced from the Company's paper operations. The Company sells these office
products directly to corporate, government, and other offices, primarily for
next-day delivery.
Customers with multi-site locations across the country are often
serviced via national contracts that provide for consistent pricing and
product offerings and, if desired, summary billings, usage reporting, and
other special services. The Company's 24 distribution centers are located
across the United States to provide next-day delivery to all domestic
locations. The Company also operates 4 retail office supply stores in
Hawaii. The Company plans to open a distribution center in Colorado late in
the first quarter of 1994.
The following table sets forth sales dollars for the office
products distribution business for the years indicated:
1993 1992 1991 1990 1989
Sales (millions) $ 683 $ 672(1) $1,039 $1,079 $1,014
(1)Early in 1992, the Company sold essentially all of its wholesale office
products distribution operations, enabling the Company to focus on the
commercial channel on a national basis. In 1991, sales of the
13 distribution centers and 1 minidistribution center that comprised the
wholesale operations were approximately $400 million.
Building Products
The Company is a major producer of plywood, lumber, and particle-
board, together with a variety of specialty wood products. The Company also
manufactures engineered wood products consisting of laminated veneer lumber
(LVL), which is a high-strength engineered structural lumber product, and
I-beam floor and ceiling joists that incorporate the LVL technology. Most
of its production is sold to independent wholesalers and dealers and through
the Company's own wholesale building materials distribution outlets. The
Company's wood products are used primarily in housing, industrial
construction, and a variety of manufactured products. Wood products manufac-
turing trade sales for 1993, 1992, and 1991 were $879 million, $761 million,
and $615 million.
The following table sets forth annual practical capacities of the
Company's wood products facilities as of December 31, 1993:
Number of
Mills Practical Capacity
(millions)
Plywood 12 1,895 square feet (3/8" basis)
Lumber 13 756 board feet
Particleboard 1 185 square feet (3/4" basis)
The Company operates 9 wholesale building materials distribution
facilities and 2 satellite locations. These operations market a wide range
of building materials, including lumber, plywood, particleboard, engineered
wood products, fiberboard siding, roofing, gypsum board, insulation, ceiling
tile, paneling, molding, windows, doors, builders' hardware, and related
products. These products are distributed to retail lumber dealers, home
centers specializing in the do-it-yourself market, and industrial customers.
A portion (approximately 33% in 1993) of the wood products required by the
Company's Building Materials Distribution Division are provided by the
Company's manufacturing facilities, and the balance is purchased from out-
side sources.
The following table sets forth sales volumes of wood products and
sales dollars for engineered wood products and the building materials
distribution business for the years indicated:
1993 1992 1991 1990 1989
(millions)
Plywood (square feet - 3/8" basis) 1,760 1,788 1,621 1,682 1,679
Lumber (board feet) 760 805 815 782 815
Particleboard (square feet -
3/4" basis) 182 186 182 179 188
Engineered wood products
(sales dollars) $71 $38 $13 $ 1 $ -
Building materials distribution
(sales dollars) $590 $447 $328 $289 $279
Timber Resources
In recent years, heightened attention has been paid to developing
and implementing recovery plans throughout the U.S. for species listed as
threatened or endangered under the Endangered Species Act of 1973. Some of
these plans have caused or could cause sharp curtailment in the use of public
and private timberlands in the Pacific Northwest. The case of the spotted
owl is a highly visible example of the negative impact of these plans on the
paper and forest products industry.
In July 1993, the Clinton Administration announced a forest
management plan that would reduce harvests in the so-called spotted owl
forests of western Washington, western Oregon, and northern California to an
average of 1.2 billion board feet annually for ten years - about a 75 percent
reduction in harvest levels from those of the mid-'80s.
If the plan is implemented as announced, as much as 50 percent of
the wood products manufacturing capacity in the owl forests could be shut
down over time, as compared with 1988 levels. In this environment, Boise
Cascade has a number of relative advantages. An important share of the
Company's raw material needs is met by its own timberland - some 1.3 million
acres in Washington, Oregon, and Idaho. The Company's wood products
facilities are among the most efficient in the region, allowing it to bid
competitively for any timber that is available.
The Company's Northwest pulp and paper mills already receive
approximately 73 percent of their wood chip supply either directly from or
through trades with the Company's wood products and whole-log chipping
operations. The Company is taking additional steps to reduce its need for
outside chip purchases. The Company's cottonwood tree plantation near its
Wallula, Washington, mill should be ready for harvest in 1997, supplying a
portion of its Northwest wood chip needs. In addition, two of the Company's
Northwest paper mills are now using recycled fiber - and will use more - to
produce recycled-content paper products.
Thus, the Company is better positioned than most Northwest
producers to compete in an era of reduced log supply. However, because of
further potential litigation, legislation, and regulation related to this
issue, the Company cannot predict how the next several years will unfold.
At year-end, the Company's lumber capacity had been reduced 8.5 percent from
the year-end 1992 level to 756 million board feet, primarily reflecting shift
reductions due to limited log supply.
Also difficult to predict is the impact of these timber constraints
on the cost structure of the Northwest paper and forest products industry.
Log costs for wood products facilities have already climbed dramatically over
the last several years, while wood chip costs for the Company's Northwest
pulp mills rose 75 percent from 1987 to 1991, before leveling off. Lumber
and plywood prices, however, have outpaced log cost increases, resulting in
strong profit margins in the wood products business. Because of excess
industry supply, paper prices have not climbed to meet higher wood chip costs
in the Northwest.
It is unclear what impact the developing recovery plans for various
threatened or endangered species will have on pricing and cost trends in
future years in the Northwest or across the nation.
Besides the 1.3 million acres of timberland in the Northwest,
Boise Cascade also owns or controls another 4.8 million acres of timberland
in North America. The amount of timber harvested each year by the Company
from its timber resources, compared with the amount it purchases from outside
sources, varies according to the price and supply of timber for sale on the
open market and according to what the Company deems to be in the interest of
sound management of its timberlands. During 1993, the Company's mills
processed approximately 1.2 billion board feet of sawtimber and 2.4 million
cords of pulpwood; 40% of the sawtimber and 58% of the pulpwood were har-
vested from the Company's timber resources, and the balance was acquired from
various private and government sources. Approximately 73% of the 1.1 million
bone-dry tons of wood chips consumed by the Company's Northwest pulp and
paper mills in 1993 were provided from the Company's Northwest wood products
manufacturing facilities as residuals in the processing of solid wood
products and from a whole-log chipping facility. Of the 660,000 bone-dry
tons of residual chips used in the South, 46% were provided by the Company's
Southern wood products manufacturing facilities.
At December 31, 1993, the acreages of owned or controlled timber
resources by geographic area and the approximate percentages of total fiber
requirements available from the Company's respective timber resources in
these areas and from the residuals from processed purchased logs were as
follows:
Midwest-
Central New
Northwest Canada England South Total
_____________________________________________________
(thousands of acres)
Fee 1,321 317 665 428 2,731
Leases and contracts 19 - - 291 310
Canadian government licenses - 3,064 - - 3,064
______ ______ ______ ______ ______
Total 1,340(1) 3,381(2) 665(2) 719(3) 6,105(4)
Approximate percentage of total
fiber requirements available
from: (5)
Owned and controlled timber
resources 23% 77% 69% 28% 38%
Residuals from processed
purchased logs 15 - - 6 9
______ ______ ______ ______ ______
Total 38% 77% 69% 34% 47%
(1)Principally sawtimber.
(2)Principally pulpwood.
(3)Sawtimber and pulpwood.
(4)On December 31, 1993, the Company's inventory of merchantable sawtimber was
approximately 8.9 billion board feet, and its inventory of pulpwood was
approximately 66.1 million cords.
(5)Assumes harvesting of Company-owned and controlled timber resources on a
sustained timber yield basis and operation of the Company's paper and wood
products manufacturing facilities at practical capacity. Percentages shown
represent weighted average consumption on a cubic volume basis.
Long-term leases generally provide the Company with timber harvest-
ing rights and carry with them the responsibility for management of the
timberlands. The average remaining life of all leases and contracts is in
excess of 50 years. In addition, the Company has an option to purchase
approximately 203,000 acres of the timberland it currently has under leases
and contracts in the South.
A substantial portion of the wood requirements of the Company's
pulp and paper mills in Kenora and Fort Frances, Ontario, Canada, are
provided through four separate Forest Management Agreements with the Province
of Ontario covering approximately 3 million acres of timberland. Stumpage
charges are those in effect at the time the timber is harvested, as
prescribed by the province's regulations. The agreements require the Company
to assume responsibility for management of the timberlands; however, the
Company is reimbursed for certain silvicultural expenses that are incurred.
The agreements were signed in 1983 and 1984 and have initial terms of
20 years. At the end of each successive five-year period covered by the
agreements, the remaining term will be extended by an additional five years,
provided that the Company has fulfilled the timberland management
responsibilities set forth in the agreements. In accordance with these
provisions, those agreements have been extended.
The Company seeks to maximize the utilization of its timberlands
through efficient management so that the timberlands will provide a continu-
ous supply of wood for future needs. Site preparation, planting, fertil-
izing, thinning, and logging techniques are continually improved through a
variety of methods, including genetic research and computerization.
The Company assumes substantially all risks of loss from fire and
other casualties on all the standing timber it owns, as do most owners of
timber tracts in the U.S.
Competition
The markets served by the Company are highly competitive, with
various substantial companies operating in each. The Company competes in
its markets principally through price, service, quality, and value-added
products and services.
Environmental Quality
The Company invests substantial capital in order to comply with
federal, state, and local environmental laws and regulations. During 1993,
capital expenditures attributable to an ongoing pollution abatement program
amounted to $46 million. It is anticipated that approximately $70 million
will be spent in 1994 for this purpose. Failure to comply with applicable
pollution control standards could result in interruption or suspension of
operations at the affected facilities or could require additional
expenditures at these facilities. Anticipated expenditures pursuant to the
ongoing pollution abatement program should enable the Company to continue to
meet the environmental standards now applicable to its various facilities.
The Environmental Protection Agency (EPA) has proposed new rules
to regulate air and water emissions from pulp and paper mills. These
proposed rules would, among other things, set extremely stringent standards
for color, chemical oxygen demand, and the discharge of all chlorinated
organics. "Chlorinated organics" refers to a family of thousands of organic
compounds that occur naturally and are also produced as byproducts of
pulp-bleaching processes that use chlorine compounds.
Although the majority of these chemical compounds discharged are
environmentally benign, a small percentage, including the chemical dioxin,
are known to be toxic at sufficiently high concentrations. With this
knowledge, Boise Cascade has invested in new pulping and bleaching equipment
and has changed bleaching processes so that, today, the level of dioxin in
mill effluent at most of the Company's pulp mills is so small that it cannot
be measured using acceptable methodology.
Unfortunately, the proposed EPA rules do not discriminate between
known toxins and other chlorinated organics, but rather seek to regulate the
levels of all such compounds, regardless of their actual impact on human
health or the environment. This approach is likely to require the
elimination of elemental chlorine and may require the elimination of all
chlorine compounds from the pulp-bleaching process, despite a lack of
evidence that totally chlorine-free bleaching would result in significant or
cost-effective improvement in the environment or public health. Moreover,
the estimated cost of changing bleaching processes and capturing air
emissions to accommodate the proposed regulations is staggering - as much as
$12 billion for the U.S. pulp and paper industry as a whole. For Boise
Cascade, the cost of complying with the proposed rules utilizing current
technology could be several hundred million dollars over the next four or
five years. Boise Cascade is working with industry associations and the EPA
to achieve revisions to the proposed regulations that would better reflect
scientific understanding of the effects, the risks of alternative
pulp-bleaching processes, and the costs.
As of December 31, 1993, the Company was notified that it is a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) or similar federal and
state laws with respect to 53 sites where hazardous substances or other
contaminants are located. The Company has resolved issues relating to
several of these sites at minimal cost and believes that it may have minimal
or no responsibility with regard to several other of these sites. In most
cases, the Company is one of many potentially responsible parties, and its
alleged contribution to these sites has been minor. For those sites where
a range of potential liability has been determined, the Company has
established appropriate reserves.
With respect to all of the currently outstanding sites, the Company
cannot predict with certainty the total response and remedial costs, the
Company's share of the total costs, the extent to which contributions will
be available from other parties, the amount of time necessary to complete the
cleanups, or the availability of insurance coverage. However, based on the
Company's investigations, the Company's experience with respect to cleanup
of hazardous substances, the fact that expenditures will in many cases be
incurred over extended periods of time, and the number of solvent potentially
responsible parties, the Company does not presently believe that the known
actual and potential response costs will, in the aggregate, have a material
adverse effect on its financial condition or the results of operations.
Employees
As of December 31, 1993, the Company had 17,362 employees, 9,071
of whom were covered under collective bargaining agreements. During 1993,
the Company reached new labor agreements effective until mid-1998 at its pulp
and paper mill in Kenora, Ontario, Canada. In February 1994, the Company and
production and most of the maintenance workers at its International Falls,
Minnesota, pulp and paper mill agreed to contract extensions. The agreements
are effective until April 1999.
Collective bargaining agreements at the Company's four Pacific
Northwest pulp and paper facilities and one converting operation expired in
the spring of 1993. The Company is operating these mills without signed
collective bargaining agreements. On February 1, 1994, the Company
implemented its final contract offer at its Wallula, Washington, paper mill.
The Company is in negotiations with unions representing employees at the
other four mills. The Company is seeking changes in the amount of pay for
time not worked, changes in work rules in order to increase operating
flexibility, and other changes, all of which would improve productivity and
efficiency.
The collective bargaining contracts at the Company's pulp and
paper mill in Fort Frances, Ontario, Canada, expired in April 1993. The
Company is operating this mill without signed collective bargaining
agreements. Although negotiations are continuing, the terms of new
agreements proposed by the Company have not been accepted by unions
representing employees at this facility. The Company is seeking changes in
work rules that would increase operating flexibility, which the Company
believes is necessary for increased productivity and efficiency. In
addition, there is some dispute over pension plan improvements. A number of
the Company's Canadian competitors have already achieved some of the same
work rule changes in their contract settlements. Prior to satisfactory
resolution of the issues, another firm's mill was on strike for over 90 days.
On March 2, 1994, the unions announced that they had selected March 16 as a
date for strike. There are meetings scheduled for the Company and unions to
meet prior to that date.
While the Company believes that the Pacific Northwest and
Fort Frances, Ontario, negotiations can be resolved without work stoppages
or strikes, it is not possible at this time to predict how the negotiations
may conclude.
Among the negotiations scheduled for 1994 are labor contracts
covering the Company's Northwest wood products facilities.
Identification of Executive Officers
The information with respect to the executive officers of the
registrant, which is set forth in Item 10 of this annual report on Form 10-K,
is incorporated into this Part I by this reference.
Capital Investment
The Company's capital expenditures in 1993 were $221 million,
compared with $283 million in 1992 and $299 million in 1991. Details of 1993
spending by segment and by type are as follows:
Replacement,
Quality/ Timber and Environmental,
Expansion Efficiency(1) Timberlands and Other Total
(expressed in millions)
Paper and paper products $ 25 $ 43 $ - $ 111 $ 179
Office products 1 1 - 1 3
Building products 8 7 - 14 29
Timber and timberlands - - 4 - 4
Other 2 - - 4 6
______ ______ ______ ______ ______
Total $ 36 $ 51 $ 4 $ 130 $ 221
(1) Quality and efficiency projects include quality improvements, modernization, energy,
and cost-saving projects.
The level of capital investment in 1994 is expected to be about
$300 million. The 1994 capital budget will be allocated to cost-saving,
modernization, replacement, maintenance, environmental, and safety projects.
Energy
The paper and paper products segment is the primary energy user
of the Company. Self-generated energy sources in this segment, such as wood
wastes, pulping liquors, and hydroelectric power, provided 55% of total 1993
energy requirements, compared with 54% in 1992 and 52% in 1991. The energy
requirements fulfilled by purchased sources in 1993 were as follows: natural
gas, 45%; electricity, 28%; residual fuel oil, 8%; and other sources, 19%.
Item 2. Properties
The Company owns substantially all of its operating facilities.
Regular maintenance, renewal, and new construction programs have preserved
the operating suitability and adequacy of those properties.
Following is a list of the Company's facilities by segment as of
December 31, 1993. Information concerning timber resources is presented in
Item 1 of this Form 10-K.
Paper and Paper Products
10 pulp and paper mills located in Alabama, Louisiana, Maine, Minnesota,
Oregon, Washington (3), and Ontario, Canada (2).
1 recycled pulp mill located in Washington.
6 regional service centers located in California, Georgia, Illinois,
New Jersey, Oregon, and Texas.
1 converting facility located in Oregon.
7 corrugated container plants located in Idaho (2), Nevada, Oregon, Utah,
and Washington (2).
Office Products
24 office supply, paper, and office furniture distribution centers located
in Arizona, California (2), Connecticut, Florida, Hawaii (4), Illinois,
Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, Ohio,
Oregon, Pennsylvania, South Carolina, Texas (2), Utah, and Washington. The
Company plans to open a distribution center in Denver, Colorado, late in the
first quarter of 1994.
4 retail outlets located in Hawaii.
Building Products
13 sawmills located in Alabama, Idaho (3), Louisiana, Oregon (5), and
Washington (3).
12 plywood and veneer plants located in Idaho, Louisiana (2), Oregon (7),
and Washington (2).
1 particleboard plant located in Oregon.
1 engineered wood products plant located in Oregon.
1 wood beam plant located in Idaho.
9 wholesale building materials units located in Arizona, Colorado, Idaho (2),
Montana, Utah, and Washington (3).
2 satellite building materials facilities located in Colorado and Washington.
Item 3. Legal Proceedings
As of December 31, 1993, the Company was notified that it is a
"potentially responsible party" under the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA) or similar federal and
state laws with respect to 53 sites where hazardous substances or other
contaminants are located. On April 19, 1993, the Company filed a lawsuit in
State District Court in Boise, Idaho, against 31 of its current and previous
insurance carriers seeking insurance coverage for response costs the Company
has incurred or may incur at these sites. The Company cannot predict with
certainty the total response and remedial costs, the Company's share of the
total costs, the extent to which contributions will be available from other
parties, the amount of time necessary to complete the cleanups, or the
availability of insurance coverage. However, based on the Company's
investigations, the Company's experience with respect to cleanup of hazardous
substances, the fact that expenditures will in many cases be incurred over
extended periods of time, and the number of solvent potentially responsible
parties, the Company does not presently believe that the known actual and
potential response costs will, in the aggregate, have a material adverse
effect on its financial condition or the results of operations.
In January 1994, the state of Maine Department of Environmental
Protection requested that the Company enter into an administrative settlement
to resolve alleged violations of the state's environmental laws during April
1991 through March 1993 at the Company's facility in Rumford, Maine. The
alleged violations concern water discharges, air emissions, and hazardous
waste. The Department has requested that the Company pay a fine of $359,000
and agree to an injunctive order. Negotiations with the Department are
ongoing; it is expected that this matter will be resolved consensually, but
at this time, the ultimate resolution of this matter and the dollar amount
of any settlement cannot be determined.
The Company is involved in other litigation and administrative
proceedings primarily arising in the normal course of its business. In the
opinion of management, the Company's recovery, if any, or the Company's
liability, if any, under any pending litigation or administrative proceeding,
including that described in the preceding paragraphs would not materially
affect its financial condition or operations.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The Company's common stock is listed on the New York, the Chicago,
and the Pacific Stock Exchanges. The high and low sales prices for the
Company's common stock, as well as the frequency and amount of dividends paid
on such stock, are presented in the tables captioned "Common Stock Prices"
and "Common Stock Dividends -- Paid Per Share" in the Company's 1993 Annual
Report. Additional information concerning dividends on common stock is
presented under the caption "Dividends" of the Financial Review, and
information concerning restrictions on the payments of dividends is included
in Note 4, "Debt," of the Notes to Financial Statements in the Company's
1993 Annual Report. The approximate number of common shareholders, based
upon actual record holders at year-end, is presented under the caption
"Financial Highlights" of the Company's 1993 Annual Report. The information
under these captions is incorporated herein by this reference.
Item 6. Selected Financial Data
The following table sets forth selected financial data of the
Company for the years indicated and should be read in conjunction with the
disclosures in Item 7 of this Form 10-K:
1993 1992 1991 1990 1989
(expressed in millions)
Assets
Current assets $ 887 $ 866 $ 933 $ 998 $ 932
Property and equipment, net 3,010 3,067 3,163 3,155 2,629
Other 616 627 633 632 582
______ ______ ______ ______ ______
$4,513 $4,560 $4,729 $4,785 $4,143
Liabilities and
Shareholders' Equity
Current liabilities $ 688 $ 750 $ 651 $ 758 $ 678
Long-term debt, less
current portion 1,593 1,680 1,916 1,649 1,205
Guarantee of ESOP debt 247 262 275 286 293
Other 480 510 439 516 392
Shareholders' equity 1,505 1,358 1,448 1,576 1,575
______ ______ ______ ______ ______
$4,513 $4,560 $4,729 $4,785 $4,143
1993 1992 1991 1990 1989
(expressed in millions, except
per-common-share amounts)
Net sales $3,958 $3,716 $3,950 $4,186 $4,338
Income (loss) before accounting
change (77) (154) (79) 75 268
Net income (loss) (77) (227) (79) 75 268
Net income (loss) per common share
Primary
Income (loss) before
accounting change $(3.17) $(4.79) $(2.46) $ 1.62 $ 6.19
Effect of net accounting
change (1) - (1.94) - - -
______ ______ ______ ______ ______
$(3.17) $(6.73) $(2.46) $ 1.62 $ 6.19
Fully diluted (2)
Income (loss) before
accounting change $(3.17) $(4.79) $(2.46) $ 1.62 $ 5.70
Effect of net accounting
change (1) - (1.94) - - -
______ ______ ______ ______ ______
$(3.17) $(6.73) $(2.46) $ 1.62 $ 5.70
Cash dividends declared
per common share $ .60 $ .60 $ 1.29 $ 1.52 $ 1.43
(1) Consists of a one-time noncash charge of $73 million, or $1.94 per share,
for the adoption of Financial Accounting Standards Board requirements to
accrue postretirement benefits other than pensions.
(2)The computation of fully diluted net income (loss) per common share was
antidilutive in all years reported except for the year ended December 31,
1989; therefore, the amounts reported for primary and fully diluted
earnings are the same.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's discussion and analysis of financial condition and
results of operations are presented under the captions "Financial Review"
and "Discussion and Analysis" of the Company's 1993 Annual Report. The
information under these captions is incorporated herein by this reference.
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements and related notes,
together with the report of the independent public accountants, are presented
in the Company's 1993 Annual Report and are incorporated herein by this
reference. Selected quarterly financial data is presented under the caption
"Quarterly Results of Operations" in the Company's 1993 Annual Report and is
incorporated herein by this reference.
The consolidated income (loss) statement for the three months
ended December 31, 1993, is presented in the Company's Fact Book for the
fourth quarter of 1993 and is incorporated herein by this reference.
The 10.125% Notes issued in December 1990, the 9.85% Notes issued
in June 1990, the 9.9% Notes issued in March 1990, and the 9.45% Debentures
issued in October 1989 each contain a provision under which in the event of
the occurrence of both a designated event, as defined, and a rating decline,
as defined, the holders of these securities may require the Company to redeem
the securities.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors
The directors and nominees for directors of the Company are pre-
sented under the caption "Election of Directors" in the Company's definitive
proxy statement dated March 7, 1994. All of the nominees are presently
directors. This information is incorporated herein by this reference.
Executive Officers as of February 28, 1994
Date First
Elected as
Name Age Position or Office an Officer
John B. Fery 64 Chairman of the Board and 11/29/60
Chief Executive Officer,
Director
George J. Harad 49 President and
Chief Operating Officer,
Director 5/11/82
Peter G. Danis Jr. 62 Executive Vice President 7/26/77
Theodore Crumley 48 Senior Vice President and
Chief Financial Officer 5/10/90
Rex L. Dorman 60 Senior Vice President 2/21/75
Alice E. Hennessey 57 Senior Vice President 10/28/71
Terry R. Lock 52 Senior Vice President 2/17/77
Richard B. Parrish 55 Senior Vice President 2/27/80
N. David Spence 58 Senior Vice President 12/8/87
John H. Wasserlein 52 Senior Vice President 2/10/82
J. Ray Barbee 46 Vice President 9/26/89
Stanley R. Bell 47 Vice President 9/25/90
John C. Bender 53 Vice President 2/13/90
Charles D. Blencke 50 Vice President 12/11/92
Tom E. Carlile 42 Vice President and
Controller 2/4/94
A. Ben Groce 52 Vice President 2/8/91
J. Michael Gwartney 53 Vice President 4/25/89
John W. Holleran 39 Vice President and
General Counsel 7/30/91
H. John Leusner 58 Vice President 12/11/92
Irving Littman 53 Vice President and
Treasurer 11/1/84
Jeffrey G. Lowe 52 Vice President 12/11/92
Robert L. Merrill 51 Vice President 12/11/92
Carol B. Moerdyk 43 Vice President 5/10/90
D. Ray Ryden 60 Vice President 4/26/88
Donald F. Smith 52 Vice President 12/8/87
J. Kirk Sullivan 58 Vice President 9/30/81
Gary M. Watson 46 Vice President 2/5/93
A. James Balkins III 41 Corporate Secretary 9/5/91
All of the officers named above except A. Ben Groce and Gary M.
Watson (see below) have been employees of the registrant or one of its
subsidiaries for at least five years. Mr. Groce rejoined the Company in 1991
after resigning in June 1989. Prior to his resignation, he had served as an
officer of the Company since December 1987.
Rex L. Dorman, senior vice president and former chief financial
officer, will retire from his position with the Company effective June 1,
1994. Theodore Crumley, formerly vice president and controller, was elected
senior vice president and chief financial officer as of February 4, 1994, to
replace him. Mr. Dorman will assist Mr. Crumley with the transition in the
Company's financial management until June 1.
Tom E. Carlile was elected vice president and controller in
February 1994. Mr. Carlile received a B.A. degree in accounting in 1973 from
Boise State University in Boise, Idaho, and is a certified public accountant.
He joined the Company in 1973 and held a variety of financial and planning
positions before becoming director of finance and planning for the White
Paper Division in 1989.
E. Thomas Edquist, senior vice president, retired from his position
as an officer of the Company effective July 31, 1993. He continued to work
for the Company until his retirement on December 31, 1993.
Gary M. Watson was elected vice president in February 1993.
Dr. Watson received a B.S. degree in chemistry from Western Washington
University in 1969. He also received an M.S. degree in 1972 and a Ph.D.
degree in chemical physics in 1974, both from Lawrence University in
connection with the Institute of Paper Science and Technology. He joined
Boise Cascade in 1992 as director of the Company's Paper Research and
Development Center in Portland, Oregon.
Item 11. Executive Compensation
Information concerning compensation of the Company's executive
officers for the year ended December 31, 1993, is presented under the caption
"Compensation Tables" in the Company's definitive proxy statement dated
March 7, 1994. This information is incorporated herein by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Information concerning the security ownership of certain benefi-
cial owners as of December 31, 1993, is set forth under the caption
"Beneficial Ownership" in the Company's definitive proxy statement
dated March 7, 1994, and is incorporated herein by this reference.
(b) Information concerning security ownership of management as of
December 31, 1993, is set forth under the caption "Security Ownership
of Directors and Executive Officers" in the Company's definitive proxy
statement dated March 7, 1994, and is incorporated herein by this
reference.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related
transactions during 1993 is set forth under the caption "Consulting
Agreement" in the Company's definitive proxy statement dated March 7, 1994,
and is incorporated herein by this reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as a part of this annual report on
Form 10-K for Boise Cascade Corporation and subsidiaries:
(1) (i) The Income (Loss) Statement for the three months ended
December 31, 1993, is incorporated herein by this reference
from the Company's Fact Book for the fourth quarter of
1993.
(ii) The Financial Statements, the Notes to Financial
Statements, and the Report of Independent Public
Accountants listed below are incorporated herein
by this reference from the Company's 1993 Annual
Report.
- Balance Sheets as of December 31, 1993, 1992,
and 1991.
- Statements of Income (Loss) for the years ended
December 31, 1993, 1992, and 1991.
- Statements of Cash Flows for the years ended
December 31, 1993, 1992, and 1991.
- Statements of Shareholders' Equity for the years
ended December 31, 1993, 1992, and 1991.
- Notes to Financial Statements.
- Report of Independent Public Accountants.
(2) Financial Statement Schedules.
- Report of Independent Public Accountants.
V Property and Equipment for the years ended
December 31, 1993, 1992, and 1991.
VI Accumulated Depreciation, Depletion, and
Amortization of Property and Equipment for the years
ended December 31, 1993, 1992, and 1991.
VII Guarantees of Securities of Other Issuers as of
December 31, 1993.
IX Short-Term Borrowings for the years ended
December 31, 1993, 1992, and 1991.
X Supplementary Income Statement Information for the
years ended December 31, 1993, 1992, and 1991.
- Consent of Independent Public Accountants.
Schedules other than those listed are omitted because they are
not applicable or because the required information is shown in
the financial statements or notes.
(3) Exhibits.
A list of the exhibits required to be filed as part of this
report is set forth in the Index to Exhibits, which immedi-
ately precedes such exhibits, and is incorporated herein
by this reference.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
December 31, 1993.
For the purpose of complying with the rules governing Form S-8 under the
Securities Act of 1933, the undersigned registrant hereby undertakes as
follows, which undertaking shall be incorporated by reference into
registrant's Registration Statements on Form S-8 Nos. 33-47892 (filed
May 14, 1992), 33-28595 (filed May 8, 1989), 33-21964 (filed June 6,
1988), 33-31642 (filed November 7, 1989), 2-96196 (filed March 25, 1985),
33-45675 (filed February 12, 1992), and 33-16672 (filed September 10,
1987):
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers, and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a
director, officer, or controlling person of the registrant in the
successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication
of such issue.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Boise Cascade Corporation:
We have audited, in accordance with generally accepted auditing
standards, the financial statements included in Boise Cascade Corporation's
annual report to shareholders incorporated by reference in this Form 10-K,
and have issued our report thereon dated January 26, 1994. Our report on
the financial statements includes an explanatory paragraph with respect to
the change in the method of accounting for postretirement benefits other
than pensions in accordance with Standard No. 106 of the Financial
Accounting Standards Board as discussed in Note 5 of the financial state-
ments. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedules listed in Part IV, Item 14(a)(2)
are the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic financial statements. These schedules have
been subjected to the auditing procedures applied in the audit of the
basic financial statements and, in our opinion, fairly state in all
material respects the financial data required to be set forth therein
in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Boise, Idaho
January 26, 1994
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Boise Cascade Corporation
By John B. Fery
John B. Fery
Chairman of the Board and
Chief Executive Officer
Dated: March 11, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on March 11, 1994.
Signature Capacity
(i) Principal Executive Officer:
John B. Fery Chairman of the Board and
John B. Fery Chief Executive Officer
(ii) Principal Financial Officer:
Theodore Crumley Senior Vice President and
Theodore Crumley Chief Financial Officer
(iii) Principal Accounting Officer:
Tom E. Carlile Vice President
Tom E. Carlile and Controller
(iv) Directors:
John B. Fery Paul J. Phoenix
John B. Fery Paul J. Phoenix
Anne L. Armstrong A. William Reynolds
Anne L. Armstrong A. William Reynolds
Robert E. Coleman Frank A. Shrontz
Robert E. Coleman Frank A. Shrontz
George J. Harad Edson W. Spencer
George J. Harad Edson W. Spencer
Robert K. Jaedicke Robert H. Waterman, Jr.
Robert K. Jaedicke Robert H. Waterman, Jr.
James A. McClure Ward W. Woods
James A. McClure Ward W. Woods
BOISE CASCADE CORPORATION AND SUBSIDIARIES
SCHEDULE V--PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
BALANCE AT BALANCE
BEGINNING ADDITIONS OTHER CHANGES AT END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS ADD DEDUCT PERIOD
(EXPRESSED IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Timber and timberlands
Timber and timberlands $ 323,156 $ 4,663 $ 11,120 $ - $ 11,128(1) $ 305,571
Timber deposits 62,799 - - - 2,316 60,483
__________ __________ __________ __________ __________ __________
$ 385,955 $ 4,663 $ 11,120 $ - $ 13,444 $ 366,054
Property and equipment
Land and land improvements $ 56,601 $ 2,759 $ 922 $ - $ 1,567(2) $ 56,871
Buildings and improvements 556,266 19,975 4,529 - - 571,712
Machinery and equipment 4,498,287 194,084 49,937 - - 4,642,434
__________ __________ __________ __________ __________ __________
$5,111,154 $ 216,818 $ 55,388 $ - $ 1,567 $5,271,017
YEAR ENDED DECEMBER 31, 1992
Timber and timberlands
Timber and timberlands $ 347,634 $ 7,537 $ 22,070 $ - $ 9,945(1) $ 323,156
Timber deposits 41,820 - - 20,979 - 62,799
__________ __________ __________ __________ __________ __________
$ 389,454 $ 7,537 $ 22,070(3) $ 20,979 $ 9,945 $ 385,955
Property and equipment
Land and land improvements $ 64,334 $ 1,593 $ 7,816 $ - $ 1,510(2) $ 56,601
Buildings and improvements 593,649 16,129 53,512 - - 556,266
Machinery and equipment 4,417,202 257,692 176,607 - - 4,498,287
__________ __________ __________ __________ __________ __________
$5,075,185 $ 275,414 $ 237,935(4) $ - $ 1,510 $5,111,154
YEAR ENDED DECEMBER 31, 1991
Timber and timberlands
Timber and timberlands $ 358,020 $ 5,065 $ 10,608 $ 5,100(5) $ 9,943(1) $ 347,634
Timber deposits 33,965 - - 7,855 - 41,820
__________ __________ __________ __________ __________ __________
$ 391,985 $ 5,065 $ 10,608 $ 12,955 $ 9,943 $ 389,454
Property and equipment
Land and land improvements $ 76,633 $ 1,348 $ 6,675 $ - $ 6,972(5) $ 64,334
Buildings and improvements 569,906 27,679 3,936 - - 593,649
Machinery and equipment 4,235,133 264,582 82,513 - - 4,417,202
__________ __________ __________ __________ __________ __________
$4,881,672 $ 293,609 $ 93,124(6) $ - $ 6,972 $5,075,185
NOTES:
(1) Primarily cost of company timber harvested.
(2) Primarily amortization of logging roads.
(3) Includes sales of timber and timberlands of $14,438,000.
(4) Includes $61,164,000 attributable to the sale of essentially all of the Company's wholesale office products
distribution operations, $98,044,000 to the sale of 11 corrugated container plants, and $24,770,000 to the
sale of other miscellaneous items.
(5) Primarily the transfer of plant site to timberlands and amortization of logging roads.
(6) Includes $37,728,000 attributable to the sale of company aircraft.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
SCHEDULE VI--ACCUMULATED DEPRECIATION,
DEPLETION, AND AMORTIZATION OF PROPERTY AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND OTHER CHANGES AT END OF
DESCRIPTION OF PERIOD EXPENSES RETIREMENTS ADD DEDUCT PERIOD
(EXPRESSED IN THOUSANDS)
YEAR ENDED DECEMBER 31, 1993
Buildings and improvements $ 216,624 $ 21,909 $ 3,575 $ - $ - $ 234,958
Machinery and equipment 1,827,565 233,106 34,269 - - 2,026,402
__________ __________ __________ __________ __________ __________
$2,044,189 $ 255,015 $ 37,844 $ - $ - $2,261,360
YEAR ENDED DECEMBER 31, 1992
Buildings and improvements $ 213,091 $ 21,513 $ 17,980 $ - $ - $ 216,624
Machinery and equipment 1,699,569 232,822 104,826 - - 1,827,565
__________ __________ __________ __________ __________ __________
$1,912,660 $ 254,335 $ 122,806(1) $ - $ - $2,044,189
YEAR ENDED DECEMBER 31, 1991
Buildings and improvements $ 194,395 $ 21,889 $ 3,193 $ - $ - $ 213,091
Machinery and equipment 1,532,399 211,566 44,396 - - 1,699,569
__________ __________ __________ __________ __________ __________
$1,726,794 $ 233,455 $ 47,589(2) $ - $ - $1,912,660
NOTES:
(1) Includes $21,708,000 attributable to the sale of essentially all of the Company's wholesale office products
distribution operations, $54,085,000 to the sale of 11 corrugated container plants, and $2,520,000 to the sale of
other miscellaneous items.
(2) Includes $2,886,000 attributable to the sale of company aircraft.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
SCHEDULE VII--GUARANTEES OF SECURITIES OF OTHER ISSUERS
DECEMBER 31, 1993
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F COLUMN G
NATURE OF ANY DEFAULT
BY ISSUER OF
AMOUNT OWNED AMOUNT IN SECURITIES GUARANTEED
NAME OF ISSUER OF TITLE OF ISSUE OF BY PERSON OR TREASURY OF IN PRINCIPAL, INTEREST,
SECURITIES GUARANTEED EACH CLASS OF TOTAL AMOUNT PERSONS FOR ISSUER OF SINKING FUND OR
BY PERSON FOR WHICH SECURITIES GUARANTEED AND WHICH STATE- SECURITIES NATURE OF REDEMPTION PROVISIONS,
STATEMENT IS FILED GUARANTEED OUTSTANDING MENT IS FILED GUARANTEED GUARANTEE (1) OR PAYMENT OF DIVIDENTS
(expressed in thousands)
City of Lafayette -
Industrial Revenue
Bonds Secured Notes $1,450 $ - $ - $ 107 None
City of Yakima -
Industrial Revenue
Bonds Unsecured Notes 1,700 - - 167 None
City of Oil City -
Industrial Revenue
Bonds Unsecured Notes 1,900 - - 112 None
City of Edwardsville -
Industrial Revenue
Bonds Unsecured Notes 1,000 - - 71 None
City of West Chicago -
Industrial Revenue
Bonds Secured Notes 1,000 - - 96 None
______ ______ ______ ______
$7,050 $ - $ - $ 553
(1) All guarantees are for principal and interest. Amounts shown represent annual aggregate interest guaranteed.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
CATEGORY OF WEIGHTED AVERAGE AMOUNT WEIGHTED AVERAGE
AGGREGATE BALANCE AVERAGE MAXIMUM AMOUNT OUTSTANDING INTEREST RATE
SHORT-TERM AT END OF INTEREST OUTSTANDING DURING THE DURING THE
BORROWINGS PERIOD RATE AT MONTH END PERIOD (1) PERIOD (2)
(dollars expressed in thousands)
1993
Notes payable
Amounts payable
to banks $ 31,000 3.9% $ 50,516 $ 26,105 3.7%
1992
Notes payable
Amounts payable
to banks $ 4,000 4.1% $139,000 $ 55,401 4.4%
1991
Notes payable
Amounts payable
to banks $ 58,000 5.1% $106,000 $ 61,545 6.1%
(1) The average amount outstanding during the year was determined based on daily amounts outstanding.
(2) The weighted average interest rate during the year was computed by dividing average annualized
interest by average annualized short-term borrowings.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
COLUMN A COLUMN B
ITEM CHARGED TO COSTS AND EXPENSES
YEAR ENDED DECEMBER 31
1993 1992 1991
(expressed in thousands)
Maintenance and repairs $339,027 $345,257 $369,079
Taxes, other than payroll
and income taxes 52,848 54,984 57,633
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated January 26, 1994, included or incor-
porated by reference in this Form 10-K for the year ended December 31, 1993,
into Boise Cascade Corporation's previously filed post-effective amendment
No. 1 to Form S-8 registration statement (File No. 33-28595); the
registration statement on Form S-8 (File No. 33-47892); post-effective
amendment No. 1 to Form S-8 registration statement (File No. 2-96196); post-
effective amendment No. 1 to Form S-8 registration statement (File
No. 33-21964); the registration statement on Form S-8 (File No. 33-31642);
the registration statement on Form S-8 (File No. 33-45675); the registration
statement on Form S-3 (File No. 33-38216); and the registration statement on
Form S-3 (File No. 33-55396).
ARTHUR ANDERSEN & CO.
Boise, Idaho
March 11, 1994
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed with the Annual Report
on Form 10-K for the
Year Ended December 31, 1993
Page
Number Description Number
(1)
3.1 (2) Restated Certificate of Incorporation, as amended -
3.2 (3) Certificate of Designation of Convertible Preferred
Stock, Series D, dated July 10, 1989 -
3.3 (4) Certificate of Designation of Conversion Preferred
Stock, Series E, dated January 21, 1992 -
3.4 Certificate of Designation of Cumulative Preferred
Stock, Series F, dated January 29, 1993 31
3.5 Bylaws, as amended, July 30, 1993 35
3.6 Certificate of Designation of Conversion Preferred
Stock, Series G, dated September 17, 1993 51
4.1 (5) Trust Indenture between Boise Cascade Corporation and
Morgan Guaranty Trust Company of New York, Trustee,
dated October 1, 1985, as amended -
4.2 (6) 1990 Revolving Loan Agreement -- $750,000,000, dated
January 1, 1990, as amended -
4.3 (7) Shareholder Rights Plan, as amended September 25, 1990 -
9 Inapplicable -
10.1 Key Executive Performance Plan for Executive Officers,
as amended February 3, 1994 65
10.2 1986 Executive Officer Deferred Compensation Plan,
as amended July 29, 1993 81
10.3 1983 Board of Directors Deferred Compensation Plan,
as amended July 29, 1993 93
10.4 1982 Executive Officer Deferred Compensation Plan,
as amended July 29, 1993 103
10.5 Executive Officer Severance Pay Policy 115
10.6 Supplemental Early Retirement Plan for Executive Officers 119
10.7 Boise Cascade Corporation Supplemental Retirement Policy 131
10.8 1987 Board of Directors Deferred Compensation Plan,
as amended July 29, 1993 135
10.9 1984 Key Executive Stock Option Plan and Form of Agreement,
as amended through February 7, 1992 145
10.10 Executive Officer Group Life Insurance Plan description 157
10.11 Executive Officer Split-Dollar Life Insurance Plan 161
10.12 Form of Agreement with Executive Officers, as amended 175
10.13 Supplemental Health Care Plan for Executive Officers 189
10.14 Nonbusiness Use of Corporate Aircraft Policy, as amended 197
10.15 Executive Officer Financial Counseling Program description 201
10.16 Family Travel Program description 205
10.17 Form of Directors' Indemnification Agreement 209
10.18 Deferred Compensation and Benefits Trust, as amended
through June 30, 1989 219
10.19 1991 Director Stock Option Plan 249
11 Inapplicable -
12 Ratio of Earnings (Losses) to Fixed Charges 259
13.1 Incorporated sections of the Boise Cascade Corporation
1993 Annual Report 263
13.2 Incorporated sections of the Boise Cascade Corporation
1993 Fact Book for the fourth quarter of 1993 301
18 Inapplicable -
19 Inapplicable -
22 Significant subsidiaries of the registrant 309
23 Inapplicable -
24 Consent of Arthur Andersen & Co. (See page 26) -
25 Inapplicable -
28 Inapplicable -
29 Inapplicable -
(1) This information appears only in the manually signed original of the
Annual Report on Form 10-K.
(2) Exhibit 3.1 was filed under the same exhibit number in the Company's
1987 Annual Report on Form 10-K and is incorporated herein by this
reference.
(3) The Certificate of Designation of Convertible Preferred Stock, Series D,
dated July 10, 1989, was filed as Exhibit 4.4 in the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1989, and is
incorporated herein by this reference.
(4) Exhibit 3.3 was filed under the same exhibit number in the Company's 1991
Annual Report on Form 10-K and is incorporated herein by this reference.
(5) The Trust Indenture between Boise Cascade Corporation and Morgan Guaranty
Trust Company of New York, Trustee, dated October 1, 1985, as amended,
was filed as Exhibit 4 in the Registration Statement on Form S-3
No. 33-5673, filed May 13, 1986. The First Supplemental Indenture, dated
December 20, 1989, to the Trust Indenture between Boise Cascade
Corporation and Morgan Guaranty Trust Company of New York, Trustee, dated
October 1, 1985, was filed as Exhibit 4.2 in the Pre-Effective Amendment
No. 1 to the Registration Statement on Form S-3 No. 33-32584, filed
December 20, 1989. The Second Supplemental Indenture, dated August 1,
1990, to the Trust Indenture was filed as Exhibit 4.1 in the Company's
Current Report on Form 8-K filed on August 10, 1990. Each of the
documents referenced in this footnote is incorporated herein by this
reference.
(6) The 1990 Revolving Loan Agreement, as amended, was filed as Exhibit 4.1
in the Company's Form 10-K for the year ended December 31, 1989, filed
with the Securities and Exchange Commission on March 8, 1990, and is
incorporated herein by this reference. The Form of Second Amendment to
the 1990 Revolving Loan Agreement was filed as Exhibit 4.2 in the
Company's Form 10-Q for the quarter ended March 31, 1992, filed with the
Securities and Exchange Commission on May 8, 1992, and the Form of Third
Amendment to the 1990 Revolving Loan Agreement was filed as Exhibit 4 in
the Company's Form 8-K, dated December 4, 1992, filed with the Securities
and Exchange Commission on December 4, 1992, both of which are
incorporated herein by this reference.
In reliance upon item 601(b)(4)(iii) of Regulation S-K, the registrant is
not filing herewith various instruments (other than those mentioned in
footnotes 5 and 6) defining the rights of holders of long-term debt of the
registrant and its subsidiaries because the total amount of securities
authorized under each such instrument does not exceed 10% of the total
assets of the registrant and its subsidiaries on a consolidated basis.
The registrant hereby agrees to furnish a copy of any such instrument to
the Commission upon request.
(7) The Rights Agreement, dated as of December 13, 1988, as amended
September 25, 1990, was filed as Exhibit 1 in the Company's Form 8-K
filed with the Securities and Exchange Commission on September 25, 1990,
and is incorporated herein by this reference.
CERTIFICATE OF DESIGNATION
OF
9.40% CUMULATIVE PREFERRED STOCK, SERIES F
OF
BOISE CASCADE CORPORATION
Pursuant to Section 151 of the
General Corporation Law
of the State of Delaware
Boise Cascade Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to authority granted to
and vested in the Board of Directors of the Corporation by the
provisions of the Corporation's Restated Certificate of Incorpo-
ration, the Board of Directors of the Corporation has adopted the
following resolution creating a series of Preferred Stock of the
Corporation:
RESOLVED, by the Board of Directors (the "Board of
Directors") of Boise Cascade Corporation, a Delaware corporation
(the "Corporation"), that, pursuant to authority expressly granted
to and vested in the Board of Directors by the provisions of the
Corporation's Restated Certificate of Incorporation (the "Restated
Certificate of Incorporation"), the Board of Directors hereby
creates a sixth series of the class of authorized Preferred Stock,
without par value, of the Corporation, and authorizes the issuance
thereof, and hereby fixes the designation and amount thereof and
the voting powers, preferences and relative, participating,
optional and other special rights of the shares of such series, and
the qualifications, limitations or restrictions thereof (in
addition to the designation, preferences and relative,
participating and other special rights, and the qualifications,
limitations or restrictions thereof, set forth in the Restated
Certificate of Incorporation which are applicable to the Preferred
Stock of all series) as follows:
1. Designation and Amount. The shares of such series
shall be designated the "9.40% Cumulative Preferred Stock, Series
F" and the number of shares constituting such series shall be
115,000. The shares of such series shall have a stated capital of
$.01 per share. Such series is herein sometimes referred to as the
"Series F Preferred Stock."
2. Dividends. The holders of the shares of Series F
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
therefor, cash dividends ("Preferred Dividends") at the rate of
$94.00 per share per annum, payable quarterly in arrears, one
quarter each on the 15th day of the months of January, April, July
and October in each year (each a "Dividend Payment Date")
commencing on April 15, 1993. In the event that any Dividend
Payment Date shall fall on any day other than a business day (as
hereinafter defined), the Preferred Dividend due on such Dividend
Payment Date shall be paid on the business day immediately
following such Dividend Payment Date. Preferred Dividends shall
begin to accrue from the date of initial issuance of the Series F
Preferred Stock. Preferred Dividends shall accrue on a daily basis
whether or not in any such quarterly period there shall be funds
of the Corporation legally available therefor and whether or not
such Preferred Dividends are declared, but Preferred Dividends
accrued for any period less than a full quarterly period between
Dividend Payment Dates (or, in the case of the first Preferred
Dividend, from the date of initial issuance of the shares of
Series F Preferred Stock to the first Dividend Payment Date) shall
be computed on the basis of a 360-day year of twelve 30-day months.
Accrued but unpaid Preferred Dividends shall cumulate as of the
Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Preferred
Dividends. As used herein, the term "business day" shall mean any
day other than a Saturday, Sunday or a day on which banking
institutions in the state of New York are authorized or obligated
by law or executive order to close.
3. Optional Redemption. The shares of Series F
Preferred Stock are not redeemable by the Corporation prior to
February 15, 1998. On and after February 15, 1998, the outstanding
shares of Series F Preferred Stock or any part thereof may be
redeemed by the Corporation, at its option expressed by resolution
of the Board of Directors, at any time or from time to time, at the
redemption price of $1,000 per share, plus an amount equal to any
arrearages in dividends thereon. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the
redemption date to each holder of record of shares of Series F
Preferred Stock to be redeemed at the address shown on the books
of the Corporation (but no failure to mail such notice or any
defect therein or in the mailing thereof shall affect the validity
of the proceedings for such redemption except as to the holder to
whom the Corporation has failed to mail such notice or except as
to the holder whose notice was defective). On or after the
redemption date fixed in such notice, dividends shall cease to
accumulate on shares of Series F Preferred Stock called for
redemption (unless the Corporation defaults in the payment or
deposit of the redemption price pursuant to such notice).
4. Liquidation Rights. In the event of any liquida-
tion or dissolution or winding up of the Corporation, voluntary or
involuntary, the holders of the Series F Preferred Stock shall be
entitled to receive the sum of $1,000 per share, plus an amount
equal to any arrearages in dividends thereon.
5. Voting Rights. Except as set forth in the follow-
ing sentence of this paragraph 5, the holders of Series F Pre-
ferred Stock shall have no voting rights. The holders of Series F
Preferred Stock shall have one vote per share on each of the
matters on which they are entitled to vote by applicable law, by
the provisions of Section 2.6 of the Restated Certificate of
Incorporation or by the provisions of Section 2.8 of the Restated
Certificate of Incorporation, which Section 2.8 shall be applicable
to the Series F Preferred Stock.
IN WITNESS WHEREOF, Boise Cascade Corporation has caused
this Certificate of Designation to be signed by John W. Holleran,
its Vice President and General Counsel, and attested by A. James
Balkins III, its Corporate Secretary, this 29th day of January,
1993.
BOISE CASCADE CORPORATION
By /s/ John W. Holleran
John W. Holleran
Vice President and
General Counsel
ATTEST:
By: /s/ A. James Balkins III
A. James Balkins III
Corporate Secretary
BYLAWS
OF
BOISE CASCADE CORPORATION
As Amended to July 30, 1993
_______________________
Offices
Section 1. The registered office of the corporation in
Delaware shall be in the City of Wilmington, County of New
Castle.
Section 2. The corporation may also have offices at such
other places both within and without the State of Delaware as the
board of directors may from time to time determine or the
business of the corporation may require.
Meetings of Stockholders
Section 3. All meetings of the stockholders for the elec-
tion of directors shall be held in Boise, Idaho, at such place as
may be fixed from time to time by the board of directors, or at
such other place either within or without the State of Delaware
as shall be designated from time to time by the board of direc-
tors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be
stated in the notice of the meeting or in a duly executed waiver
of notice thereof.
At a meeting of the stockholders, only business shall be
conducted which has been properly brought before the meeting. To
be properly brought before a meeting of the stockholders, busi-
ness must be specified in the notice of meeting (or any supple-
ment thereto) given by, or at the direction of, the board of
directors or otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before a
meeting by a stockholder, the stockholder must have given timely
notice of the business to the corporate secretary. To be timely,
a stockholder's notice must be in writing delivered to or mailed,
postage prepaid, and received by the corporate secretary not less
than 60 days nor more than 90 days prior to the meeting; pro-
vided, however, that if less than 65 days' notice or prior public
disclosure of the date of the meeting is given to stockholders,
notice by the stockholder to be timely must be received by the
corporate secretary not later than the close of business on the
7th day following the day on which notice of the date of the
meeting was mailed or public disclosure was made. For each
matter the stockholder proposes to bring before the meeting, the
notice to the corporate secretary shall include (i) a brief
description of the business desired to be brought before the
meeting and the reasons for conducting the business at the
meeting, (ii) the name and record address of the stockholder
proposing the business, (iii) the class and number of shares of
the corporation which are beneficially owned by the stockholder
and (iv) any material interest of the stockholder in such
business.
Notwithstanding anything in these bylaws to the contrary, no
business shall be conducted at the meeting except in accordance
with the procedures set forth in this Section 3.
The chairman of a meeting shall, if the facts warrant,
determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the
provisions of this Section 3. If the chairman determines that
business was not properly brought before the meeting, the
business shall not be transacted.
Section 4. Annual meetings of stockholders, at such date
and time as shall be designated from time to time by the board of
directors and stated in the notice of the meeting, at which the
stockholders shall elect by a plurality vote a board of direc-
tors, and transact such other business as may properly be brought
before the meeting. Elections of directors may be by voice vote,
rather than by written ballot, unless by resolution adopted by
the majority vote of the stockholders represented at the meeting,
the election of directors by written ballot is required.
Section 5. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten
nor more than sixty days (or in the case a vote of stockholders
on a merger or consolidation is one of the stated purposes of the
annual meeting, not less than twenty nor more than sixty days)
before the date of the meeting.
Section 6. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in alpha-
betical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be
held, which place shall be specified in the notice of the meet-
ing, or, if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 7. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the certificate of incorporation, may be called by the chairman
of the board and shall be called by the chairman of the board or
corporate secretary at the request in writing of a majority of
the board of directors or a majority of the executive committee.
Such request shall state the purpose or purposes of the proposed
meeting.
Section 8. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes
for which the meeting is called, shall be given not less than ten
nor more than sixty days (or in the case of a merger or consoli-
dation, not less than twenty nor more than sixty days) before the
date of the meeting, to each stockholder entitled to vote at such
meeting.
Section 9. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
Section 10. The holders of a majority of the shares of
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute, by the certifi-
cate of incorporation or by these bylaws. If, however, such
quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present
in person or represented by proxy, shall have power to adjourn
the meeting from time to time, without notice other than an-
nouncement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall
be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified.
If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting,
a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 11. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting
power present in person or represented by proxy, excluding,
however, any shares where the holder has expressly indicated that
the holder is abstaining from voting on the matter, shall decide
any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the
certificate of incorporation or of these bylaws, a different vote
is required in which case such express provision shall govern and
control the decision of such question.
Section 12. Each stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by such
stockholder, but no proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer
period. In the election of each director of the corporation,
each holder of stock shall have one vote for each share held.
Section 13. Any action required or permitted to be taken at
any annual or special meeting of stockholders must be taken at
such a meeting duly called, upon proper notice to all stock-
holders entitled to vote. No action required to be taken or
which may be taken at any annual or special meeting of stock-
holders may be taken without a meeting, without prior notice and
without a vote.
Board of Directors
Section 14. The number of directors which shall constitute
the whole board of directors shall be fixed from time to time by
resolution adopted by the affirmative vote of a majority of the
entire board of directors of the corporation, except that the
minimum number of directors shall be fixed at no less than three
and the maximum number of directors shall be fixed at no more
than fifteen. The directors shall be divided into three classes,
as provided in the Certificate of Incorporation, and each class
shall consist, as nearly equal in number as possible, of one-
third of the total number of directors constituting the entire
board of directors. Except as provided in Section 15 of the
Bylaws, the directors for all classes shall be elected at the
1985 Annual Meeting of the stockholders, and thereafter one class
of directors shall be elected at each annual meeting of the
stockholders: Class I in 1986, Class II in 1987, Class III in
1988, Class I in 1989 and so on. Each director elected shall
hold office for the term specified for his or her class in the
Certificate of Incorporation and until his or her successor is
elected and qualified or until his or her earlier resignation or
removal. No person shall serve as a director of this corpora-
tion after the annual stockholders meeting next following his or
her 70th birthday. Directors need not be stockholders.
Nominations for election to the board of directors of the
corporation at a meeting of stockholders may be made by the
board, on behalf of the board, by any nominating committee
appointed by that board, or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting.
Nominations, other than those made by or on behalf of the board,
shall be made by notice in writing delivered to or mailed,
postage prepaid, and received by the corporate secretary not less
than 30 days nor more than 60 days prior to any meeting of
stockholders called for the election of directors; provided,
however, that if less than 35 days' notice or prior public
disclosure of the date of the meeting is given to stockholders,
the nomination must be received by the corporate secretary not
later than the close of business on the 7th day following the day
on which the notice of meeting was mailed. The notice shall set
forth: (i) the name and address of the stockholder who intends
to make the nomination; (ii) the name, age, business address and,
if known, residence address of each nominee; (iii) the principal
occupation or employment of each nominee; (iv) the number of
shares of stock of the corporation which are beneficially owned
by each nominee and by the nominating stockholder; (v) any other
information concerning the nominee that must be disclosed of
nominees in proxy solicitations pursuant to Regulation 14A of the
Securities Exchange Act of 1934; and (vi) the executed consent of
each nominee to serve as a director of the corporation if
elected.
The chairman of the meeting of stockholders may, if the
facts warrant, determine that a nomination was not made in
accordance with the foregoing procedures, and if the chairman
should so determine, the chairman shall so declare to the meeting
and the defective nomination shall be disregarded.
Removal of directors shall be as provided in the Certificate
of Incorporation.
Section 15. Vacancies and newly created directorships
resulting from any increase in the authorized number of direc-
tors shall be filled by a majority of the remaining directors
then in office, even though less than a quorum, or by a sole
remaining director. Any additional director of any class elected
to fill a vacancy in such a class shall hold office for a term
that shall coincide with the remaining term of that class, but in
no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office
until the next annual meeting for the year in which his or her
term expires and until the director's successor shall have been
elected and qualified or until his or her earlier resignation or
removal.
Section 16. The business of the corporation shall be
managed by its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things
as are not by statute or by the certificate of incorporation or
by these bylaws directed or required to be exercised or done by
the stockholders.
Meetings of the Board of Directors
Section 17. The board of directors of the corporation may
hold meetings, both regular and special, either within or without
the State of Delaware.
Section 18. The first meeting of each newly elected board
of directors shall be held without other notice than this bylaw,
immediately after, and at the same place as, the annual meeting
of stockholders. In the event of the failure to hold the first
meeting of a newly elected board at such time and place, the
meeting may be held at such time and place as shall be specified
in a notice given as hereinafter provided for special meetings of
the board of directors, or as shall be specified in a written
waiver signed by all of the directors.
Section 19. Regular meetings of the board of directors may
be held without notice at such time and at such place as shall
from time to time be determined by the board.
Section 20. Special meetings of the board may be called by
the chairman of the board on not less than forty-eight hours'
notice to each director, either personally or by mail or by
telegram; special meetings shall be called by the chairman of the
board or corporate secretary in like manner and on like notice on
the written request of two directors.
Section 21. At all meetings of the board a majority of the
total number of directors then constituting the whole board shall
constitute a quorum for the transaction of business and the vote
of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the board of directors,
except as may be otherwise specifically provided by statute or by
the certificate of incorporation. If a quorum shall not be
present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting until a
quorum shall be present.
Section 22. Unless otherwise restricted by the certificate
of incorporation or these bylaws, any action required or per-
mitted to be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if all
members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee; and any
member of the board of directors or of any committee thereof
designated by such board may participate in a meeting of such
board or committee by means of conference telephone or similar
communications equipment by means of which all persons parti-
cipating in the meeting can hear each other, and participation in
such meeting shall constitute presence in person at such meeting.
Committees of Directors
Section 23. The board of directors shall have an executive
committee and such other committees as they may designate by
resolution passed by a majority of the whole board, each com-
mittee to consist of one or more of the directors of the corpora-
tion. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disquali-
fied member at any meeting of the committee. Any such committee,
to the extent provided in the resolution, when the board of
directors is not in session, shall have and may exercise the
powers of the board of directors in the management of the busi-
ness and affairs of the corporation, and may authorize the seal
of the corporation to be affixed to all papers which may require
it. The member of a committee of one or a majority of the
members of any other committee shall constitute a quorum for the
transaction of business at a meeting thereof, and action by any
committee must be authorized by the affirmative vote of the
member of a committee of one or of a majority of the members of
any other committee present at a meeting at which a quorum is
present. If a member of a committee is absent or disqualified
from voting at any meeting, the member or members thereof present
at the meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the
place of any such absent or disqualified member; provided that at
any such meeting, the committee shall not revise or rescind any
previous action of the committee without the affirmative vote of
a majority of the regular members present.
Special meetings of any committee of the board may be called
by the chairman of the board or the chairman of the committee on
not less than forty-eight hours' notice to each member of the
committee, either personally or by mail or by telegram. Special
meetings of any committee of the board at which members parti-
cipate by means of conference telephone or similar communications
equipment as provided by Section 22 of these bylaws, and at
which at least a majority of the members of the committee parti-
cipate, may be called by the chairman of the board on not less
than six hours' notice to each member of the committee either
personally or by telegram.
Section 24. Each committee shall have a chairman, appointed
by the board of directors, who shall preside at all meetings of
such committee. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when
required.
Compensation of Directors
Section 25. The directors shall receive such compensation
and reimbursement of expenses, if any, of attendance at regular
and special meetings of the board of directors as may be set from
time to time by the board. No such payment shall preclude any
director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing
committees, including the executive committee, may receive such
compensation as shall be approved from time to time by the board.
Notices
Section 26. Notices to directors and stockholders shall be
in writing and delivered personally or mailed to the directors or
stockholders at their addresses appearing on the books of the
corporation. Notice by mail shall be deemed to be given when the
notice is mailed. Notice to directors may also be given by
telegram, and shall be deemed to be given at the time of delivery
to the telegraph company. Notice to members of committees of the
directors as such may also be given orally.
Section 27. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of
incorporation or of these bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equiv-
alent thereto. Attendance of a person at a meeting shall con-
stitute a waiver of notice of such meeting, except when the
person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened.
Officers
Section 28. The officers of the corporation shall be a
chairman of the board, a president, one or more vice presidents
(the number and designation thereof to be determined by the board
of directors), a treasurer, a controller, when such controller is
deemed necessary by the board of directors, a corporate secre-
tary, and such assistant treasurers, assistant secretaries or
other officers as may be elected or appointed by the board of
directors. Any two or more offices may be held by the same
person.
Section 29. Officers of the corporation shall be elected by
the board of directors. Each officer shall hold office until his
successor is chosen and qualified or until his earlier
resignation or removal.
Section 30. The board of directors may from time to time
appoint such other officers and agents as it shall deem advis-
able, who shall hold their offices for such terms and shall
perform such duties as from time to time may be prescribed by the
chairman of the board or the board of directors.
Section 31. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote
of a majority of the board of directors, but such removal shall
be without prejudice to the contract rights, if any, of the
person so removed.
Chairman of the Board
Section 32. The chairman of the board shall be the chief
executive officer of the corporation and shall have general
authority over the business and affairs of the corporation,
subject to the board of directors. He shall see that all orders
and resolutions of the board of directors are carried into
effect, and shall preside at all meetings of the stockholders and
the board of directors. He may sign certificates for shares of
the corporation, and any deeds, mortgages, bonds, contracts, or
other instruments which the board of directors has authorized to
be executed, whether or not under the seal of the corporation,
except in cases where the execution thereof shall be expressly
delegated by the board of directors or by these bylaws to some
other officer or agent of the corporation, or shall be required
by law to be otherwise signed or executed, and shall perform such
other duties and have such other powers as from time to time may
be prescribed by the board of directors.
President
Section 33. The president shall be the chief operating
officer of the corporation and shall have general direction and
supervision of the operations of the corporation, subject to the
board of directors and the chairman of the board. In the absence
of the chairman of the board, or in the event of his inability to
act, he shall perform the duties of the chairman of the board and
when so acting shall have all the powers of, and be subject to
all the restrictions upon, the chairman of the board. He may
sign certificates for shares of the corporation, and any deeds,
mortgages, bonds, contracts, or other instruments which the board
of directors has authorized to be executed, whether or not under
the seal of the corporation, except in cases where the execution
thereof shall be expressly delegated by the board of directors or
by these bylaws to some other officer or agent of the corpora-
tion, or shall be required by law to be otherwise signed or
executed, and shall perform such other duties as from time to
time may be prescribed by the board of directors or as may be
delegated by the chairman of the board.
Vice Presidents
Section 34. In the absence of the president, or in the
event of his inability to act, the vice presidents (or if there
be more than one, the executive vice president, senior vice
presidents or the vice presidents in the order designated, or in
the absence of any designation then in the order of their elec-
tion or in the order named for election) shall perform the duties
of the president and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the president. Each
vice president shall perform such other duties as from time to
time may be assigned to him by the chairman of the board, the
president or the board of directors.
Treasurer
Section 35. The treasurer shall have charge and custody of
and be responsible for all funds and securities of the corpora-
tion, and the deposit of all moneys in the name of the corpora-
tion in such banks, trust companies, or other depositories as
shall be selected or approved by the board of directors; and in
general shall perform all the duties incident to the office of
treasurer and such other duties as from time to time may be
assigned to him by the chairman of the board or the board of
directors. If required by the board of directors, the treasurer
shall give a bond for the faithful discharge of his duties in
such sum and with such surety or sureties as the board of
directors shall determine.
Controller
Section 36. The controller shall be the principal officer
in charge of the accounts of the corporation, and shall perform
such duties as from time to time may be assigned to him by the
chairman of the board or the board of directors.
Corporate Secretary
Section 37. The corporate secretary shall: (a) keep the
minutes of the stockholders' and the board of directors' meetings
in one or more books provided for that purpose; (b) see that all
notices are duly given in accordance with the provisions of these
bylaws or as required by law; (c) be custodian of the corporate
records and of the seal of the corporation and see that the seal
of the corporation is affixed to all certificates for shares
prior to the issue thereof and to all documents, the execution of
which on behalf of the corporation under its seal is duly author-
ized in accordance with the provisions of these bylaws; (d) sign
with the chairman of the board, the president or a vice presi-
dent, certificates for shares of the corporation, the issue of
which shall have been authorized by resolution of the board of
directors; (e) have general charge of the stock transfer books of
the corporation; and (f) in general perform all duties incident
to the office of corporate secretary and such other duties as
from time to time may be assigned to him by the chairman of the
board or the board of directors.
Assistant Treasurers, Assistant Controllers
and Assistant Secretaries
Section 38. The assistant treasurers shall respectively, if
required by the board of directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as
the board of directors shall determine. The assistant secre-
taries as thereunto authorized by the board of directors may sign
with the chairman of the board, the president or a vice presi-
dent, certificates for shares of the corporation, the issue of
which shall have been authorized by a resolution of the board of
directors. The assistant treasurers, assistant controllers and
assistant secretaries in general shall perform such duties as
from time to time may be delegated to them by the treasurer,
controller or the corporate secretary, respectively, or assigned
to them by the chairman of the board or the board of directors.
Compensation of Officers
Section 39. The salaries (including bonuses and similar
supplemental payments) of the officers other than of assistant
treasurers, assistant controllers and assistant secretaries shall
be fixed or approved from time to time by the board of directors
or by the committee of directors to whom such authority shall be
delegated by the board of directors, and no officer shall be
prevented from receiving such salaries, bonuses or similar
supplemental payments by reason of the fact that he is also a
director of the corporation.
Voting and Transfer of Stock in Other Corporations
Section 40. The board of directors may by resolution
designate an officer or any other person to act for the corpora-
tion and vote its shares in any company in which it may own or
hold stock, and may direct in what manner, and for or against
what propositions and in case of elections for whom its vote
shall be cast. In case, however, the board of directors has not
taken express action, the chairman of the board, the president,
any vice president, the treasurer, or the corporate secretary may
act for this corporation on all stockholder matters connected
with any such company, including voting the shares owned or held
by this corporation and executing and delivering proxies, waivers
and stockholder consents. Certificates of stock owned by this
corporation in any other company may be endorsed for transfer by
any one of the above listed officers.
Indemnification of Directors, Officers and Others
Section 41. Each person who is or was a director, officer
or employee of the corporation, and each person who serves or may
have served at the request of the corporation as a director,
officer or employee of another corporation, partnership, joint
venture, trust or other enterprise (and the heirs, executors,
administrators and estates of any such person), shall be entitled
to indemnity to the fullest extent now or hereafter permitted or
authorized by the General Corporation Law of the State of
Delaware against any expenses, judgments, fines and settlement
amounts actually and reasonably incurred by such person arising
out of his or her status as such director, officer or employee.
The corporation shall indemnify any director or officer of the
corporation unless the board of directors acting reasonably and
in good faith makes a determination that the person has not acted
in good faith and in a manner he or she reasonably believed to
have been in, or not opposed to, the best interests of the
corporation. Such determination shall be made by a majority vote
of a quorum consisting of directors who were not parties to the
action, suit or proceeding out of which the claim for indemni-
fication arose, or, if such a quorum is not obtainable, by
independent legal counsel selected by the board of directors.
Except as expressly provided in any Indemnification Agreement,
indemnification and any advancement of expenses under this bylaw
will not be mandatory for any person seeking indemnity in connec-
tion with a proceeding voluntarily initiated by such person
unless the proceeding was authorized by a majority of the entire
Board of Directors. Expenses incurred by a director or officer
in defending a civil or criminal action, suit or proceeding
arising out of his or her status as a director or officer shall
be paid by the corporation, as these expenses become due, in
advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the
director or officer to repay amounts advanced only if it shall
ultimately be determined that he or she is not entitled to be
indemnified by the corporation. The provisions of this Sec-
tion 41 shall not be deemed exclusive of any other rights to
which any person seeking indemnification may be lawfully entitled
under the law of Delaware or any other competent jurisdiction.
Any amendment or repeal of this bylaw shall not limit the right
of any person to indemnity with respect to actions taken or
omitted to be taken by such person prior to such amendment or
repeal.
Certificates for Shares and Their Transfer
Section 42. Each holder of stock in the corporation shall
be entitled to have a certificate signed by or in the name of the
corporation by the chairman of the board, the president or a vice
president and by the corporate secretary or an assistant secre-
tary, or the treasurer or an assistant treasurer of the corpo-
ration, certifying the number of shares owned by him and sealed
with the seal or a facsimile of the seal of the corporation. Any
of or all of the signatures on the certificate may be a facsi-
mile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Section 43. Upon surrender to the corporation or any
transfer agent of the corporation of a certificate for shares of
the corporation duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, the corpo-
ration or transfer agent shall cancel the old certificate, record
the transaction on the books of the corporation, and either issue
a new certificate to the person entitled thereto or credit the
proper number of shares to an account of the person entitled
thereto maintained on the books of the corporation. Upon request
the corporation or transfer agent shall issue a certificate for
all or any part of the shares held in such an account.
Section 44. The board of directors may authorize the
issuance of a new certificate in lieu of a certificate alleged by
the holder thereof to have been lost, stolen or destroyed, upon
compliance by such holder, or his legal representatives, with
such requirements as the board of directors may impose or author-
ize. Such authorization by the board of directors may be general
or confined to specific instances.
Fixing Record Date
Section 45. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or entitled to receive
payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance,
a record date, which shall not be more than sixty nor less than
ten days before the date of such meeting, nor more than sixty
days prior to any other action. A determination of stockholders
of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
Registered Stockholders
Section 46. The corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise
provided by the laws of Delaware.
Dividends
Section 47. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors
at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of
incorporation.
Section 48. Before payment of any dividend, there may be
set aside out of any funds of the corporation available for
dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Checks
Section 49. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued
in the name of the corporation shall be signed by such officer or
officers or such other person or persons as the board of
directors may, from time to time, designate.
Fiscal Year
Section 50. The fiscal year shall begin on the first day of
January in each year.
Seal
Section 51. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware." The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Amendments
Section 52. These bylaws may be altered, amended or re-
pealed or new bylaws may be adopted by the stockholders or by the
board of directors at any regular meeting of the stockholders or
of the board of directors or at any special meeting of the
stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new bylaws is
contained in the notice of such special meeting.
CERTIFICATE OF DESIGNATION
OF
CONVERSION PREFERRED STOCK, SERIES G
OF
BOISE CASCADE CORPORATION
Pursuant to Section 151 of the
General Corporation Law
of the State of Delaware
Boise Cascade Corporation, a Delaware corporation (the
"Corporation"), certifies that pursuant to authority granted to and
vested in the Board of Directors of the Corporation by the
provisions of the Corporation's Restated Certificate of
Incorporation, the Board of Directors of the Corporation has
adopted the following resolution creating a series of Preferred
Stock of the Corporation:
RESOLVED, by the Board of Directors (the "Board of
Directors") of Boise Cascade Corporation, a Delaware
corporation (the "Corporation"), that, pursuant to
authority expressly granted to and vested in the Board
of Directors by the provisions of the Corporation's
Restated Certificate of Incorporation (the "Restated
Certificate of Incorporation"), the Board of Directors
hereby creates a seventh series of the class of
authorized Preferred Stock, without par value, of the
Corporation, and authorizes the issuance thereof, and
hereby fixes the designation and amount thereof and the
voting powers, preferences and relative, participating,
optional and other special rights of the shares of such
series, and the qualifications, limitations or
restrictions thereof (in addition to the designation,
preferences and relative, participating, optional and
other special rights, and the qualifications, limitations
or restrictions thereof, set forth in the Restated
Certificate of Incorporation which are applicable to the
Preferred Stock of all series) as follows:
1. Designation and Amount. The shares of such series shall
be designated the "Conversion Preferred Stock, Series G" and the
number of shares constituting such series shall be 862,500. The
shares of such series shall have a stated capital of $.01 per
share. Such series is herein sometimes referred to as the
"Series G Preferred Stock."
2. Dividends. The holders of the shares of Series G
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available
therefor, cash dividends ("Preferred Dividends") at the rate of
$15.80 per share per annum, payable quarterly in arrears, one
quarter each on the 15th day of the months of January, April, July,
and October in each year (each a "Dividend Payment Date") commenc-
ing on October 15, 1993. In the event that any Dividend Payment
Date shall fall on any day other than a business day (as
hereinafter defined), the Preferred Dividend due on such Dividend
Payment Date shall be paid on the business day immediately
following such Dividend Payment Date. Preferred Dividends shall
begin to accrue from the date of initial issuance of the Series G
Preferred Stock. Preferred Dividends shall cease to accrue on
shares of Series G Preferred Stock on the Mandatory Conversion Date
(as hereinafter defined) or on the date of their earlier conversion
or redemption. Preferred Dividends shall accrue on a daily basis
whether or not in any such quarterly period there shall be funds
of the Corporation legally available therefor and whether or not
such Preferred Dividends are declared, but Preferred Dividends
accrued for any period less than a full quarterly period between
Dividend Payment Dates (or, in the case of the first Preferred
Dividend, from the date of initial issuance of the shares of
Series G Preferred Stock to the first Dividend Payment Date) shall
be computed on the basis of a 360-day year of twelve 30-day months.
Accrued but unpaid Preferred Dividends shall cumulate as of the
Dividend Payment Date on which they first become payable, but no
interest shall accrue on accumulated but unpaid Preferred
Dividends.
3. Conversion or Redemption.
(a) Automatic Conversion on the Mandatory Conversion
Date. Unless earlier either called for redemption in
accordance with the provisions of paragraph 3(b) or converted
at the option of the holder in accordance with the provisions
of paragraph 3(c), on October 15, 1997, (the "Mandatory
Conversion Date"), each outstanding share of Series G
Preferred Stock shall convert automatically (the "Automatic
Conversion") into (i) shares of authorized common stock, $2.50
par value, of the Corporation (the "Common Stock") at the
Common Equivalent Rate (as hereinafter defined) in effect on
the Mandatory Conversion Date and (ii) the right to receive
an amount in cash equal to all accrued and unpaid Preferred
Dividends on such share to the Mandatory Conversion Date,
whether or not earned or declared, out of funds legally
available therefor. The Common Equivalent Rate is initially
ten shares of Common Stock for each share of Series G
Preferred Stock and is subject to adjustment as set forth in
paragraphs 3(d) and 3(e) below. Preferred Dividends on the
shares of Series G Preferred Stock shall cease to accrue and
such shares of Series G Preferred Stock shall cease to be
outstanding on the Mandatory Conversion Date. The Corporation
shall make such arrangements as it deems appropriate for the
issuance of certificates representing shares of Common Stock
and for the payment of cash in respect of such accrued and
unpaid dividends, if any, or cash in lieu of fractional
shares, if any, in exchange for and contingent upon surren-
der of certificates representing the shares of Series G
Preferred Stock, and the Corporation may defer the payment of
dividends on such shares of Common Stock and the voting
thereof until, and make such payment and voting contingent
upon, the surrender of such certificates representing the
shares of Series G Preferred Stock, provided that the
Corporation shall give the holders of the shares of Series G
Preferred Stock such notice of any such actions as the
Corporation deems appropriate and upon such surrender such
holders shall be entitled to receive such dividends declared
and paid on such shares of Common Stock subsequent to the
Mandatory Conversion Date. Amounts payable in cash in respect
of the shares of Series G Preferred Stock or in respect of
such shares of Common Stock shall not bear interest.
(b) Redemption by the Corporation.
(i) Right to Call for Redemption. Shares of
Series G Preferred Stock are not redeemable by the
Corporation prior to July 15, 1997 (the "Initial
Redemption Date"). At any time and from time to time on
or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, the Corporation shall have the
right to call, in whole or in part, the outstanding
shares of Series G Preferred Stock for redemption
(subject to the notice provisions set forth in
paragraph (3)(b)(iii) and to section 2.6(a)(v) of the
Restated Certificate of Incorporation). Upon such call,
each holder of shares of Series G Preferred Stock to be
redeemed shall be entitled to receive from the
Corporation, in exchange for each such share of Series G
Preferred Stock:
(A) A number of shares of Common Stock equal
to the Call Price (as hereinafter defined) in effect
on the redemption date divided by the Current Market
Price (as hereinafter defined) of the Common Stock
determined as of the second Trading Day (as
hereinafter defined) immediately preceding the
Notice Date (as hereinafter defined); and
(B) An amount in cash equal to all accrued and
unpaid Preferred Dividends on such share of Series G
Preferred Stock to the redemption date, whether or
not earned or declared, out of funds legally
available therefor.
The "Call Price" of each share of Series G Preferred
Stock is $212.25 on and after the Initial Redemption Date
through September 14, 1997, and $211.25 on and after
September 15, 1997, until the Mandatory Conversion Date.
If fewer than all of the outstanding shares of Series G
Preferred Stock are to be called for redemption, shares
to be redeemed shall be selected by the Corporation from
outstanding shares of Series G Preferred Stock not
previously redeemed by lot or pro rata (as nearly as may
be) or by any other method determined by the Board of
Directors in its sole discretion to be equitable.
(ii) Current Market Price. As used in this
paragraph 3, the term "Current Market Price" per share
of the Common Stock on any date of determination means
the lesser of (X) the average of the Closing Prices (as
hereinafter defined) of the Common Stock for the fifteen
consecutive Trading Days (as hereinafter defined) ending
on and including such date of determination, or (Y) the
Closing Price of the Common Stock for such date of
determination; provided, however, with respect to any
redemption of shares of Series G Preferred Stock, if any
event that results in an adjustment of the Common
Equivalent Rate occurs during the period beginning on the
first day of such fifteen-day period and ending on the
applicable redemption date, the Current Market Price as
determined pursuant to the foregoing shall be
appropriately adjusted to reflect the occurrence of such
event.
(iii) Notice of Redemption. The Corporation
shall provide notice of any redemption of the shares of
Series G Preferred Stock to holders of record of the
Series G Preferred Stock to be called for redemption not
less than 15 nor more than 60 days prior to the date
fixed for such redemption. Such notice shall be provided
by mailing notice of such redemption first class postage
prepaid, to each holder of record of shares of Series G
Preferred Stock to be redeemed, at such holder's address
as it appears on the stock register of the Corporation;
provided, however, neither failure to give such notice
nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Series G
Preferred Stock to be redeemed except as to the holder
to whom the Corporation has failed to give said notice
or except as to the holder whose notice was defective.
A public announcement of any call for redemption shall
be made by the Corporation prior to, or at the time of,
the mailing of such notice of such call to holders of
shares of Series G Preferred Stock. As used in this
paragraph 3(b), the term "Notice Date" with respect to
any call for redemption of shares of Series G Preferred
Stock means the date on which first occurs either the
public announcement by the Corporation of such call for
redemption or the commencement of mailing of the notice
of such redemption to the holders of such shares, in each
case pursuant to this subparagraph (iii).
Each such notice shall state, as appropriate, the
following and may contain such other information as the
Corporation deems advisable:
(A) The redemption date;
(B) That all outstanding shares of Series G
Preferred Stock are to be redeemed or, in the case
of a call for redemption of fewer than all
outstanding shares of Series G Preferred Stock, the
number of such shares held by such holder to be
redeemed;
(C) The Call Price, the number of shares of
Common Stock deliverable upon redemption of each
share of Series G Preferred Stock to be redeemed and
the Current Market Price used to calculate such
number of shares of Common Stock;
(D) The place or places where certificates for
such shares are to be surrendered for redemption;
and
(E) That dividends on the shares of Series G
Preferred Stock to be redeemed shall cease to accrue
on and after such redemption date (except as
otherwise provided herein).
(iv) Deposit of Shares and Funds. The Corporation's
obligation to deliver shares of Common Stock and provide
funds upon redemption in accordance with this
paragraph 3(b) shall be deemed fulfilled if, on or before
a redemption date, the Corporation shall deposit, with
a bank or trust company, or an affiliate of a bank or
trust company, having an office or agency in New York,
New York, and having a capital and surplus of at least
$50,000,000 according to its last published statement of
condition, or shall set aside or make other reasonable
provision for the issuance of, such number of shares of
Common Stock as are required to be delivered by the
Corporation pursuant to this paragraph 3(b) upon the
occurrence of the related redemption of Series G
Preferred Stock and for the payment of cash in lieu of
the issuance of fractional share amounts and accrued and
unpaid dividends payable in cash on the shares of
Series G Preferred Stock to be redeemed as required by
this paragraph 3(b), in trust for the account of the
holders of such shares of Series G Preferred Stock to be
redeemed (and so as to be and continue to be available
therefor), with irrevocable instructions and authority
to such bank or trust company that such shares and funds
be delivered upon redemption of the shares of Series G
Preferred Stock so called for redemption. Any interest
accrued on such funds shall be paid to the Corporation
from time to time. Any shares of Common Stock or funds
so deposited and unclaimed at the end of two years from
such redemption date shall be repaid and released to the
Corporation, after which the holder or holders of such
shares of Series G Preferred Stock so called for
redemption shall look only to the Corporation for deliv-
ery of shares of Common Stock and the payment of any
other funds due in connection with the redemption of
Series G Preferred Stock.
(v) Surrender of Certificates; Status. Each holder
of shares of Series G Preferred Stock to be redeemed
shall surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the Board
of Directors shall so require and the notice shall so
state) to the Corporation at the place designated in the
notice of such redemption and shall thereupon be entitled
to receive certificates evidencing shares of Common Stock
and to receive any funds payable pursuant to this
paragraph 3(b) following such surrender and following the
date of such redemption. In case fewer than all the
shares represented by any such surrendered certificate
are called for redemption, a new certificate shall be
issued at the expense of the Corporation representing the
unredeemed shares. If such notice of redemption shall
have been given, and if on the date fixed for redemption
shares of Common Stock and funds necessary for the
redemption shall have been irrevocably either set aside
by the Corporation separate and apart from its other
funds or assets in trust for the account of the holders
of the shares to be redeemed (and so as to be and
continue to be available therefor) or deposited with a
bank or trust company or an affiliate thereof as provided
herein or the Corporation shall have made other
reasonable provision therefor, then, notwithstanding that
the certificates evidencing any shares of Series G
Preferred Stock so called for redemption shall not have
been surrendered, the shares represented thereby so
called for redemption shall be deemed no longer out-
standing, Preferred Dividends with respect to the shares
so called for redemption shall cease to accrue on the
date fixed for redemption (except that holders of shares
of Series G Preferred Stock at the close of business on
a record date for any payment of Preferred Dividends
shall be entitled to receive the Preferred Dividend
payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such
shares following such record date and prior to such
Dividend Payment Date) and all rights with respect to the
shares so called for redemption shall forthwith after
such date cease and terminate, except for the rights of
the holders to receive the shares of Common Stock and
funds, if any, payable pursuant to this paragraph 3(b)
without interest upon surrender of their certificates
therefor. Holders of shares of Series G Preferred Stock
that are redeemed shall not be entitled to receive
dividends declared and paid on such shares of Common
Stock, and such shares of Common Stock shall not be
entitled to vote, until such shares of Common Stock are
issued upon the surrender of the certificates
representing such shares of Series G Preferred Stock and
upon such surrender such holders shall be entitled to
receive such dividends declared and paid on such shares
of Common Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Shares of Series G
Preferred Stock are convertible, in whole or in part, at the
option of the holders thereof ("Optional Conversion"), at any
time prior to the Mandatory Conversion Date, unless previously
redeemed, into shares of Common Stock at a rate of 8.01 shares
of Common Stock for each share of Series G Preferred Stock
(the "Optional Conversion Rate"), subject to adjustment as set
forth below. The right to Optional Conversion of shares of
Series G Preferred Stock called for redemption shall terminate
at the close of business on the redemption date.
Optional Conversion of shares of Series G Preferred
Stock may be effected by delivering certificates evidencing
such shares, together with written notice of conversion and
a proper assignment of such certificates to the Corporation
or in blank (and, if applicable, payment of an amount equal
to the dividend payable on such shares), to the office of any
transfer agent for the Series G Preferred Stock or to any
other office or agency maintained by the Corporation for that
purpose and otherwise in accordance with Optional Conversion
procedures established by the Corporation. Each Optional
Conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the
foregoing requirements shall have been satisfied. The
Optional Conversion shall be at the Optional Conversion Rate
in effect at such time and on such date.
Holders of shares of Series G Preferred Stock at the
close of business on a record date for any payment of
Preferred Dividends shall be entitled to receive the Preferred
Dividend payable on such shares on the corresponding Dividend
Payment Date notwithstanding the Optional Conversion of such
shares following such record date and prior to such Dividend
Payment Date. However, shares of Series G Preferred Stock
surrendered for Conversion after the close of business on a
record date for any payment of Preferred Dividends and before
the opening of business on the next succeeding Dividend
Payment Date must be accompanied by payment in cash of an
amount equal to the Preferred Dividend thereon which is to be
paid on such Dividend Payment Date (unless such shares are
subject to redemption on a redemption date prior to such
Dividend Payment Date). Except as provided above, upon any
Optional Conversion of shares of Series G Preferred Stock, the
Corporation shall make no payment or allowance for unpaid
Preferred Dividends, whether or not in arrears, on such shares
of Series G Preferred Stock as to which Optional Conversion
has been effected or for dividends or distributions on the
shares of Common Stock issued upon such Optional Conversion.
(d) Adjustments to the Common Equivalent Rate and the
Optional Conversion Rate. The Common Equivalent Rate and the
Optional Conversion Rate shall each be subject to adjustment
from time to time as provided below in this paragraph (d).
(i) If the Corporation shall pay or make a dividend
or other distribution with respect to its Common Stock
in shares of Common Stock (including by way of
reclassification of any shares of its Common Stock), the
Common Equivalent Rate and the Optional Conversion Rate
in effect at the opening of business on the day following
the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution
shall each be increased by multiplying such Common
Equivalent Rate and Optional Conversion Rate by a
fraction of which the numerator shall be the sum of the
number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus
the total number of shares of Common Stock constituting
such dividend or other distribution, and of which the
denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed
for such determination, such increase to become effective
immediately after the opening of business on the day
following the date fixed for such determination. For the
purposes of this clause (i), the number of shares of
Common Stock at any time outstanding shall not include
shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock.
The Corporation will not pay any dividend or make any
distribution on shares of Common Stock held in the
treasury of the Corporation.
(ii) In case outstanding shares of Common Stock
shall be subdivided into a greater number of shares of
Common Stock, the Common Equivalent Rate and the Optional
Conversion Rate in effect at the opening of business on
the day following the day upon which such subdivision
becomes effective shall each be proportionately
increased, and, conversely, in case outstanding shares
of Common Stock shall be combined into a smaller number
of shares of Common Stock, the Common Equivalent Rate and
the Optional Conversion Rate in effect at the opening of
business on the day following the day upon which such
combination becomes effective shall each be
proportionately reduced, such increases or reductions,
as the case may be, to become effective immediately after
the opening of business on the day following the day upon
which such subdivision or combination becomes effective.
(iii) If the Corporation shall, after the date
hereof, issue rights or warrants to all holders of its
Common Stock entitling them (for a period not exceeding
45 days from the date of such issuance) to subscribe for
or purchase shares of Common Stock at a price per share
less than the Current Market Price of the Common Stock
(determined pursuant to paragraph 3(b)(ii)) on the record
date for the determination of stockholders entitled to
receive such rights or warrants, then in each case the
Common Equivalent Rate and the Optional Conversion Rate
shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate in
effect on such record date, by a fraction of which the
numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or
warrants, immediately prior to such issuance, plus the
number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or
warrants, and of which the denominator shall be the
number of shares of Common Stock outstanding on the date
of issuance of such rights or warrants, immediately prior
to such issuance, plus the number of shares of Common
Stock which the aggregate offering price of the total
number of shares of Common Stock so offered for
subscription or purchase pursuant to such rights or
warrants would purchase at such Current Market Price
(determined by multiplying such total number of shares
by the exercise price of such rights or warrants and
dividing the product so obtained by such Current Market
Price). Shares of Common Stock owned by the Corporation
or by another company of which a majority of the shares
entitled to vote in the election of directors are held,
directly or indirectly, by the Corporation shall not be
deemed to be outstanding for purposes of such
computation. Such adjustment shall become effective at
the opening of business on the business day next
following the record date for the determination of
stockholders entitled to receive such rights or warrants.
To the extent that shares of Common Stock are not
delivered after the expiration of such rights or
warrants, the Common Equivalent Rate and the Optional
Conversion Rate shall each be readjusted to the Common
Equivalent Rate and the Optional Conversion Rate which
would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the
basis of the issuance of rights or warrants in respect
of only the number of shares of Common Stock actually
delivered.
(iv) If the Corporation shall pay a dividend or make
a distribution to all holders of its Common Stock
consisting of evidences of its indebtedness or other
assets (including shares of capital stock of the
Corporation other than Common Stock but excluding any
cash dividends or any dividends or other distributions
referred to in clauses (i) and (ii) above), or shall
issue to all holders of its Common Stock rights or
warrants to subscribe for or purchase any of its
securities (other than those referred to in clause (iii)
above), then in each such case the Common Equivalent Rate
and the Optional Conversion Rate shall each be adjusted
by multiplying the Common Equivalent Rate and the
Optional Conversion Rate in effect on the record date for
such dividend or distribution or for the determination
of stockholders entitled to receive such rights or war-
rants, as the case may be, by a fraction of which the
numerator shall be the Current Market Price per share of
the Common Stock (determined pursuant to
paragraph 3(b)(ii) on such record date), and of which the
denominator shall be such Current Market Price per share
of Common Stock less the fair market value (as determined
by the Board of Directors, whose determination shall be
conclusive) as of such record date of the portion of the
assets or evidences of indebtedness so distributed, or
of such subscription rights or warrants, applicable to
one share of Common Stock. Such adjustment shall become
effective on the opening of business on the business day
next following the record date for such dividend or
distribution or for the determination of stockholders
entitled to receive such rights or warrants, as the case
may be.
(v) Any shares of Common Stock issuable in payment
of a dividend or other distribution shall be deemed to
have been issued immediately prior to the close of
business on the record date for such dividend or other
distribution for purposes of calculating the number of
outstanding shares of Common Stock under
subparagraph (ii) above.
(vi) Anything in this paragraph 3 notwithstanding,
the Corporation shall be entitled to make such upward
adjustments in the Common Equivalent Rate, the Optional
Conversion Rate and the Call Price, in addition to those
required by this paragraph 3, as the Corporation in its
sole discretion shall determine to be advisable, in order
that any stock dividends, subdivision of shares,
distribution of rights to purchase stock or securities,
or distribution of securities convertible into or
exchangeable for stock (or any transaction which could
be treated as any of the foregoing transactions pursuant
to Section 305 of the Internal Revenue Code of 1986, as
amended) hereafter made by the Corporation to its
stockholders shall not be taxable.
(vii) In any case in which this paragraph 3(d)
shall require that an adjustment as a result of any event
become effective at the opening of business on the
business day next following a record date and the date
fixed for conversion pursuant to paragraph 3(a) or
redemption pursuant to paragraph 3(b) occurs after such
record date, but before the occurrence of such event, the
Corporation may in its sole discretion elect to defer the
following until after the occurrence of such event:
(A) issuing to the holder of any shares of Series G
Preferred Stock surrendered for conversion or redemption
the additional shares of Common Stock issuable upon such
conversion or redemption over the shares of Common Stock
issuable before giving effect to such adjustment;
and (B) paying to such holder any amount in cash in lieu
of a fractional share of Common Stock pursuant to
paragraph 3(g).
(viii) All adjustments to the Common Equivalent
Rate and the Optional Conversion Rate shall be calculated
to the nearest 1/100th of a share of Common Stock. No
adjustment in the Common Equivalent Rate or in the
Optional Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at
least one percent in the Common Equivalent Rate;
provided, however, any adjustments which by reason of
this subparagraph are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All adjustments to the Common Equivalent
Rate and the Optional Conversion Rate shall be made
successively.
(ix) Before taking any action that would cause an
adjustment reducing the Common Equivalent Rate or the
Optional Conversion Rate such that the conversion price
(for purposes of this paragraph, an amount equal to the
liquidation value per share of Series G Preferred Stock
divided by the Common Equivalent Rate or the Optional
Conversion Rate, respectively, as in effect from time to
time) would be below the then par value of the Common
Stock, the Corporation will take any corporate action
which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of Common Stock
at the Common Equivalent Rate or the Optional Conversion
Rate as so adjusted.
(x) Before redeeming any shares of Series G
Preferred Stock, the Corporation will take any corporate
action which may, in the opinion of its counsel, be
necessary in order that the Corporation may validly and
legally issue fully paid and nonassessable shares of
Common Stock upon such redemption.
(e) Adjustment for Certain Consolidations or Mergers.
In case of any consolidation or merger to which the
Corporation is a party (other than a merger or consolidation
in which the Corporation is the continuing corporation and in
which the Common Stock outstanding immediately prior to the
merger or consolidation remains unchanged), or in case of any
sale or transfer to another corporation of the property of the
Corporation as an entirety or substantially as an entirety,
or in case of any statutory exchange of securities with
another corporation (other than in connection with a merger
or acquisition), proper provision shall be made so that each
share of the Series G Preferred Stock shall, after
consummation of such transaction, be subject to (i) conversion
at the option of the holder into the kind and amount of
securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of the Series G
Preferred Stock might have been converted immediately prior
to consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of
securities, cash or other property receivable upon
consummation of such transaction by a holder of the number of
shares of Common Stock into which such share of the Series G
Preferred Stock would have been converted if the conversion
on the Mandatory Conversion Date had occurred immediately
prior to the date of consummation of such transaction, and
(iii) redemption on any redemption date in exchange for the
kind and amount of securities, cash or other property
receivable upon consummation of such transaction by a holder
of the number of shares of Common Stock that would have been
issuable at the Call Price in effect on such redemption date
upon a redemption of such share immediately prior to
consummation of such transaction, assuming that the public
announcement of such redemption had been made on the last
possible date permitted by the provisions of paragraph 3(b)
hereof and applicable law; assuming in each case that such
holder of Common Stock failed to exercise rights of election,
if any, as to the kind or amount of securities, cash or other
property receivable upon consummation of such transaction
(provided that if the kind or amount of securities, cash or
other property receivable upon consummation of such
transaction is not the same for each nonelecting share, then
the kind and amount of securities, cash or other property
receivable upon consummation of such transaction for each
nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting
shares). The kind and amount of securities into which the
shares of the Series G Preferred Stock shall be convertible
after consummation of such transaction shall be subject to
adjustment as described in paragraph 3(d) following the date
of consummation of such transaction. The Corporation may not
become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common
Equivalent Rate and Optional Conversion Rate are adjusted as
provided in paragraph 3(d), the Corporation shall:
(i) Forthwith compute the adjusted Common
Equivalent Rate and Optional Conversion Rate in
accordance with this paragraph 3 and prepare a
certificate signed by the Chief Financial Officer, any
Vice President, the Treasurer or the Controller of the
Corporation setting forth the adjusted Common Equivalent
Rate and Optional Conversion Rate, the method of
calculation thereof in reasonable detail and the facts
requiring such adjustment and upon which such adjustment
is based, which certificate shall be conclusive, final
and binding evidence of the correctness of the
adjustment, and file such certificate forthwith with the
transfer agent or agents for the Series G Preferred Stock
and the Common Stock;
(ii) Make a prompt public announcement stating that
the Common Equivalent Rate and Optional Conversion Rate
have been adjusted and setting forth the adjusted Common
Equivalent Rate and Optional Conversion Rate; and
(iii) Mail a notice stating that the Common
Equivalent Rate and Optional Conversion Rate have been
adjusted, the facts requiring such adjustment and upon
which such adjustment is based and setting forth the
adjusted Common Equivalent Rate and Optional Conversion
Rate, to the holders of record of the outstanding shares
of the Series G Preferred Stock at or prior to the time
the Corporation mails an interim statement to its
stockholders covering the fiscal quarter period during
which the facts requiring such adjustment occurred but
in any event within 45 days of the end of such fiscal
quarter period.
(g) Notices of Proposed Actions. In case, at any time
while any of the shares of Series G Preferred Stock are
outstanding,
(i) the Corporation shall declare a dividend (or
any other distribution) on the Common Stock, excluding
any cash dividends, or
(ii) the Corporation shall authorize the issuance
to all holders of the Common Stock of rights or warrants
to subscribe for or purchase shares of the Common Stock
or of any other subscription rights or warrants, or
(iii) of any reclassification of the Common
Stock (other than a subdivision or combination thereof)
or of any consolidation or merger to which the
Corporation is a party and for which approval of any
stockholders of the Corporation is required (except for
a merger of the Corporation into one of its subsidiaries
solely for the purpose of changing the corporate domicile
of the Corporation to another state of the United States
and in connection with which there is no substantive
change in the rights or privileges of any securities of
the Corporation other than changes resulting from
differences in the corporate statutes of the then
existing and the new state of domicile), or of the sale
or transfer of all or substantially all of the assets of
the Corporation,
then the Corporation shall cause to be filed at each office
or agency maintained for the purpose of conversion of the
shares of Series G Preferred Stock, and shall cause to be
mailed to the holders of shares of Series G Preferred Stock
at their last addresses as they shall appear on the stock
register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified,
in the event that more than one date is specified), a notice
stating (A) the date on which a record is to be taken for the
purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be
determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer, dis-
solution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property
(including cash), if any, deliverable upon such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give
or receive the notice required by this paragraph (g) or any
defect therein shall not affect the legality or validity of
any such dividend, distribution, right or warrant or other
action.
(h) No Fractional Shares. No fractional shares of
Common Stock shall be issued upon the redemption or conversion
of any shares of the Series G Preferred Stock. In lieu of
any fraction of a share of Common Stock which would otherwise
be issuable in respect of the aggregate number of shares of
the Series G Preferred Stock surrendered by the same holder
for redemption or conversion on any redemption date or upon
Automatic Conversion or Optional Conversion, such holder shall
have the right to receive an amount in cash (computed to the
nearest cent) equal to the same fraction of the (i) Current
Market Price of the Common Stock in the case of redemption,
or (ii) Closing Price of the Common Stock determined (A) as
of the fifth Trading Day immediately preceding the Mandatory
Conversion Date, in the case of Automatic Conversion or (B) as
of the second Trading Day immediately preceding the effective
date of conversion, in the case of an Optional Conversion by
a holder. If more than one share of Series G Preferred Stock
shall be surrendered for conversion or redemption at one time
by or for the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on
the basis of the aggregate number of shares of the Series G
Preferred Stock so surrendered or redeemed.
(i) Reservation of Common Stock. The Corporation shall
at all times reserve and keep available out of its authorized
and unissued Common Stock, solely for issuance upon the
conversion or redemption of shares of Series G Preferred Stock
as herein provided, free from any preemptive rights, such
number of shares of Common Stock as shall from time to time
be issuable upon the conversion or redemption of all the
shares of Series G Preferred Stock then outstanding.
(j) Definitions. As used in this Certificate of
Designation:
(i) The term "business day" shall mean any day
other than a Saturday, Sunday or a day on which banking
institutions in the state of New York are authorized or
obligated by law or executive order to close;
(ii) The term "Closing Price," on any day, shall
mean the closing sale price regular way on such day or,
in case no such sale takes place on such day, the average
of the reported closing bid and asked prices regular way,
in each case on the New York Stock Exchange or, if the
Common Stock is not listed or admitted to trading on such
Exchange, on the principal national securities exchange
on which the Common Stock is listed or admitted to
trading, or, if not listed or admitted to trading on any
national securities exchange, the average of the closing
bid and asked prices of the Common Stock on the over-
the-counter market on the day in question as reported by
the National Association of Securities Dealers, Inc.
Automated Quotation System, or a similarly generally
accepted reporting service, or if not so available in
such manner, as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of
Directors of the Corporation for that purpose; and
(iii) The term "Trading Day" shall mean a date
on which the New York Stock Exchange (or any successor
to such Exchange) is open for the transaction of
business.
(k) Payment of Taxes. The Corporation will pay any and
all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of
Common Stock on the redemption or conversion of shares of
Series G Preferred Stock pursuant to this paragraph 3;
provided, however, the Corporation shall not be required to
pay any tax which may be payable in respect of any
registration or transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the
registered holder of shares of Series G Preferred Stock
redeemed or converted or to be redeemed or converted, and no
such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Corporation the
amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
4. Liquidation Rights. In the event of any liquidation or
dissolution or winding up of the Corporation, voluntary or
involuntary, the holders of the Series G Preferred Stock shall be
entitled to receive the sum of $211.25 per share, plus an amount
equal to any arrearages in dividends thereon.
5. Voting Rights. The holders of shares of Series G
Preferred Stock shall be entitled to vote on all matters submitted
to a vote of the stockholders of the Corporation, voting together
with the holders of Common Stock as one class. The holder of each
share of Series G Preferred Stock shall be entitled to one vote for
each share of Series G Preferred Stock held by such holder. In
addition, the provisions of Section 2.8 of the Restated Certificate
of Incorporation shall be applicable to the Series G Preferred
Stock.
IN WITNESS WHEREOF, Boise Cascade Corporation has caused this
Certificate of Designation to be signed by John W. Holleran, its
Vice President and General Counsel, and attested by A. James
Balkins III, its Corporate Secretary, this 22nd day of September,
1993.
BOISE CASCADE CORPORATION
By /s/ John W. Holleran
John W. Holleran
Vice President and General
Counsel
ATTEST:
By /s/ A. James Balkins III
A. James Balkins III
Corporate Secretary
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
(As Amended February 3, 1994)
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
1. Purpose of the Plan. The Boise Cascade Corporation Key
Executive Performance Plan for Executive Officers (the "Plan") is
designed to recognize the contribution of Executive Officers in
optimizing the long-term value to the shareholders of Boise Cascade
Corporation (the "Company") through its effective management.
2. Definitions. For purposes of this Plan, the following terms
shall have the meanings set out below:
2.1. Annualized Dividend Rate. The Annualized Dividend Rate
shall be the last regular quarterly dividend declared for common
shares during the year ending immediately prior to the Award Period
multiplied by 4.
2.2. Award. A payment made under the Plan or a payment which
is deferred according to the terms of a deferral option. All
Awards shall be based upon a percentage of the Participant's Base
Salary. All Awards made shall be defined as one of the following:
2.2a. Corporate Financial Performance Award -- an Award
determined in accordance with the Corporate Financial Performance
Award Criteria. A Corporate Financial Performance Award, if
earned, shall be a minimum of 10% and a maximum of 60% of a
Participant's Base Salary.
2.2b. Discretionary Individual Performance Award -- an
Award determined in accordance with the Discretionary Individual
Performance Award Criteria. A Discretionary Individual Performance
Award, if granted, may be up to a maximum of 20% of a Participant's
Base Salary.
2.3. Award Criteria. The specific criteria for the Corporate
Financial Performance Award and for the Discretionary Individual
Performance Award shall be:
2.3a. Corporate Financial Performance Award Criteria -
- - A mathematical formula which expresses the relationship between
the Company's Return on Equity and the percentage Award to be paid.
At the beginning of the Award Period commencing
January 1, 1986, the Board shall establish the Return on Equity
objective to be achieved by the Company in order for Participants
to earn the maximum Corporate Financial Performance Award. This
Return on Equity objective will continue for subsequent Award
Periods unless it is modified by the Committee. At the beginning
of an Award Period, the Return on Equity required to be achieved
by the Company in order for Participants to earn a minimum
Corporate Financial Performance Award shall be equivalent to the
annualized dividends paid to the Company's common and preferred
shareholders.
Return on Equity for an Award Period shall then be
expressed in terms of Net Income. Once expressed, Net Income shall
control determination of the Corporate Financial Performance Award
for that Award Period.
The Award Criteria shall be published at the beginning
of the Award Period. Once the Award Criteria have been published,
should the company be required under generally accepted accounting
principles to report on a different basis, the Award Criteria shall
be restated.
The Corporate Financial Performance Award to be earned
if the Net Income achieved by the Company is between the Net Income
objective established for a maximum Corporate Financial Performance
Award and the Net Income required for a minimum Corporate Financial
Performance Award shall be calculated on a linear basis and set out
on a schedule or chart to be published at the beginning of each
Award Period.
2.3b. Discretionary Individual Award Criteria --
Discretionary Individual Performance Awards, if granted, will be
based upon a Participant's outstanding performance. Discretionary
Individual Performance Awards will be subject to approval by the
Board.
2.3c. Notwithstanding the foregoing, for purposes of the
Award Periods commencing on January 1, 1994, the Minimum Award
payable under this Plan for such Award Period shall be based upon
the weighted average percentage payout for Key Executives (or the
equivalent) under all Division Incentive Plans sponsored by the
Company (the "Weighted Average Payout"). Subject to approval by
the Committee, the calculation of the Weighted Average Payout shall
be based upon the capital of each separate division of the Company
covered by a Division Incentive Plan. The Minimum Award to
participants in this Plan shall be a multiple of the Weighted
Average Payout, up to a maximum payout limitation as follows:
Maximum
Executive Officer Level Factor Payout
Vice President 2.00 30%
Senior Vice President or 2.25 37%
Executive Vice President
CEO or COO 2.50 44%
2.4. Award Period. A period of one year, commencing on
January 1 and ending on December 31.
2.5. Base Salary. A Participant's Base Salary shall be the
annual pay rate at the end of the Award Period without taking into
account (i) any deferrals of income; (ii) any incentive
compensation; or (iii) any other benefits paid or provided under
any of the Company's other employee benefit plans.
2.6. Change in Control. A Change in Control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
2.7. Committee. The Committee shall mean the Human Resources
Committee of the Board.
2.8. Deferred Compensation and Benefits Trust. An
irrevocable trust or trusts established or to be established by the
Company with an independent trustee for the benefit of persons
entitled to receive payments or benefits hereunder, the assets of
which nevertheless will be subject to claims of the Company's
creditors in the event of bankruptcy or insolvency and with respect
to which the Company shall have received a ruling from the Internal
Revenue Service that the trust is a "grantor trust" for federal in-
come tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall contain
other appropriate terms and conditions consistent with the purposes
sought to be accomplished by it. Prior to a Change in Control, the
Deferred Compensation and Benefits Trust may be amended from time
to time by the Company, but no such amendment may substantially
alter any of the provisions set out in the preceding paragraphs.
2.9. Earnings Per Share. The Company's Earnings Per Share
shall be net income, after tax, and excluding preferred dividends,
divided by average shares outstanding as reported in the Company's
published financial statements adjusted for major nonrecurring and
nonoperating expense and income items as set out below. Earnings
Per Share shall be on a fully diluted basis if required to be
reported on this basis under generally accepted accounting
principles; otherwise, Earnings Per Share shall be primary Earnings
Per Share.
Earnings Per Share as reported shall be adjusted for those
major nonrecurring and nonoperating expense or income items (as
determined by the Chairman of the Board and Chief Executive
Officer) which, considered alone, would increase or decrease
Earnings Per Share as reported by more than $.10 per share, and
which, considered in the aggregate on a net basis, would increase
or decrease Earnings Per Share as reported by more than $.25 per
share; and in that event, Earnings Per Share as reported shall be
adjusted for any increase or reduction over $.25 per share.
2.10. Executive Officers. The Executive Officers of the
Company are the Chairman of the Board and Chief Executive Officer,
the President and Chief Operating Officer and any Executive Vice
President, Senior Vice President, Vice President or the Secretary,
Treasurer or Controller of the Company.
2.11 Net Income. The Company's Net Income shall be income
after taxes as reported in the Company's published financial
statements. Net Income may be adjusted for major nonrecurring and
nonoperating income or expense items, as determined by the
Committee, based on the facts and circumstances involved.
2.12. Participant. A person who is an Executive Officer of
the Company at the beginning of the Award Period or who is elected
an Executive Officer by the Company's Board of Directors (the
"Board") during the Award Period.
2.13. Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if (A) the
Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company,
(B) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company;
(C) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company's then outstanding
securities; or (D) the Board of Directors adopts a resolution to
the effect that a Potential Change in Control of the Company for
purposes of this Agreement has occurred.
2.14. Return on Equity. The Company's Return on Equity shall
be net income, after tax, and before extraordinary items, divided
by average shareholders' equity, expressed as a percentage as
reported in the Company's published financial statements for the
year ended immediately prior to the Award Period.
3. Determination of Awards. As soon as practical after the
conclusion of the Award Period, the Corporate Financial Per-
formance Awards and the Discretionary Individual Performance
Awards, if any, shall be determined as follows:
3.1. Corporate Financial Performance Awards. The Company's
Earnings Per Share for the Award Period shall be applied against
the Corporate Financial Performance Award Criteria and the amount
of the Award determined.
3.2. Discretionary Individual Performance Awards. The
Chairman of the Board and Chief Executive Officer shall review the
performance of each Participant in relation to the Discretionary
Individual Performance Award Criteria and will recommend any
Discretionary Individual Performance Awards he believes
appropriate. Upon approval by the Board, a recommended Award will
become a Discretionary Individual Performance Award. Any
Discretionary Individual Performance Award granted will be separate
from any Corporate Financial Performance Award.
4. Payment of Awards. Payment of Awards, less usual withholding
taxes, shall be made as soon as practical upon their determination,
except for payment of Awards deferred in accordance with any
deferred option which may have been selected by the Participant.
5. Administration and Interpretation of the Plan. Except for the
power reserved by the Board hereunder, the Committee shall
administer and interpret the Plan. Any interpretation by the
Committee shall be final and binding on the Participants. The
Committee may adopt such rules and regulations relating to the Plan
as it may deem necessary for the administration of the Plan. The
Committee may delegate administrative responsibilities to advisors
or other persons who are not members of the Committee and may rely
upon information or opinions of legal counsel or experts selected
to render advice with respect to the Plan.
6. Participation in the Plan. Executive Officers of the Company
may become Participants in accordance with the terms of the Plan
at any time during the Award Period. If an Executive Officer
becomes a Participant at any time other than the commencement of
the Award Period, the amount of his or her Corporate Financial
Performance Award under the Corporate Financial Performance Award
Criteria of the Plan shall be prorated on the basis of the number
of days during the Award Period that he or she is an Executive
Officer compared to the total number of calendar days in the Award
Period. Any Discretionary Individual Performance Award made under
the Discretionary Individual Performance Award Criteria shall be
made without regard to any proration.
At such time as an Executive Officer becomes a Participant in
this Plan, he or she shall be included in all subsequent Key
Executive Performance Plans for Executive Officers until he or she
ceases to be an Executive Officer of the Company, employment with
the Company terminates or he or she retires, resigns, becomes
permanently disabled, dies or is excluded from participation by the
Board.
If a person becomes a Participant under this Plan and is also
a Participant under the Key Executive Performance Plan (for other
key executives) for the same Award Period, such Participant will
also be entitled to a pro rata Award under the Key Executive
Performance Plan (for other key executives) at the end of the Award
Period.
No Participant in this Plan is eligible for participation in
any other group or division cash-incentive, commission or bonus
program that bases payment upon the Company's performance during
an Award Period.
7. Treatment of Awards Upon Retirement, Disability, Death,
Reassignment or Termination. A Participant who retires (including
early retirement as defined under the Company's qualified pension
plan for salaried employees and retirement under the Company's
Supplemental Early Retirement Plan for Executive Officers), becomes
totally disabled or dies will cease to be a Participant in the Plan
as of the day of the occurrence. In this event, the Participant
(or his or her designated beneficiary or estate in the case of
death) shall receive a pro rata Corporate Financial Performance
Award under the Plan, which shall be based on the number of days
during the Award Period the person was a Participant in the Plan
compared to the total number of days in the Award Period. The
prorated Corporate Financial Performance Award shall be paid to the
Participant (or his or her designated beneficiary or estate in the
case of death) as soon as practical after the conclusion of the
Award Period. Participants terminating due to retirement, total
disability or death are eligible to be considered for a
Discretionary Individual Performance Award.
If a Participant is excluded from participation by the Board
during the Award Period, the Participant shall cease participation
and shall receive a prorated Corporate Financial Performance Award
for the Award Period. The calculation and payment of such prorated
award will be made in the same manner as that of a Participant who
has retired, become permanently disabled or died. Participants
excluded from participation by the Board during the Award Period
are not eligible to be considered for a Discretionary Individual
Performance Award.
Participants who resign from the Company or who are terminated
by the Company during the Award Period, with or without cause,
shall forfeit all rights to any Corporate Performance Financial
Award or Discretionary Individual Performance Award for the Award
Period and shall not be entitled to any prorated Corporate
Financial Performance Award unless approved by the Board.
8. Deferral of Awards. A Participant may elect to defer all or
any portion of any Corporate Financial Performance Award made under
the Plan to a future date, but not beyond the date of the
Participant's normal retirement. The Participant must make an
election to defer on forms provided by the Company prior to
September 30 of the Plan year. Notwithstanding this election, if
the Participant's Corporate Financial Performance Award is
calculated to be $2,000 or less, the Corporate Financial
Performance Award shall be paid as though the election to defer had
not been made.
A deferred Corporate Financial Performance Award shall be
credited to an account (Deferred Bonus Account) maintained for the
Participant by the Company. On an annual basis, this account shall
be credited with interest at a rate determined by the Company, but
which shall not be less than the prime rate offered by the Bank of
America NT&SA on January 1, for the succeeding year. If, for any
reason, the Bank of America's prime rate shall be unavailable to
establish the interest rate under this Plan, the Company shall
select the prime rate of a financial institution of similar stature
to establish the interest rate under this Plan.
If payment is made from a Participant's Deferred Bonus Account
at any time during a calendar year, interest at the rate then in
effect shall be credited to his or her account on the portion so
paid through the end of the month preceding the month of payment.
A further description of the features and consequences of
deferral of a Corporate Financial Performance Award made under the
Plan is set out in Exhibit "A" to this Plan and incorporated herein
by this reference.
9. Deferred Compensation and Benefits Trust. The Company is
establishing a Deferred Compensation and Benefits Trust ("Trust"),
and the Company will comply with the terms of the Trust. Upon the
occurrence of any Potential Change in Control of the Company, the
Company shall transfer to the Trust an amount of cash, marketable
securities, or other property acceptable to the trustee(s) equal
in value to 105 percent of the amount necessary, on an actuarial
basis and calculated in accordance with the terms of the Trust, to
pay the Company's obligations under this Agreement (the "Funding
Amount"). The cash, marketable securities, and other property so
transferred shall be held, managed, and disbursed by the trustee(s)
subject to and in accordance with the terms of the Trust. In
addition, from time to time the Company shall make any and all
additional transfers of cash, marketable securities, or other
property acceptable to the trustee(s) as may be necessary in order
to maintain the Funding Amount with respect to this Plan.
10. Miscellaneous.
10.1. Assignability. A Participant's right and interest
under the Plan may not be assigned or transferred, except in the
event of the Participant's death, to his or her designated
beneficiary, or in the absence of a designation, by will or to the
Participant's legal representatives.
10.2. Employment Not Guaranteed. Neither this Plan nor any
action taken hereunder shall be construed as giving a Participant
a right to remain as an Executive Officer or an employee of the
Company for any period.
10.3. Taxes. The Company shall deduct from all Corporate
Financial Performance Awards or Discretionary Individual
Performance Awards all applicable federal and state taxes required
by law to be withheld from such Corporate Financial Performance
Awards or Discretionary Individual Performance Awards.
10.4. Construction. The Plan shall be construed according
to the laws of the state of Idaho.
10.5. Form of Communication. Any election, application,
claim, notice or other communication required or permitted to be
made by a Participant to the Committee or Company shall be made in
writing and in such form as the Company shall prescribe. Such
communication shall be effective upon mailing, if sent by first-
class mail, postage prepaid and addressed to Manager of Executive
Compensation, Boise Cascade Corporation, One Jefferson Square,
Boise, Idaho 83728.
11. Amendment and Termination. The Board may at any time amend
or terminate the Plan, provided that the Board may not modify or
terminate the Plan so as to adversely affect any benefits earned
or accrued by the Participants prior to the date of the
modification or termination.
12. Claims Procedure. Claims for benefits under the Plan shall
be filed in writing with the Committee. Written notice of the
disposition of a claim shall be furnished the claimant within
ninety days after the application is filed. In the event the claim
is denied, the specific reasons for such denial shall be set forth
in writing, pertinent provisions of the Plan shall be cited and,
where appropriate, an explanation as to how the claimant may
perfect the claim or submit such claim for review will be provided.
13. Claims Review Procedure. Any Participant, former Participant
or Beneficiary of either, who has been denied a benefit claim shall
be entitled, upon written request to the Committee, to a review of
his denied claim. Such request, together with a written statement
of the claimant's position, shall be filed with the Committee no
later than sixty days after receipt of the written notification
provided for in Section 12. The Committee shall make its decision
within sixty days after receipt of the claimant's request for
review.
14. Effective Date. The Plan shall become effective on January 1,
1986.
Exhibit A
CORPORATE FINANCIAL PERFORMANCE AWARD DEFERRAL OPTION
FOR EXECUTIVE OFFICERS
GENERAL
1. The Key Executive Performance Program of Boise Cascade
Corporation (the "Company") includes a deferral option. A
participant who is eligible to receive a Corporate Financial
Performance Award under the Key Executive Performance Plan, which
would be payable, if earned, in a subsequent year, may elect to
defer receipt of all or part of such Corporate Financial
Performance Award provided the election is made prior to
September 30 of the Plan year. If no election to defer is received
from a Participant, having been signed on or before September 30
of the Plan year, the Participant will be deemed to have made an
election not to defer receipt of his or her award, if any.
ELECTIONS TO BE MADE
2. Eligible employees may elect (if done so on or before
September 30 of the Plan year) to receive their Corporate Financial
Performance Award (if any) in:
a. Immediate Cash
Any deferred award of $2,000 or less will be paid in
cash regardless of any other elections by the employee; or
b. Deferred Cash
(1) Deferred awards will be credited to the
executive's Deferred Bonus Account, an account
established for Key Executive Performance Program
deferral purposes for the Plan year. Annually
thereafter, the employee's Deferred Bonus Account
will be credited with interest at a rate
determined by the Company which will not be less
than the prime rate offered by the Bank of America
NT&SA on January 1.
(2) If any payment is made from an employee's Deferred
Bonus Account during a year, interest will be
credited to the account on the portion so paid up
to the end of the month preceding the month in
which payment occurs.
(3) An employee's Deferred Bonus Account for a given
plan year will be paid to him or her in a lump sum
on one of the following dates:
A. The date selected by the employee, or
B. January 1 of the year following the employee's
normal or early retirement if no earlier date
has been selected previously by the employee.
In lieu of lump-sum payment, an employee may elect
to receive payment in consecutive equal annual
installments over a period not exceeding ten years
commencing with the date the employee may select.
(4) Any amounts deferred shall not be considered as
compensation for pension purposes or for purposes
of the Company's Savings and Supplemental
Retirement Plan. However, any resulting reduction
in a participant's pension benefit will be
provided from the Company's unfunded supplemental
retirement plan.
ELECTION TO DEFER IRREVOCABLE
3. Except as otherwise provided herein, election to defer payment
of an award is irrevocable.
TERMINATION OF EMPLOYMENT
4. If an employee terminates for any reason other than retirement
or death, the Company will pay to such terminated employee his or
her Deferred Bonus Account in full in the month following the month
of termination. The amount of such Deferred Bonus Account will be
determined in accordance with paragraph 2.b(2).
DEATH OF EMPLOYEE: DESIGNATION OF BENEFICIARY
5. If an employee terminates because of death, or if an employee
dies after his or her normal or early retirement and there is an
unpaid balance in his or her Deferred Bonus Account, the employee's
Deferred Bonus Account or unpaid balance thereof will be paid by
the Company to the employee's designated beneficiary or
beneficiaries in the month following the month in which the
employee's death occurs. The amount of such Deferred Bonus Account
or unpaid balance thereof will be determined in accordance with
paragraph 2.b(2).
6. An employee must designate the beneficiary or beneficiaries who
are to receive his or her Deferred Bonus Account in the event of
the employee's death. The beneficiary designation shall be made
on the Beneficiary Designation form and may be changed at any time
upon written notice to the Company. If an employee has not
designated a beneficiary or beneficiaries or if all the designated
beneficiaries are deceased, the Deferred Bonus Account will be paid
to the employee's estate.
FINANCIAL HARDSHIP OF EMPLOYEE
7. If, either before or after normal or early retirement, the con-
tinued deferral of a bonus award creates an extreme financial
hardship on an employee, the Company may, at its sole and absolute
discretion, pay all or any part of his or her Deferred Bonus
Account to him or her in such manner as the Company deems
appropriate. The amount of such Deferred Bonus Account balance
will be determined in accordance with paragraph 2.b(2). Extreme
financial hardship for this purpose shall be limited to the
inability of the employee to provide the basic necessities of life
for himself or herself and his or her dependents.
AMENDMENT OF ELECTION
8. A participant who has previously submitted an election
regarding payment of a Deferred Bonus Account and who subsequently
wishes to change that election may submit a written application to
Boise Cascade. Requests must specify, subject to the limits of the
Plan, (1) either a lump-sum payment or annual installments or (2) a
date at least two years later than the date originally elected for
such payments to commence and terminate. Such requests must be
made prior to January 1 of the year in which he or she previously
elected to have the payments commence and at least 30 days prior
to the date he or she previously elected to have the payments
commence. Boise Cascade, in its sole and absolute discretion, may
accept or reject such application. In no event will the Company
approve any other request to accelerate payment other than pursuant
to Section 7.
Notwithstanding any provision in this Plan to the contrary, a
Participant or Beneficiary may request a distribution of the value
of the Participant's accumulated account balance under the Plan in
a single lump-sum payment at any time during the calendar year.
This request must be made in writing to the Company. The lump-
sum payment shall be made within 30 days of the date on which the
Company received the request for the distribution and shall be
equal to the Participant's accumulated account balance under the
Plan reduced by an amount equal to 10% of the Participant's
accumulated account balance. This lump-sum payment shall be
subject to withholding of federal, state, and other taxes to the
extent applicable. If a request is made under this provision, the
Participant shall not be eligible to participate in any
nonqualified deferred compensation plan maintained by the Company,
including this Plan, for a period of 12 months after such request
is made. Further, in such event, any deferred compensation
agreement under any nonqualified deferred compensation plan of the
Company shall not be effective with respect to Compensation payable
to the Participant during such period.
AWARD MAY NOT BE REVOKED BY THE COMPANY
9. Once an award is made to an employee, it cannot be revoked or
modified by the Company and will be paid in accordance with the
election made and in accordance with the other terms of this bonus
deferral option.
DEFERRED BONUS ACCOUNT NOT TRANSFERABLE
10. The Deferred Bonus Account of an employee or any part thereof
shall not be assignable or transferable by an employee, either
before or after normal or early retirement, other than to a
properly designated beneficiary or beneficiaries or by will or the
laws of descent and distribution. During the lifetime of an
employee, payments of a Deferred Bonus Account will be made only
to the employee.
EARLY RETIREMENT
11. An employee who takes early retirement at the request of the
Company may, on that account, change any outstanding deferral
election at any time between the date on which he or she is so
requested to take retirement and the effective date of such early
retirement.
TAX IMPLICATIONS OF DEFERRAL
12. The Company believes, but does not represent or guarantee, that
a deferral election made in accordance with the terms of the Plan,
including this Exhibit A, is effective to defer the receipt of
taxable income.
13. Each employee should consider his or her own financial
situation and tax implications prior to electing to defer the
award. It may be advantageous to defer the award, insofar as tax
considerations are concerned, since an employee's overall tax rate
could be expected to be less after retirement as a result of
diminished income at that time. In some cases, however, employees
expecting to be in a higher income tax bracket following retirement
because of other income could be penalized for electing to defer
the award.
14. Employees should consult an attorney or an accountant familiar
with the federal income and estate tax laws, as well as their local
state laws, regarding the tax implications of a deferred award in
their individual cases.
15. This deferral option applies only to Participants in those
countries where tax statutes recognize voluntary compensation
deferral programs that are consistent with the terms contained in
this exhibit.
Addendum A
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN
ITEMS RELATING TO SENIOR EXECUTIVE OFFICERS
1. Notwithstanding the provisions of Section 2.2a, a
Corporate Financial Performance Award, if earned, shall
be a minimum of 10% and a maximum of 75% of a
Participant's Base Salary if the Participant is an
Executive Vice President or a Senior Vice President and
a minimum of 10% and a maximum of 90% of a Participant's
Base Salary if the Participant is the Chairman and Chief
Executive Officer or the President and Chief Operating
Officer.
2. Notwithstanding the provisions of Sections 2.3b, 3.2, and
6, Senior Executive Officers shall not be eligible for
consideration for Discretionary Individual Performance
Awards.
3. Notwithstanding the provisions of Sections 2.10 and 2.11,
a Senior Executive Officer is any Executive Vice
President, any Senior Vice President, the Chairman and
Chief Executive Officer, and the President and Chief
Operating Officer of the Company or anyone who is elected
a Senior Executive Officer by the Board during the Award
Period.
4. Notwithstanding the provisions of Section 6, anyone who
is elected a Senior Executive Officer during the Award
Period shall be deemed to be a Senior Executive Officer
during the entire Award Period.
1994 PERFORMANCE CRITERIA
For 1994, the Plan provides for payment of a Corporate
Performance Award when company Net Income equals $77 million.
The maximum award payout would occur when Net Income equals
or exceeds $329 million (or 20.2% return on equity). The
executive officer awards as a percent of base salary would
be as illustrated by the following table. Net earnings
levels between the amounts indicated would result in
proportional reward amounts:
NET INCOME ($000,000)
$ 77 $178 $329
CEO/COO 14% 44% 90%
EVP/SVP 12 37 75
Vice President 10 30 60
BOISE CASCADE CORPORATION
1986 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1993)
BOISE CASCADE CORPORATION
1986 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
1. Purpose of the Plan. The purpose of the Boise Cascade
Corporation 1986 Executive Officer Deferred Compensation Plan (the
"Plan") is to further the growth and development of Boise Cascade
Corporation (the "Company") by providing executive officers of the
Company the opportunity to defer a portion of their compensation
and thereby encourage their productive efforts.
2. Definitions.
2.1 Change in Control. A Change in Control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
2.2 Compensation. A Participant's salary, commission, bonus
and other payments for personal services rendered by a Participant
to the Company during a calendar year. Compensation shall not
include any amounts paid by the Company to a Participant that are
not strictly in consideration for personal services, such as
expense reimbursement, cost-of-living allowance, education
allowance, premium on excess group life insurance, or any Company
contribution to the Pension Plan or the Savings and Supplemental
Retirement Plan; and the fact that an amount constitutes taxable
income to the Participant shall not be controlling for this
purpose. Compensation shall not include any taxable income
realized by, or payments made to, an employee as a result of the
grant or exercise of an option to acquire stock of the Company or
as a result of the disposition of such stock, and shall not include
compensation resulting from any long-term incentive plan.
2.3 Deferred Compensation Agreement. A written agreement
between a Participant and the Company, whereby a Participant agrees
to defer a portion of his Compensation pursuant to the provisions
of the Plan, and the Company agrees to make benefit payments in
accordance with the provisions of the Plan.
2.4 Deferred Compensation and Benefits Trust. An irrevocable
trust or trusts established or to be established by the Company
with an independent trustee or trustees for the benefit of persons
entitled to receive payments or benefits hereunder, the assets of
which nevertheless will be subject to claims of the Company's
creditors in the event of bankruptcy or insolvency and with respect
to which the Company shall have received a ruling from the Internal
Revenue Service that the trust is a "grantor trust" for federal
income tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
2.5 Disability. A condition that totally and continuously
prevents the Participant, for at least six consecutive months, from
engaging in an "occupation" for Compensation or profit. During the
first 24 months of total Disability, "occupation" means the
Participant's occupation at the time the Disability began. After
that period, "occupation" means any occupation for which the
Participant is or becomes reasonably fitted by education, training,
or experience. Notwithstanding the foregoing, a Disability shall
not exist for purposes of this Plan if the Participant fails to
qualify for Disability benefits under the Social Security Act,
unless the Company determines, in its sole discretion, that a
Disability exists.
2.6 Early Retirement Date. The date of a Participant's
Termination of Employment for reasons other than death or
Disability, prior to attainment of age 65 but subsequent to
attaining age 55, and after completing ten Years of Service with
the Company.
2.7 Executive Officer. The Chairman of the Board and Chief
Executive Officer, the President and Chief Operating Officer, any
Executive Vice President, any Senior Vice President, any Vice
President, the Secretary, the Treasurer, or the Controller of the
Company.
2.8 Minimum Death Benefit. The Minimum Death Benefit shall
be equal to the sum of the following:
(a) The Minimum Death Benefit to which a Participant is
entitled for the deferrals and corresponding Company
Contributions made to the Plan for the period
January 1, 1987, through December 31, 1990, which
shall be an amount equal to three times the
Participant's total expected deferrals up to a
maximum of $500,000.
and
(b) The Minimum Death Benefit to which a Participant is
entitled for the deferrals and corresponding Company
Contributions to the Plan for the period January 1,
1992, through December 31, 1995, which shall be an
amount equal to three times the Participant's total
expected deferrals up to a maximum of $500,000.
The amount of the Minimum Death Benefit payable under this
Section 2.8 shall be subject to adjustment in the event there is
an alteration of the amount to be deferred as provided in
Section 4.3.
2.9 Moody's Times 130%. The Company shall accumulate the
Participant's deferred compensation with monthly interest
equivalent to an annualized rate of 130% times Moody's Composite
Average of Yields on Corporate Bonds for the preceding calendar
month as determined from Moody's Bond Record published by Moody's
Investor's Service, Inc. (or any successor thereto), or, if such
monthly yield is no longer published, a substantially similar
average selected by the Board.
2.10 Normal Retirement Date. The first day of the month
coincident with or next following a Participant's 65th birthday.
2.11 Participant. An Executive Officer who has entered into
a written Deferred Compensation Agreement with the Company in
accordance with the provisions of the Plan.
2.12 Pension Plan. The Boise Cascade Corporation Pension
Plan for Salaried Employees, as amended from time to time.
2.13 Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if (A) the
Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company,
(B) any person (including the Company) publicly announces an in-
tention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company; (C) any person
becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 9.5% or more of the combined voting
power of the Company's then outstanding securities; or (D) the
Board of Directors adopts a resolution to the effect that a Poten-
tial Change in Control of the Company for purposes of this Agree-
ment has occurred.
2.14 Service. Service as accumulated under the Company's
Pension Plan.
2.15 Termination of Employment. The Participant's ceasing
to be employed by the Company for any reason whatsoever, whether
voluntarily or involuntarily, including by reason of early
retirement, normal retirement, death or Disability.
2.16 Year of Service. A Year of Vesting Service, as provided
in the Company's Pension Plan.
3. Administration and Interpretation of the Plan. The Company
shall administer and interpret the Plan, and interpretation by the
Company shall be final and binding upon a Participant. The Company
may adopt rules and regulations relating to the Plan as it may deem
necessary or advisable for the administration of the Plan. The
Company may also delegate administrative responsibilities to
advisors or other persons who are not employees of the Company and
may rely upon information or opinions of legal counsel or experts
selected to render advice with respect to the Plan.
4. Participant Compensation Deferral.
4.1 Compensation Deferral. Prior to January 1, 1987, an
Executive Officer who wishes to participate in the Plan shall
execute a written Deferred Compensation Agreement, in the format
provided by the Company, whereby the Executive Officer elects to
defer a portion of his or her Compensation otherwise earned and
payable on or after January 1, 1987, and through the four-year
period ending December 31, 1990. An Executive Officer who is
contributing to the 1982 Executive Officer Deferred Compensation
Plan on January 1, 1987, shall elect prior to January 1, 1987, to
participate in this Plan for four full calendar years beginning
January 1 of the calendar year after his or her contributions cease
to the 1982 Executive Officer Deferred Compensation Plan. Prior
to January 1, 1991, an Executive Officer who wishes to participate
in the Plan through the period ending December 31, 1995, shall
execute a written Deferred Compensation Agreement covering such
period. The amount of annual Compensation to be deferred shall be
in whole percentage increments as specified in the applicable
Deferred Compensation Agreement. The period during which
Compensation is reduced shall be the calendar years specified in
the Deferred Compensation Agreement. The amount deferred shall
result in corresponding reductions in the Compensation payable to
a Participant.
4.2 Participation in the Plan. An Executive Officer who
first attains such status subsequent to January 1, 1987, and prior
to December 31, 1991, and who continues to retain his status as an
Executive Officer, shall be entitled to participate in the Plan
until December 31, 1995, and shall be bound by all the other terms
and conditions of the Plan. An Executive Officer who first attains
such status subsequent to January 1, 1992, and prior to
December 31, 1995, shall be entitled to participate in the Plan
until December 31, 1995, and shall be bound by all the other terms
and conditions of the Plan. An Executive Officer shall complete
a Deferred Compensation Agreement within 30 days of becoming
eligible and being notified of the terms and conditions of the
Plan. Contributions to the Plan shall commence the first of the
month following the completion of the Deferred Compensation
Agreement. The Company shall notify a new Participant promptly
upon becoming eligible.
4.3 Alteration of Compensation Deferral. The amount of
compensation to be deferred, once selected by a Participant, shall
be irrevocable except upon written approval by the Company. A
request to alter the amount of compensation deferred must be
submitted by a Participant in writing to the Company prior to
January 1 of the year for which such modification is requested and
shall detail the reasons for the modification. If a modification
of the deferral amount is granted by the Company, the modification
shall affect only future years of participation; and all benefits
under the Plan shall be adjusted to reflect the new deferred amount
and also to reflect any costs incurred by the Company to effect the
adjusted benefits payable to the Participant.
4.4 Company Contribution. The Company shall, at the election
of a Participant, contribute an additional amount equal to 4.2% of
the Participant's Compensation to the Plan, to be used to provide
benefits as specified in the Deferred Compensation Agreement. If
a Participant elects to have such amount contributed under the
Deferred Compensation Agreement, the Company shall not make any
matching contribution for such Participant under the Company
Savings and Supplemental Retirement Plan.
4.5 Continuation of Contribution. Should there be a
Termination of Employment by a Participant prior to having
completed the entire period of participation determined in
accordance with Sections 4.1 or 4.2, the Participant may elect,
subject to the approval of the Company, to continue contributing
to the Plan at the same rate in effect upon Termination of
Employment for such period of time, up to and including the entire
period of participation determined in accordance with Sections 4.1
or 4.2, as may be approved by the Company, in which case he or she
will continue to be a Participant and be bound by all the other
terms and conditions of the Plan. In any such case, the Company
may continue its contributions or may require the Participant to
contribute the amounts formerly contributed by the Company.
5. Payment of Deferred Amounts.
5.1 Participant Account. The Company shall maintain for each
Participant an account by accumulating his deferred compensation
plus the company contribution, if any, and, each month, the account
shall be updated with a monthly rate of interest equal to Moody's
Times 130%.
5.2 Return of Deferrals. At the time a Participant executes
the Deferred Compensation Agreement, he may elect to receive a
return of his deferrals. Each such return of deferral shall be
made in a lump sum, seven years after the end of the calendar year
in which the deferral is made. Prior to January 1 of the year
preceding the year in which any return of deferral is to be made,
the Participant may request to defer a portion or all of the
payment of the return of deferral until such time as the account
would otherwise be paid and such request shall be approved or
denied at the sole discretion of the Company. Any return of
deferral paid shall be deemed a distribution, and, accordingly,
shall be deducted from the Participant's account and shall reduce
the benefits provided under this section by the dollar amount of
any such payments.
5.3 Plan Benefits. Upon Termination of Employment for
reasons other than disability, a Participant shall be paid his
account in a lump sum or in equal monthly installments calculated
to distribute his account plus accrued interest for a period of
not more than 15 years. Payments shall commence on the date and
shall be made in the manner elected by the Participant in the
Deferred Compensation Agreement. Unpaid balances under the
installment election continue to earn interest at the rate of
Moody's Times 130%. If a Participant does not make an election,
his account shall be paid out in monthly installments over 15 years
beginning January 1 of the year following Termination of
Employment. The Participant may request other forms of payout
which are subject to approval by the Company, pursuant to
Section 5.4.
5.4 Change of Election. A Participant may request a change
in the payout election anytime prior to January 1 of the year
benefits are scheduled to be paid, provided that the request is
received by the Company at least 30 days prior to the date benefits
are scheduled to be paid. The changed payout election must be one
of the payout options in the original deferral agreement. Such
request must be in writing and shall be approved or denied at the
sole discretion of the Company. No change will be permitted that
would allow a payment to be made earlier than originally elected
in the Deferred Compensation Agreement.
Notwithstanding any provision in this Plan to the
contrary, a Participant or Beneficiary may at any time request a
single lump-sum payment of the amount credited to an account or
accounts of the Participant under the Plan. The amount of the
payment shall be equal to (i) the Participant's accumulated account
balance under the Plan as of the payment date, reduced by (ii) an
amount equal to 10% of such accumulated account balance. This
lump-sum payment shall be subject to withholding of federal, state,
and other taxes to the extent applicable. This request must be
made in writing to the Company. The lump-sum payment shall be made
within 30 days of the date on which the Company received the
request for the distribution. If a request is made under this
provision, the Participant shall not be eligible to participate in
any nonqualified deferred compensation plan maintained by the
Company, including this Plan, for a period of 12 months after such
request is made. In addition, in such event any deferred
compensation agreement under any nonqualified deferred compensation
plan of the Company shall not be effective with respect to
Compensation payable to the Participant during this 12-month
period.
5.5 Payment on Death After Benefits Commence. If a
Participant dies after his benefits have commenced and prior to the
distribution of his entire Participant Account, his beneficiary
shall receive any benefit payments in accordance with the Deferred
Compensation Agreement.
5.6 Death Benefit. If a Participant should die while a
Participant in the Plan and prior to the commencement of Plan
distributions, the Company shall pay his or her designated
beneficiary or beneficiaries the greater of the accumulated account
balance or the Minimum Death Benefit. Payments shall be made as
specified in the Deferred Compensation Agreement. The Participant
Account shall be updated with a monthly rate of interest equal to
Moody's Times 130%.
5.7 Disability Benefit. For a Participant who made deferrals
into the Plan prior to January 1, 1991, and who terminates prior
to attaining age 65 due to a Disability, the Company shall pay the
Participant in monthly installments commencing on the first day of
the seventh consecutive month following the Participant's
Disability, the Disability Benefit specified in the Deferred
Compensation Agreement until the Participant attains his Normal
Retirement Date or ceases to be totally and continuously disabled.
The maximum Disability Benefit shall be an amount which when
combined with Primary Social Security, company-sponsored group
Long-Term Disability and disability benefits from other deferred
compensation plans is equal to 80% of predisability salary. For
the purpose of this maximum, the 80% of predisability salary shall
be indexed to the Consumer Price Index. After a Participant who
is receiving a Disability Benefit attains his Normal Retirement
Date, he shall be entitled to be paid his account in accordance
with the form of payment elected in the Deferred Compensation
Agreement. If a Participant dies while receiving a Disability
Benefit, the Participant's beneficiary shall receive the Death
Benefit pursuant to Section 5.6. If a Participant meets the
requirements for a Disability Benefit and the amount of the
Disability Benefit on the Deferred Compensation Agreement is $0,
or if there is no Disability Benefit stated on such Participant's
Deferred Compensation Agreement, then the Participant's Account
shall be paid in monthly installments over a 15-year period
beginning the month the Disability Benefit would have been paid and
unpaid account balances shall accumulate at Moody's Times 130%.
A Participant who makes deferrals into this Plan
subsequent to December 31, 1991, shall be entitled to, in addition
to the Disability Benefit described above, a Disability Benefit
equal to the remaining balance, if any, of his or her Participant
Account. The payment, timing, and amount of the benefit shall be
consistent with the previous paragraph pertaining to a
Participant's Disability Benefit.
5.8 Recipients of Payments; Designation of Beneficiary. All
payments to be made by the Company shall be made to the
Participant, if living. In the event of a Participant's death
prior to the receipt of all benefit payments, all subsequent
payments to be made under the Plan shall be to the beneficiary or
beneficiaries of the Participant. The Participant shall designate
a beneficiary by filing a written notice of such designation with
the Company in such form as the Company may prescribe. If no
designation shall be in effect at the time when any benefits
payable under this Plan shall become due, the beneficiary shall be
the spouse of the Participant, or if no spouse is then living, the
representatives of the Participant's estate.
6. Miscellaneous.
6.1 Assignability. A Participant's rights and interests
under the Plan may not be assigned or transferred except, in the
event of the Participant's death, to his or her designated
beneficiary, or in the absence of a designation, by will or to his
or her legal representative.
6.2 Employment Not Guaranteed by Plan. Neither this Plan nor
any action taken hereunder shall be construed as giving a
Participant the right to be retained as an Executive Officer or as
an employee of the Company for any period.
6.3 Taxes. The Company shall deduct from all payments made
hereunder all applicable federal or state taxes required by law to
be withheld from such payments.
6.4 Construction. The Plan shall be construed according to
the laws of the State of Idaho.
6.5 Form of Communication. Any election, application, claim,
notice or other communication required or permitted to be made by
a Participant to the Company shall be made in writing and in such
form as the Company shall prescribe. Such communication shall be
effective upon mailing, if sent by first-class mail, postage
prepaid, and addressed to the Company's office at One Jefferson
Square, Boise, Idaho 83728.
7. No Reduction in Pension Benefit. To compensate a Participant
for any reduction in pension benefits under the Pension Plan which
may result from a Participant's deferring Compensation under this
Plan, the Company shall pay to the Participant an amount equal to
the reduction in pension benefits in the same manner and at the
same time as such benefits would have been paid under the Pension
Plan.
8. Amendment and Termination. The Board of Directors may, at any
time, amend the Plan, provided that the amendment shall not
adversely affect any right or benefit of a Participant under the
Plan without the prior consent of a Participant.
9. Unsecured General Creditor. Except as provided in Section 10
hereof, participants and their beneficiaries, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims
in any property or assets of the Company, nor shall they be
beneficiaries of, or have any rights, claims or interests in any
life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Company
("Policies"). Such Policies or other assets of the Company shall
not be held under any trust for the benefit of Participants, their
beneficiaries, heirs, successors, or assigns, or held in any way
as collateral security for the fulfilling of the obligations of the
Company under this Plan. Any and all Company assets and Policies
shall be, and remain, the general, unpledged, unrestricted assets
of the Company. The Company's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Company to
pay money in the future.
10. Deferred Compensation and Benefits Trust. The Company is
establishing a Deferred Compensation and Benefits Trust ("Trust"),
and the Company shall comply with the terms of the Trust. Upon the
occurrence of any Potential Change in Control of the Company, the
Company shall transfer to the Trust an amount of cash, marketable
securities, or other property acceptable to the trustee(s) equal
in value to 105 percent of the amount necessary, on an actuarial
basis and calculated in accordance with the terms of the Trust, to
pay the Company's obligations under this Agreement (the "Funding
Amount"). The cash, marketable securities, and other property so
transferred shall be held, managed, and disbursed by the trustee(s)
subject to and in accordance with the terms of the Trust. In
addition, from time to time the Company shall make any and all
additional transfers of cash, marketable securities, or other
property acceptable to the trustee(s) as may be necessary in order
to maintain the Funding Amount with respect to this Plan.
BOISE CASCADE CORPORATION
1983 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1993)
BOISE CASCADE CORPORATION
1983 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
1. Purpose of the Plan. The purpose of the Boise Cascade
Corporation 1983 Board of Directors Deferred Compensation Plan (the
"Plan") is to further the growth and development of Boise Cascade
Corporation (the "Company") by providing directors of the Company
the opportunity to defer a portion or all of their Compensation and
thereby encourage their productive efforts.
2. Definitions.
2.1 Change in Control. A Change in Control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
2.2 Compensation. A Participant's fees for personal services
rendered by a Participant as a director of the Company during a
calendar year. Compensation shall not include any amounts paid by
the Company to a Participant that are not strictly in consideration
for personal services, such as expense reimbursements.
2.3 Deferred Compensation Agreement. A written agreement
between a Participant and the Company, whereby a Participant agrees
to defer a portion of his Compensation pursuant to the provisions
of the Plan, and the Company agrees to make benefit payments in
accordance with the provisions of the Plan.
2.4 Deferred Compensation and Benefits Trust. An irrevocable
trust or trusts established or to be established by the Company
with an independent trustee or trustees for the benefit of persons
entitled to receive payments or benefits hereunder, the assets of
which nevertheless will be subject to claims of the Company's
creditors in the event of bankruptcy or insolvency and with respect
to which the Company shall have received a ruling from the Internal
Revenue Service that the trust is a "grantor trust" for federal
income tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
2.5 Director. A member of the Board of Directors of Boise
Cascade Corporation as elected by the shareholders.
2.6 Early Benefit Commencement Date. The first day of the
month following a Participant's Termination for reasons other than
death prior to attainment of age 70 or after the four-year deferral
the date selected by a Participant to begin benefit payments. An
election to begin benefit payments must be made prior to January
1 of the year in which benefits commence.
2.7 Minimum Death Benefit. The Minimum Death Benefit shall
be a multiple of the total amount of Compensation to be deferred
over the four-year period. The multiple shall be determined
according to the Participant's age at the beginning of the Plan
(January 1, 1984):
Multiple
of Deferred
Age Compensation
65 and over 2
60 3
55 4
50 5
The Multiple shall be interpolated to the Participant's age
on his or her last birth date on the date the Participant begins
deferrals under the Plan. For example, Age 54 would have a
multiple of 4.2.
2.8 Moody's Plus 4%. The Company shall accumulate the
Participant's deferred compensation with monthly interest
equivalent to an annualized rate of 4% more than Moody's Composite
Average of Yields on Corporate Bonds for the preceding calendar
month as determined from Moody's Bond Record published by Moody's
Investor's Service, Inc. (or any successor thereto), or, if such
monthly yield is no longer published, a substantially similar
average selected by the Board.
2.9 Normal Benefit Commencement Date. The first day of the
month coincident with or next following a Participant's 70th
birthday.
2.10 Participant. A Director who has entered into a written
Deferred Compensation Agreement with the Company in accordance with
the provisions of the Plan.
2.11 Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if (A) the
Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company,
(B) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company;
(C) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company's then outstanding
securities; or (D) the Board of Directors adopts a resolution to
the effect that a Potential Change in Control of the Company for
purposes of this Agreement has occurred.
2.12 Termination. The Participant's ceasing to be a Director
of the Company for any reason whatsoever, whether voluntarily or
involuntarily, including by reason of death.
3. Administration and Interpretation of the Plan. The Company
shall administer and interpret the Plan, and interpretation by the
Company shall be final and binding upon a Participant. The Company
may adopt rules and regulations relating to the Plan as it may deem
necessary or advisable for the administration of the Plan. The
Company may also delegate administrative responsibilities to
advisors or other persons who are not employees of the Company and
may rely upon information or opinions of legal counsel or experts
selected to render advice with respect to the Plan.
4. Participant Compensation Deferral.
4.1 Compensation Deferral. Prior to December 20, 1983, a
Director who wishes to participate in the Plan shall execute a
written Deferred Compensation Agreement, in the format provided by
the Company, whereby the Director elects to defer a portion of his
Compensation otherwise earned and payable on or after January 1,
1984. The amount of annual Compensation to be deferred shall be
a minimum of $5,000 per year and increments of $1,000 up to all
Compensation. The period during which Compensation is deferred
shall be the four (4) calendar years immediately following 1983.
The amount deferred shall result in corresponding reductions in the
Compensation payable to a Participant.
4.2 New Directors. A Director who first attains such status
subsequent to January 1, 1984, shall be entitled to participate in
the Plan for all full calendar years after being elected a Director
and prior to January 1, 1988, and shall be bound by all terms and
conditions of the Plan.
4.3 Alteration of Compensation Deferral. The amount of
Compensation to be deferred, once selected by a Participant, shall
be irrevocable except upon written approval by the Company. A
request to alter the amount of Compensation deferred shall be
submitted by a Participant in writing to the Company prior to
January 1 of the year that such modification is requested and shall
detail the reasons for the modification. If a modification of the
deferral amount is granted by the Company, the modification shall
be effective for all future years of participation; and all
benefits under the Plan shall be adjusted to reflect the new
deferred amount and also to reflect any costs incurred by the
Company to effect the adjusted benefits payable to the Participant.
4.4 Prior Deferrals. A Participant may transfer to this Plan
any account balance that he or she may have, as of December 31,
1983, under the Boise Cascade Corporation Directors' Deferred
Compensation Policy, adopted December 16, 1971. The election to
transfer must be made prior to December 31, 1983.
5. Payment of Deferred Amounts.
5.1 Participant Account. The Company shall maintain for each
Participant an account by accumulating his Compensation deferred
and, each month, the account shall be updated with a monthly rate
of interest equal to Moody's plus 4%.
5.2 Plan Benefits. Upon Early or Normal Benefit Commencement
Date, a Participant shall be paid his account in a lump sum or in
equal quarterly installments calculated to distribute his account
plus accrued interest for a period of not more than 15 years.
Unpaid balances under the installment election continue to earn
interest at the rate of Moody's plus 4%. The Participant shall
elect the method of payment prior to the calendar year in which the
first installment is made. If a Participant does not make an
election, his account shall be paid out in quarterly installments
over 15 years. A Participant may request a change in the payout
election anytime prior to January 1 of the year benefits are
scheduled to be paid, provided that the request is received by the
Company at least 30 days prior to the date benefits are scheduled
to be paid. The changed payout election must be one of the payout
options in the original deferral agreement. Such request must be
in writing and shall be approved or denied at the sole discretion
of the Company. No change will be permitted that would allow a
payment to be made earlier than originally elected in the Deferred
Compensation Agreement.
5.3 Payment on Death After Benefits Commence. If a
Participant dies after his benefits have commenced and prior to the
distribution of his entire account, his beneficiary shall receive
any benefit payments that would have been paid to the Participant.
In lieu of the monthly benefit payments, upon the request of the
Participant's beneficiary, the Company may, in its sole discretion,
make a lump-sum payment to the Participant's beneficiary.
5.4 Death Benefit. If a Participant should die while a
Participant in the Plan and prior to the commencement of Plan
distributions, the Company shall pay his or her designated
beneficiary or beneficiaries the greater of the accumulated account
balance or the Minimum Death Benefit.
Notwithstanding any provision in this Plan to the
contrary, a Participant or Beneficiary may at any time request a
single lump-sum payment of the amount credited to an account or
accounts of the Participant under the Plan. The amount of the
payment shall be equal to (i) the Participant's accumulated account
balance under the Plan as of the payment date, reduced by (ii) an
amount equal to 10% of such accumulated account balance. This
lump-sum payment shall be subject to withholding of federal, state,
and other taxes to the extent applicable. This request must be
made in writing to the Company. The lump-sum payment shall be made
within 30 days of the date on which the Company received the
request for the distribution. If a request is made under this
provision, the Participant shall not be eligible to participate in
any nonqualified deferred compensation plan maintained by the
Company, including this Plan, for a period of 12 months after such
request is made. In addition, in such event any deferred
compensation agreement under any nonqualified deferred compensation
plan of the Company shall not be effective with respect to
Compensation payable to the Participant during this 12-month
period.
5.5 Recipients of Payments; Designation of Beneficiary. All
payments to be made by the Company shall be made to the
Participant, if living. In the event of a Participant's death
prior to the receipt of all benefit payments, all subsequent
payments to be made under the Plan shall be to the beneficiary or
beneficiaries of the Participant. The Participant shall designate
a beneficiary by filing a written notice of such designation with
the Company in such form as the Company may prescribe. If no
designation shall be in effect at the time when any benefits
payable under this Plan shall become due, the beneficiary shall be
the spouse of the Participant, or if no spouse is then living, the
representatives of the Participant's estate.
6. Miscellaneous.
6.1 Assignability. A Participant's rights and interests
under the Plan may not be assigned or transferred except, in the
event of the Participant's death, to his or her designated
beneficiary, or in the absence of a designation, by will or to his
or her legal representative.
6.2 Taxes. The Company shall deduct from all payments made
hereunder all applicable federal or state taxes which may be
required by law to be withheld from such payments.
6.3. Construction. The Plan shall be construed according to
the laws of the State of Idaho.
6.4 Form of Communication. Any election, application, claim,
notice or other communication required or permitted to be made by
a Participant to the Company shall be made in writing and in such
form as the Company shall prescribe. Such communication shall be
effective upon mailing, if sent by first class mail, postage
prepaid, and addressed to the Company's office at One Jefferson
Square, Boise, Idaho 83728.
6.5 Unsecured General Creditor. Except as provided in
Section 8 hereof, participants and their beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights,
interest or claims in any property or assets of the Company, nor
shall they be beneficiaries of, or have any rights, claims or
interests in any life insurance policies, annuity contracts or the
proceeds therefrom owned or which may be acquired to the Company
("Policies"). Such Policies or other assets of the Company shall
not be held under any trust for the benefit of Participants, their
beneficiaries, heirs, successors, or assigns, or held in any way
as collateral security for the fulfilling of the obligations of the
Company under this Plan. Any and all Company assets and Policies
shall be, and remain, the general, unpledged, unrestricted assets
of the Company. The Company's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of the Company to
pay money in the future.
7. Amendment and Termination. The Board of Directors may, at
any time, amend the Plan, provided that the amendment shall not
adversely affect any right or benefit of a Participant accrued
under the Plan prior to the amendment without the prior consent of
a Participant.
8. Deferred Compensation and Benefits Trust. The Company is
establishing a Deferred Compensation and Benefits Trust ("Trust"),
and the Company shall comply with the terms of the Trust. Upon the
occurrence of any Potential Change in Control of the Company, the
Company shall transfer to the Trust an amount of cash, marketable
securities, or other property acceptable to the trustee(s) equal
in value to 105 percent of the amount necessary, on an actuarial
basis and calculated in accordance with the terms of the Trust, to
pay the Company's obligations under this Agreement (the "Funding
Amount"). The cash, marketable securities, and other property so
transferred shall be held, managed, and disbursed by the trustee(s)
subject to and in accordance with the terms of the Trust. In
addition, from time to time the Company shall make any and all
additional transfers of cash, marketable securities, or other
property acceptable to the trustee(s) as may be necessary in order
to maintain the Funding Amount with respect to this Plan.
BOISE CASCADE CORPORATION
1982 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1993)
BOISE CASCADE CORPORATION
1982 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
1. Purpose of the Plan. The purpose of the Boise Cascade
Corporation 1982 Executive Officer Deferred Compensation Plan (the
"Plan") is to further the growth and development of Boise Cascade
Corporation (the "Company") by providing executive officers of the
Company the opportunity to defer a portion of their compensation
and thereby encourage their productive efforts.
2. Definitions.
2.1 Change in Control. A Change in Control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
2.2 Compensation. A Participant's salary, commission, bonus
and other payments for personal services rendered by a Participant
to the Company during a calendar year. Compensation shall not
include any amounts paid by the Company to a Participant that are
not strictly in consideration for personal services, such as
expense reimbursement, cost-of-living allowance, education
allowance, premium on excess group life insurance, or any Company
contribution to the Pension Plan or the Savings and Supplemental
Retirement Plan; and the fact that an amount constitutes taxable
income to the Participant shall not be controlling for this
purpose. Compensation shall not include any taxable income
realized by, or payments made to, an employee as a result of the
grant or exercise of an option to acquire stock of the Company or
as a result of the disposition of such stock, and shall not include
compensation resulting from any long-term incentive plans such as
the Company's Performance Share Plan.
2.3 Deferred Compensation Agreement. A written agreement
between a Participant and the Company, whereby a Participant agrees
to defer a portion of his or her Compensation pursuant to the
provisions of the Plan, and the Company agrees to make benefit
payments in accordance with the provisions of the Plan.
2.4 Deferred Compensation and Benefits Trust. An irrevocable
trust or trusts established or to be established by the Company
with an independent trustee or trustees for the benefit of persons
entitled to receive payments or benefits hereunder, the assets of
which nevertheless will be subject to claims of the Company's
creditors in the event of bankruptcy or insolvency and with respect
to which the Company shall have received a ruling from the Internal
Revenue Service that the trust is a "grantor trust" for federal
income tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
2.5 Disability. A condition that totally and continuously
prevents the Participant, for at least six consecutive months, from
engaging in an "occupation" for Compensation or profit. During the
first 24 months of total Disability, "occupation" means the
Participant's occupation at the time the Disability began. After
that period, "occupation" means any occupation for which the
Participant is or becomes reasonably fitted by education, training,
or experience. Notwithstanding the foregoing, a Disability shall
not exist for purposes of this Plan if the Participant fails to
qualify for Disability benefits under the Social Security Act,
unless the Company determines, in its sole discretion, that a
Disability exists.
2.6 Early Retirement Date. The date of a Participant's
Termination of Employment for reasons other than death or
Disability, prior to attainment of age 65 but subsequent to
attaining age 55, and after completing ten (10) Years of Service
with the Company. For purposes of this Section, a Participant's
age and Years of Service shall be determined by taking into account
any imputation of age or service permitted under any special early
retirement program(s) offered by the Company.
2.7 Executive Officer. The Chairman of the Board and Chief
Executive Officer, the President and Chief Operating Officer, any
Executive Vice President, any Senior Vice President, any Vice
President, the Secretary, the Treasurer, or the Controller of the
Company.
2.8 Normal Retirement Date. The first day of the month
coincident with or next following a Participant's 65th birthday.
2.9 Participant. An Executive Officer who has entered into
a written Deferred Compensation Agreement with the Company in
accordance with the provisions of the Plan.
2.10 Pension Plan. The Boise Cascade Corporation Pension
Plan for Salaried Employees, as amended from time to time.
2.11 Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if (A) the
Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control of the Company,
(B) any person (including the Company) publicly announces an in-
tention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company; (C) any person
becomes the beneficial owner, directly or indirectly, of securities
of the Company representing 9.5% or more of the combined voting
power of the Company's then outstanding securities; or (D) the
Board of Directors adopts a resolution to the effect that a Poten-
tial Change in Control of the Company for purposes of this Agree-
ment has occurred.
2.12 Service. Service as accumulated under the Company's
Pension Plan.
2.13 Termination of Employment. The Participant's ceasing
to be employed by the Company for any reason whatsoever, whether
voluntarily or involuntarily, including by reason of early
retirement, normal retirement, death or Disability.
2.14 Year of Service. A Year of Vesting Service, as provided
in the Company's Pension Plan.
3. Administration and Interpretation of the Plan. The Company
shall administer and interpret the Plan, and interpretation by the
Company shall be final and binding upon a Participant. The Company
may adopt rules and regulations relating to the Plan as it may deem
necessary or advisable for the administration of the Plan. The
Company may also delegate administrative responsibilities to
advisors or other persons who are not employees of the Company and
may rely upon information or opinions of legal counsel or experts
selected to render advice with respect to the Plan.
4. Participant Compensation Deferral.
4.1 Compensation Reduction. Prior to January 1, 1983, an
Executive Officer who wishes to participate in the Plan shall
execute a written Deferred Compensation Agreement, in the format
provided by the Company, whereby the Executive Officer elects to
defer a portion of his or her Compensation otherwise earned and
payable on or after January 1, 1983. The amount of annual
Compensation to be deferred shall be in whole percentage increments
of not less than 6% nor greater than 10% of Compensation. The
period during which Compensation is reduced shall be the four (4)
calendar years immediately following 1982. The amount deferred
shall result in corresponding reductions in the Compensation
payable to a Participant.
4.2 Participation After January 1, 1983. An Executive
Officer who first attains such status subsequent to January 1,
1983, and prior to January 1, 1987, shall be entitled to par-
ticipate in the Plan for four (4) full calendar years after being
elected an Executive Officer and shall be bound by all the other
terms and conditions of the Plan. An Executive Officer who,
although eligible, elects not to participate in the Plan, may sub-
sequently and with the approval of the Company become a Participant
before January 1, 1987, for such a period of time, up to and
including four (4) full calendar years from the commencement of
participation, as may be approved by the Company, in which case he
or she shall be bound by all the other terms and conditions of the
Plan.
4.3 Alteration of Compensation Deferral. The amount of
Compensation to be deferred, once selected by a Participant, shall
be irrevocable except upon written approval by the Company. A
request to alter the amount of Compensation deferred shall be
submitted by a Participant in writing to the Company prior to
January 1 of the year that such modification is requested and shall
detail the reasons for the modification. If a modification of the
deferral amount is granted by the Company, the modification shall
be effective for all future years of participation; and all
benefits under the Plan shall be adjusted to reflect the new
deferred amount and also to reflect any costs incurred by the
Company to effect the adjusted benefits payable to the Participant.
4.4 Company Contribution. The Company shall, at the election
of a Participant, contribute an additional amount equal to 3.6%
(however, effective July 1, 1989, this amount shall be increased
to 4.2%) of the Participant's Compensation to the Plan, to be used
to provide benefits as specified in the Deferred Compensation
Agreement. If a Participant elects to have such amount contributed
under the Deferred Compensation Agreement, the Company shall not
make any matching contribution for such Participant under the
Company Savings and Supplemental Retirement Plan.
4.5 Continuation of Contribution. Should there be a
Termination of Employment by a Participant prior to having
completed the entire period of participation determined in
accordance with Sections 4.1 or 4.2, the Participant may elect,
subject to the approval of the Company, to continue contributing
to the Plan at the same rate in effect upon Termination of
Employment for such period of time, up to and including the entire
period of participation determined in accordance with Sections 4.1
or 4.2, as may be approved by the Company, in which case he or she
will continue to be a Participant and be bound by all the other
terms and conditions of the Plan. In any such case, the Company
may continue its contributions or may require the Participant to
contribute the amounts formerly contributed by the Company.
5. Payment of Deferred Amounts.
5.1 Normal Benefit. Unless a Participant is otherwise
receiving a benefit under this Plan, and except as provided in this
Section, the Company shall pay to a Participant in 180 equal
monthly installments commencing on the Participant's Normal
Retirement Date, as compensation earned for services rendered prior
to such date, the Normal Benefit amount specified in the Deferred
Compensation Agreement (the "Normal Benefit"). If a Participant
is employed by the Company after attaining age 65, payment of the
Normal Benefit shall commence on the first day of the month
following the Participant's Termination of Employment.
5.2 Payment Upon Death After Normal Retirement. If a
Participant entitled to the Normal Benefit dies after his or her
Normal Retirement Date, his or her beneficiary shall receive any
Normal Benefit payments that would have been paid to the
Participant. In lieu of the monthly Normal Benefit payments, upon
the request of the Participant's beneficiary, the Company may, in
its sole discretion, make an actuarially determined equivalent
lump-sum payment to the Participant's beneficiary.
5.3 Early Benefit. If a Participant terminates employment
on an Early Retirement Date, the Company shall pay to the
Participant, in 180 equal monthly installments commencing on the
first day of the month coincident with or next following the Early
Retirement Date, as compensation earned for services rendered prior
to such time, the Early Benefit amount specified in the Deferred
Compensation Agreement corresponding to the Participant's age on
his or her Early Retirement Date or an amount actuarially
determined if a Participant's Early Benefit is not specified for
that age (the "Early Benefit"). Subject to approval by the
Company, a Participant may elect to defer commencement of payment
of the Early Benefit. This election shall be in writing and
submitted to the Company prior to January 1 of the year of the
Participant's Early Retirement Date, and at least 30 days prior to
the Participant's Early Retirement Date. If a Participant makes
such an election, the Company shall pay the Participant in 180
equal monthly installments the Early Benefit specified in the
Deferred Compensation Agreement corresponding to the Participant's
age on the date to which the deferral has been made or an amount
actuarially determined if a Participant's Early Benefit is not
specified for that age -- or if a Participant elects to defer
payment of such benefit past the first day of month after attaining
age 65, the Normal Benefit. If a Participant dies before receiving
180 monthly Early Benefit payments, his or her beneficiary shall
receive any unpaid Early Benefits that would have been paid to the
Participant. In lieu of the monthly Early Benefit payments, upon
the request of the Participant's beneficiary, the Company may, in
its sole discretion, make an actuarially determined equivalent
lump-sum payment to the Participant's beneficiary.
A Participant who terminates employment prior to
attaining age 55, but who has completed ten (10) Years of Service,
may elect, subject to approval by the Company, to commence
receiving an Early Benefit at any time between ages 55 and 65, in
accordance with the provisions of this Section. This election
shall be in writing and submitted to the company prior to the end
of the calendar year preceding the year in which the Participant
elects to commence receiving the Early Benefit.
The provisions of this Section 5.3 shall apply to a
Participant who is continuing to make contributions pursuant to
Section 4.5, except that such Participant shall be deemed for this
purpose only to have terminated employment upon the expiration of
the period of continued participation as determined in accordance
with Section 4.5.
Notwithstanding any provision in this Plan to the
contrary, an Executive Officer or Beneficiary may request at any
time a single lump-sum payment of his or her benefit described
under the Plan. This request must be made in writing to the
Company. The lump-sum payment shall be made within 30 days of the
date on which the Company received the request for the
distribution. The amount of the payment shall be equal to (i) the
actuarial equivalent of the benefit described under Sections 5.1,
5.2, or 5.3 as determined by the same actuarial adjustment used
under the Salaried Plan with respect to the determination of the
amount payable as a lump-sum distribution, using the assumptions
used for purposes of calculating such present values under the
Salaried Plan and 120% of the applicable PBGC interest rate (the
"Plan Benefit"), and reduced by (ii) an amount equal to 10% of the
Plan Benefit. This lump-sum payment shall be subject to
withholding of federal, state, and other taxes to the extent
applicable. If a request is made under this provision, the
Participant shall not be eligible to participate in any
nonqualified deferred compensation plan maintained by the Company,
including this Plan, for a period of 12 months after such request
is made. In addition, in such event any deferred compensation
agreement pursuant to any nonqualified deferred compensation plan
of the Company shall not be effective with respect to compensation
payable to the Participant during this 12-month period.
5.4 Disability Benefit. If a Participant terminates
employment with the Company prior to attaining age 65 due to a
Disability, the Company shall pay the Participant in monthly
installments commencing on the first day of the seventh con-
secutive month following the Participant's Disability, the
Disability Benefit specified in the Deferred Compensation Agreement
until the Participant attains his or her Normal Retirement Date or
ceases to be totally and continuously disabled (the "Disability
Benefit"). After a Participant who is receiving a Disability
Benefit attains his or her Normal Retirement Date, he shall be
entitled to the Normal Benefit. If a Participant dies while
receiving a Disability Benefit, the Participant's beneficiary shall
receive the Survivor's Benefit pursuant to Section 5.6.
5.5 Termination Benefit. Except as provided in Sections 5.3,
5.4, and 5.6, upon a Participant's Termination of Employment prior
to completing one (1) year of participation in the Plan, the
Company shall pay to a Participant, as Compensation earned for
services rendered, a lump-sum amount equal to: (i) the amount of
Compensation deferred pursuant to the Participant's Deferred
Compensation Agreement, plus interest on the amount deferred at the
Bank of America prime interest rate as of the first business day
of that calendar year, compounded annually from the dates of the
deferrals; and (ii) any Company contribution credited on behalf of
the Participant if the Participant is fully vested in the Company
Savings and Supplemental Retirement Plan, plus interest at the Bank
of America prime interest rate as of the first business day of that
calendar year, compounded annually from the dates of contribution.
Such payment shall be made within sixty days following Termination
of Employment.
If Termination of Employment occurs after one (1) year
of participation in the Plan, the benefits provided in
Sections 5.1, 5.2, 5.3, and 5.7 shall be multiplied by a percentage
corresponding to the years of participation in the Plan, based on
the following schedule:
Years of Participation Percentage
1 but less than 2 75
2 but less than 3 85
3 but less than 4 93
4 and Over 100
5.6 Survivor's Benefit. If a Participant dies while
employed by the Company, or after Termination of Employment if
receiving a Disability Benefit, or if eligible for (but not yet
receiving) an Early Benefit or Normal Benefit, the Company shall
pay to the Participant's beneficiary, in equal monthly
installments commencing on the first day of the month after the
Participant's death, the Survivor's Benefit specified in the
Deferred Compensation Agreement until the Participant would have
attained age 65; however, such payments shall continue in any
event for at least 180 months.
5.7 Proportionate Benefit. All benefits payable under this
Article 5 shall be proportionately adjusted by a fraction, the
numerator of which is the actual dollar amount deferred by a
Participant and the denominator of which is the product of the
Stated Deferral specified in the Deferred Compensation Agreement
multiplied by four. For the purpose of determining the benefit
payable under Sections 5.4 or 5.6, in the event of Disability, or
death prior to January 1, 1987, the denominator of the above-
referenced fraction shall be the product of the Stated Deferral
specified in the Deferred Compensation Agreement multiplied by
the actual years (and fractions thereof) of deferral.
5.8 Recipients of Payments; Designation of Beneficiary.
All payments to be made by the Company shall be made to the
Participant, if living. In the event of a Participant's death
prior to the receipt of all benefit payments, all subsequent
payments to be made under the Plan shall be to the beneficiary or
beneficiaries of the Participant. The Participant shall
designate a beneficiary by filing a written notice of such
designation with the Company in such form as the Company may
prescribe. If no designation shall be in effect at the time when
any benefits payable under this Plan shall become due, the
beneficiary shall be the spouse of the Participant, or if no
spouse is then living, the representatives of the Participant's
estate.
5.9 Deferred Compensation and Benefits Trust. The Company
is establishing a Deferred Compensation and Benefits Trust
("Trust"), and the Company shall comply with the terms of the
Trust. Upon the occurrence of any Potential Change in Control of
the Company, the Company shall transfer to the Trust an amount of
cash, marketable securities, or other property acceptable to the
trustee(s) equal in value to 105 percent of the amount necessary,
on an actuarial basis and calculated in accordance with the terms
of the Trust, to pay the Company's obligations under this Agree-
ment (the "Funding Amount"). The cash, marketable securities,
and other property so transferred shall be held, managed, and
disbursed by the trustee(s) subject to and in accordance with the
terms of the Trust. In addition, from time to time the Company
shall make any and all additional transfers of cash, marketable
securities, or other property acceptable to the trustee(s) as may
be necessary in order to maintain the Funding Amount with respect
to this Plan.
6. Miscellaneous.
6.1 Assignability. A Participant's rights and interests
under the Plan may not be assigned or transferred except, in the
event of the Participant's death, to his or her designated
beneficiary, or in the absence of a designation, by will or to
his or her legal representative.
6.2 Employment Not Guaranteed by Plan. Neither this Plan
nor any action taken hereunder shall be construed as giving a
Participant the right to be retained as an Executive Officer or
as an employee of the Company for any period.
6.3 Taxes. The Company shall deduct from all payments made
hereunder all applicable Federal or state taxes required by law
to be withheld from such payments.
6.4 Construction. The Plan shall be construed according to
the laws of the State of Idaho.
6.5 Form of Communication. Any election, application,
claim, notice or other communication required or permitted to be
made by a Participant to the Company shall be made in writing and
in such form as the Company shall prescribe. Such communication
shall be effective upon mailing, if sent by first-class mail,
postage prepaid, and addressed to the Company's office at One
Jefferson Square, Boise, Idaho 83728.
7. No Reduction in Pension Benefit. To compensate a
Participant for any reduction in pension benefits under the
Pension Plan which may result from a Participant's deferring
Compensation under this Plan, the Company shall pay to the
Participant an amount equal to the reduction in pension benefits
in the same manner and at the same time as such reduced benefits
would have been paid under the Pension Plan.
8. Amendment and Termination. The Board of Directors may, at
any time, amend the Plan, provided that the amendment shall not
adversely affect any right or benefit of a Participant under the
Plan without the prior consent of a Participant.
EXECUTIVE OFFICER SEVERANCE PAY POLICY
(As Amended Through December 11, 1992)
The company recognizes that it is usually difficult for executive
officers whose employment is terminated involuntarily to obtain a
position comparable to the one he or she has with the company.
In view of this, any executive officer who is terminated involun-
tarily, except if terminated for disciplinary reasons (as that
term is described in Corporate Policy 10.2), will be entitled to
receive severance pay equal to one year's base salary. Mandatory
retirement pursuant to the company's mandatory retirement policy
will not be deemed involuntary termination of employment for
purposes of severance pay or any other benefits.
The company, at its sole discretion, may elect to make the
severance payment in equal payments over a 12-month period or in
a lump sum. The company may also, at its sole discretion,
continue certain group insurance coverage on behalf of the
terminated executive officer for up to 12 months following the
date of termination to the extent consistent with Corporate
Policy 10.2.
The company's Executive Officer Mandatory Retirement Policy and
Corporate Policy 10.2 will govern all other aspects of the
termination of employment of executive officers.
BOISE CASCADE CORPORATION
SUPPLEMENTAL EARLY RETIREMENT PLAN FOR EXECUTIVE OFFICERS
(As Amended Through July 26, 1988)
BOISE CASCADE CORPORATION
SUPPLEMENTAL EARLY RETIREMENT PLAN FOR EXECUTIVE OFFICERS
ARTICLE I: PURPOSE
The purpose of this Supplemental Plan is to facilitate the
orderly succession of Executive Officers with continuity of
management by providing additional Early Retirement Benefits for
the Executive Officers.
ARTICLE II: DEFINITIONS AND CONSTRUCTION
2.1 Definitions: The following words and phrases shall have
the meaning set forth below, unless the context clearly indicates
to the contrary:
(a) "Board of Directors" shall mean the Board of
Directors of Boise Cascade Corporation.
(b) "Change in Control" shall mean a Change in Control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or
any successor provisions, whether or not the Company is then
subject to such reporting requirement; provided that, without
limitation, such a Change in Control shall be deemed to have
occurred if (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the
Company or an employee benefit plan maintained by the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board, including for this purpose any new
director whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of the period, cease for any reason to constitute a majority
thereof.
(c) "Committee" shall mean the Retirement Committee of
the Company appointed by the Board of Directors, which in addition
to its other duties and responsibilities, shall have the duties and
responsibilities set out in Article V of this Supplemental Plan.
(d) "Company" shall mean Boise Cascade Corporation, a
corporation organized and existing under the laws of the State of
Delaware, or its successor or successors.
(e) "Competitor" shall mean any business, foreign or
domestic, which is engaged, at any time relevant to the provisions
of this Supplemental Plan, in the manufacture, sale or distribution
of products, or in the providing of services, in competition with
products manufactured, sold or distributed, or services provided,
by the Company.
(f) "Deferred Compensation and Benefits Trust" shall
mean an irrevocable trust or trusts established or to be established
by the Company with an independent trustee or trustees for the
benefit of persons entitled to receive payments or benefits here-
under, the assets of which nevertheless will be subject to claims of
the Company's creditors in the event of bankruptcy or insolvency and
with respect to which the Company shall have received a ruling from
the Internal Revenue Service that the trust is a "grantor trust"
for federal income tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(A) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(B) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(C) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(D) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
(g) "Early Retirement Date" shall mean the first day of
the month coincident with or next following an Executive Officer's
fifty-fifth birthday. If an Executive Officer does not actually
end employment with the Company as of the date indicated in the
preceding sentence but does terminate at a later date which is
before his Normal Retirement Date, the term "Early Retirement Date"
shall refer, if the context so indicates, to the date of actual
retirement.
(h) "Early Retirement Benefits" shall mean the benefits
that will be paid to an Executive Officer who retires from the
Company under the provisions of this Supplemental Plan.
(i) "Effective Date" shall mean the date this
Supplemental Plan becomes effective as established by the Board of
Directors.
(j) "Involuntary Retirement" shall mean the termination
of employment of an Executive Officer by action of the Company or
the Board of Directors prior to an Executive Officer's Normal
Retirement Date but after the Executive Officer has completed ten
or more years of service and has reached the age of at least fifty-
five years.
(k) "Executive Officer" shall mean any person employed
by the Company as an executive officer as that term is defined by
the Securities and Exchange Commission.
(l) "Normal Retirement Date" shall mean the first day
of the month coincident with or next following an Executive
Officer's sixty-fifth birthday.
(m) "Potential Change in Control" shall mean the
occurrence of any of the following events: (A) the Company enters
into an agreement, the consummation of which would result in the
occurrence of a Change in Control of the Company, (B) any person
(including the Company) publicly announces an intention to take or
to consider taking actions which if consummated would constitute
a Change in Control of the Company; (C) any person becomes the
beneficial owner, directly or indirectly, of securities of the
Company representing 9.5% or more of the combined voting power of
the Company's then outstanding securities; or (D) the Board of
Directors adopts a resolution to the effect that a Potential Change
in Control of the Company for purposes of this Agreement has
occurred.
(n) "Salaried Plan" shall mean the Boise Cascade
Corporation Pension Plan for Salaried Employees and the Boise
Cascade Corporation Excess Benefit Plan as they currently are in
effect and as amended from time to time after the Effective Date
of this Supplemental Plan.
(o) "Supplemental Plan" shall mean the Boise Cascade
Corporation Supplemental Early Retirement Plan for Executive
Officers as set forth herein and as amended from time to time after
the Effective Date.
2.2 Construction: Except to the extent pre-empted by federal
law, this Supplemental Plan shall be construed according to the
laws of the State of Idaho. The masculine gender, where appearing
in this Supplemental Plan, shall be deemed to include the feminine
gender. The words "hereof," "herein," "hereunder" and other
similar compounds of the word "here" shall mean and refer to the
entire Supplemental Plan, not to any particular provision or
section.
ARTICLE III: ELIGIBILITY FOR EARLY RETIREMENT BENEFITS
3.1 Eligibility: An Executive Officer with ten or more years
of service with the Company, as defined in the Salaried Plan, whose
employment with the Company is terminated through Involuntary
Retirement, or who elects early retirement on or after his Early
Retirement Date but before his Normal Retirement Date, shall
receive the Early Retirement Benefits as set forth in Article IV
herein; provided, however, that in the event an Executive Officer's
employment is terminated for "cause," as that term is defined by
the severance policy of the Company, the Executive Officer shall
not be eligible to receive any benefits under this Supplemental
Plan.
3.2 Notice: If an Executive Officer is required to take
Involuntary Retirement under this Supplemental Plan, he shall be
given a written notice thereof and shall be advised of the Early
Retirement Benefits to be paid hereunder. Additionally, any
eligible Executive Officer desiring to retire under the terms of
this Supplemental Plan on or after his Early Retirement Date shall
notify the Company of his decision, in writing, at least 30 days
in advance of his Early Retirement Date.
ARTICLE IV: EARLY RETIREMENT BENEFITS
4.1 Early Retirement Benefits: An Executive Officer who is
eligible to retire on his Early Retirement Date but before his
Normal Retirement Date and who elects to retire, or who is required
to take Involuntary Retirement by the Company during that period,
shall receive the Early Retirement Benefits as set forth in
Section 4.2 herein.
4.2 Computation of Early Retirement Benefits: The Early
Retirement Benefits payable to any Executive Officer who is covered
by the provisions of Section 4.1 hereof shall be calculated as
follows:
Until age 65, the Early Retirement Benefits payable here-
under shall be an amount equal to the Basic Pension Benefit that
would have been payable at age 65 under the Salaried Plan (before
reduction to reflect any retirement option selected by the
Executive Officer pursuant to Article VII of the Salaried Plan)
without reduction on account of early retirement.
Notwithstanding the foregoing, an Executive Officer may
make an irrevocable written election at any time up to and includ-
ing Early Retirement to receive, as an alternative to the amounts
described above, Early Retirement Benefits commencing upon Early
Retirement equal to the difference between (1) the amount of the
Basic Pension Benefit, as defined in the Salaried Plan (before the
reduction to reflect any retirement option selected by the Execu-
tive Officer pursuant to Article VII of the Salaried Plan), payable
to the Executive Officer as of his Early Retirement Date, without
reduction for early retirement under the Salaried Plan, and (2) the
amount of the Basic Pension Benefit, as defined in the Salaried
Plan (before the reduction to reflect any retirement option se-
lected by the Executive Officer pursuant to Article VII of the
Salaried Plan), payable to the Executive Officer as of his Early
Retirement Date, after application of the reduction factors as set
forth in Article VI of the Salaried Plan due to the Executive Offi-
cer's election to retire on or after his Early Retirement Date.
If the calculations made pursuant to this Section 4.2
produce no Early Retirement Benefits for an Executive Officer, then
this Supplemental Plan shall not apply to that Executive Officer.
The Company will be secondarily liable for the payment
of any amounts that are payable from the Salaried Plan.
4.3 Manner and Adjustment of Payment: The Early Retirement
Benefits, as computed in Section 4.2 hereof and as provided
hereunder, shall, except as provided in Section 4.6 hereof, become
an unfunded general obligation of the Company and shall be paid to
the Executive Officer in monthly installments as a supplemental
retirement benefit. The Early Retirement Benefits shall be paid
in the same form as the Executive Officer's benefits selected under
the Salaried Plan and shall be actuarially reduced to reflect the
optional form of payment, if any, selected by the Executive Officer
under Article VII of the Salaried Plan.
4.4 Executive Officer Not to Compete: If an Executive
Officer who is receiving Early Retirement Benefits hereunder and
who has not yet reached his Normal Retirement Date provides
significant services as an employee or consultant, or otherwise
renders services of a significant nature for remuneration, to a
Competitor, the Company may, in its discretion, cancel all further
Early Retirement Benefits due to be payable to the Executive
Officer hereunder; and after the date of cancellation, the
Executive Officer shall forfeit all future benefits under this
Supplemental Plan. The Company may, in its discretion, consent to
an Executive Officer's rendering services to a Competitor; and if
it does so consent, it may place whatever limitations it considers
appropriate on the consent. If the Executive Officer breaches the
terms of the consent, the Company may, in its discretion, cancel
all further Early Retirement Benefits due to be payable to the
Executive Officer hereunder; and after the date of cancellation,
the Executive Officer shall forfeit all future benefits under this
Supplemental Plan.
4.5 Supplemental Survivor's Retirement Benefit: In the event
an Executive Officer eligible for an Early Retirement supplement
under the terms of this Supplemental Plan terminates employment by
reason of death, his spouse, if any, shall be eligible to receive
a supplemental Survivor's Retirement Benefit under this Plan. The
amount of the supplemental Survivor's Retirement Benefit shall be
equal to the difference between the Survivor's Retirement Benefit
payable under the terms of the Salaried Plan and the amount to
which the spouse would be entitled under the terms of both this
Supplemental Plan and such Salaried Plan if the employee had
elected Early Retirement on the date of his death and had elected
to receive benefits in the form of a 50% Joint and Survivor Annuity
with the spouse as joint annuitant. A surviving spouse shall not
be eligible for a supplemental survivor's benefit under this Plan
unless the spouse is eligible for a survivor's benefit under the
terms of the Salaried Plan.
4.6 Deferred Compensation and Benefits Trust: The Company
is establishing a Deferred Compensation and Benefits Trust
("Trust), and shall comply with the terms of the Trust. Upon the
occurrence of any Potential Change in Control of the Company, the
Company shall transfer to the Trust an amount of cash, marketable
securities, or other property acceptable to the trustee(s) equal
in value to 105 percent of the amount necessary, on an actuarial
basis and calculated in accordance with the terms of the Trust, to
pay the Company's obligations under this Agreement (the "Funding
Amount"). The cash, marketable securities, and other property so
transferred shall be held, managed, and disbursed by the trustee(s)
subject to and in accordance with the terms of the Trust. In
addition, from time to time the Company shall make any and all
additional transfers of cash, marketable securities, or other
property acceptable to the trustee(s) as may be necessary in order
to maintain the Funding Amount with respect to this Plan. For
purposes of calculating the amount required to be transferred by
the Company to the Trust, any Executive Officer whose employment
has not been previously terminated shall be deemed to have elected
to retire upon the later of the second anniversary of the Potential
Change in Control or the date as of which that calculation is being
made and not to have elected the alternative Early Retirement
Benefits under Section 4.2 hereof.
ARTICLE V: DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
5.1 Committee's Powers: Except as otherwise provided in the
Supplemental Plan with regard to the powers of the Company, the
Committee shall have control of administration of the Plan, with
all powers necessary to enable it to carry out its duties
hereunder. The Committee shall have the right to inspect the
records of the Company whenever such inspection may be reasonably
necessary in order to determine any fact pertinent to the
performance of the duties of the Committee. The Committee,
however, shall not be required to make such inspection but may, in
good faith, rely on any statement of the Company or any of its
officers or employees.
5.2 Copy of Supplemental Plan to Be Furnished: The Committee
shall furnish a copy of this Supplemental Plan to all present and
future Executive Officers of the Company who are or become entitled
to be covered under this Supplemental Plan as eligible Executive
Officers.
5.3 Records: The Committee shall keep a complete record of
all its proceedings and all data necessary for administration of
the Supplemental Plan.
5.4 Appeal Procedure: If any Executive Officer feels
aggrieved by any decision of the Committee concerning his benefits
hereunder, the Committee shall provide, upon written request of the
Executive Officer, specific written reasons for the decision. The
Committee shall afford an Executive Officer whose claim for
benefits has been denied 60 days from the date notice of denial is
mailed in which to request a hearing before the Committee. If an
Executive Officer requests a hearing, the Committee shall review
the written comments, oral statements and any other evidence
presented on behalf of the Executive Officer at the hearing and
render its decision within 60 days of such hearing. If the
Executive Officer still feels aggrieved by the Committee's decision
concerning his benefits hereunder, the Executive Officer can
request the Human Resources Committee of the Board of Directors to
review his case. The request for hearing must be made in writing
within 60 days from the date of the Committee's decision. The
Human Resources Committee of the Board of Directors shall review
said decision within four months after receiving the Executive
Officer's request for review and shall, within a reasonable time
thereafter, render a decision respecting the Executive Officer's
claim, which shall be final, binding and conclusive.
If any Executive Officer feels aggrieved by any decision
of the Company concerning his rights hereunder, the Company shall
provide, upon the written request of the Executive Officer,
specific written reasons for its decision. If the Executive
Officer is not satisfied with the Company's decision with respect
to his rights, the Executive Officer can request the Human
Resources Committee of the Board of Directors to review his case.
The Executive Officer's request must be made within 60 days of the
mailing of the Company's written decision, and the Human Resources
Committee of the Board of Directors will handle the review in the
same manner as set forth above with respect to appeals from Com-
mittee decisions.
ARTICLE VI: AMENDMENT AND TERMINATION
6.1 Amendment: To provide for contingencies which may
require the clarification, modification or amendment of this
Supplemental Plan, the Company reserves the right to amend this
Supplemental Plan at any time; provided, however, no amendment
shall affect any benefits previously granted hereunder to any
Executive Officer who elected or was required, pursuant to this
Supplemental Plan, to retire early. Further, prior to any
amendment of the Supplemental Plan, the Company shall give at least
90 days' prior written notice to any Executive Officer, who at the
time of the amendment will be eligible to receive Early Retirement
Benefits hereunder, of the proposed amendment and his eligibility
to elect early retirement prior to the effective date of the
amendment.
6.2 Termination: It is the present intention of the Company
to maintain this Supplemental Plan indefinitely. Nonetheless, the
Company reserves the right, at any time, to terminate the
Supplemental Plan; provided, however, no termination shall affect
any benefits previously granted hereunder to an Executive Officer
who elected or was required, pursuant to this Supplemental Plan,
to retire early; and provided further, that prior to any
termination, the Company shall give at least 90 days' prior written
notice to any Executive Officer, who at the time of the termination
will be eligible to receive Early Retirement Benefits hereunder,
of the proposed termination and of his option to elect, prior to
the termination, to take early retirement under this Supplemental
Plan prior to the effective date of the termination.
ARTICLE VII: MISCELLANEOUS
7.1 Benefits Not Transferable or Assignable: None of the
benefits, payments, proceeds, claims or rights of any Executive
Officer hereunder shall be subject to the claim of any creditor of
the Executive Officer, other than the Company as permitted in
Section 7.2 hereof; nor shall any Executive Officer have any right
to transfer, assign, encumber or otherwise alienate any of the
benefits or proceeds which he may expect to receive, contingently
or otherwise, under this Supplemental Plan.
7.2 Setoff: The Company shall have the right to withhold and
deduct from payments due hereunder to any Executive Officer any
amounts owed by the Executive Officer to the Company which were
incurred prior to the Executive Officer's Early Retirement Date.
Supplemental Retirement Policy
It is the policy of Boise Cascade Corporation to provide
retirement benefits to qualified employees in accordance with the
terms and conditions of the company's retirement plans. In order
to ensure that employees of Boise Cascade Corporation receive
retirement benefits earned during the course of their employment
with the company, the company will provide benefits in accordance
with the following:
1. The amount by which retirement benefits of any employee
under the terms of the Boise Cascade Corporation Pension
Plan for Salaried Employees (the Salaried Plan) are reduced
by reason of the limitations of Section 415 of the Internal
Revenue Code or by any other law requiring reduction in
benefits otherwise payable from the Salaried Plan shall be
an additional unfunded retirement benefit, payable from the
general assets of the company, at the time and in the same
form as pension benefits are paid to or on behalf of the
employee under the terms of the Salaried Plan.
2. The amount by which retirement benefits of any employee are
reduced under the terms of the Salaried Plan as a result of
compensation deferred under the company's 1982 Executive
Officer Deferred Compensation Plan, 1986 Executive Officer
Deferred Compensation Plan, Key Executive Performance Plan,
1987 Key Executive Deferred Compensation Plan, or any
similar plan or program adopted by the company providing for
deferral of compensation earned by salaried employees, shall
be an additional unfunded retirement benefit, payable from
the general assets of the company at the time and in the
same form as pension benefits are paid to or on behalf of
the employee under the terms of the Salaried Plan.
3. If an employee is also eligible for benefits under the Sup-
plemental Early Retirement Plan for Executive Officers (the
SERP), supplemental benefits under this policy shall also be
unreduced on account of early retirement.
4. Upon a potential change in control of the company (as
defined in the SERP), the company shall calculate the
present value of the amount payable under this policy and
shall transfer a sum equal to 105% of this amount to the
trustee of the company's Deferred Compensation and Benefits
Trust. The sum transferred may be in cash, marketable
securities, or other property, and will be held and dis-
bursed by the trustee subject to and in accordance with the
terms of the Trust. For purposes of calculating the sum to
be transferred to the trustee, any employee whose employment
has not been terminated prior to a potential change in
control and who is entitled to benefits under this policy
shall be deemed to have terminated his or her employment
with the company upon the later of (i) the second
anniversary of the date of the potential change in control
or (ii) the date as of which the calculation is being made.
BOISE CASCADE CORPORATION
1987 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1993)
BOISE CASCADE CORPORATION
1987 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
1. Purpose of the Plan. The purpose of the Boise Cascade
Corporation 1987 Board of Directors Deferred Compensation Plan (the
"Plan") is to further the growth and development of Boise Cascade
Corporation (the "Company") by providing directors of the Company
the opportunity to defer a portion or all of their compensation and
thereby encourage their productive efforts.
2. Definitions.
2.1 Change in Control. A Change in Control of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any successor
provisions, whether or not the Company is then subject to such
reporting requirement; provided that, without limitation, such a
Change in Control shall be deemed to have occurred if (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more
of the combined voting power of the Company's then outstanding
securities; or (B) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election
or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period,
cease for any reason to constitute a majority thereof.
2.2 Compensation. A Participant's fees for services rendered
by a Participant as a director of the Company during a calendar
year. Compensation shall not include any amounts paid by the
Company to a Participant that are not strictly in consideration for
personal services, such as expense reimbursements.
2.3 Deferred Compensation Agreement. A written agreement
between a Participant and the Company, whereby a Participant agrees
to defer a portion of his or her Compensation pursuant to the
provisions of the Plan, and the Company agrees to make benefit
payments in accordance with the provisions of the Plan.
2.4 Deferred Compensation and Benefits Trust. An irrevocable
trust or trusts established or to be established by the Company
with an independent trustee or trustees for the benefit of persons
entitled to receive payments or benefits hereunder, the assets of
which nevertheless will be subject to claims of the Company's
creditors in the event of bankruptcy or insolvency and with respect
to which the Company shall have received a ruling from the Internal
Revenue Service that the trust is a "grantor trust" for federal
income tax purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Plan, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
2.5 Director. A member of the Board of Directors of Boise
Cascade Corporation as elected by the shareholders.
2.6 Early Benefit Commencement Date. The date of a
Participant's Termination as a Director for reasons other than
death, prior to attainment of age 70.
2.7 Minimum Death Benefit. The Minimum Death Benefit shall
be equal to the sum of the following:
(a) The Minimum Death Benefit to which a Participant
is entitled for the deferrals and corresponding
Company Contributions made to the Plan for the
period January 1, 1988, through December 31,
1991, which shall be an amount equal to 1.5 times
the Participant's total expected deferrals, up
to a maximum of $500,000.
and
(b) The Minimum Death Benefit to which a Participant
is entitled for the deferrals and corresponding
Company Contributions to the Plan for the period
January 1, 1992, through December 31, 1995, which
shall be an amount equal to 1.5 times the
Participant's total expected deferrals, up to a
maximum of $500,000.
The amount of the Minimum Death Benefit payable under this
Section 2.7 shall be subject to adjustment in the event there
is an alteration of the amount to be deferred as provided in
Section 4.3.
2.8 Moody's Times 130%. The Company shall accumulate the
Participant's deferred compensation with monthly interest
equivalent to an annualized rate of 130% times Moody's
Composite Average of Yields on Corporate Bonds for the
preceding calendar month as determined from Moody's Bond
Record published by Moody's Investor's Service, Inc. (or any
successor thereto), or, if such monthly yield is no longer
published, a substantially similar average selected by the
Board.
2.9 Normal Retirement Date. The first day of the month
coincident with or next following a Participant's 70th
birthday.
2.10 Participant. A Director who has entered into a
written Deferred Compensation Agreement with the Company in
accordance with the provisions of the Plan.
2.11 Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if
(A) the Company enters into an agreement, the consummation of
which would result in the occurrence of a Change in Control
of the Company, (B) any person (including the Company)
publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in
Control of the Company; (C) any person becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of the
Company's then outstanding securities; or (D) the Board of
Directors adopts a resolution to the effect that a Potential
Change in Control of the Company for purposes of this Agree-
ment has occurred.
2.12 Termination. The Participant's ceasing to be a
Director of the Company for any reason whatsoever, whether
voluntarily or involuntarily, including by reason of early
retirement, normal retirement or death.
3. Administration and Interpretation of the Plan. The Company
shall administer and interpret the Plan, and interpretation
by the Company shall be final and binding upon a Participant.
The Company may adopt rules and regulations relating to the
Plan as it may deem necessary or advisable for the administra-
tion of the Plan. The Company may also delegate
administrative responsibilities to advisors or other persons
who are not employees of the Company and may rely upon
information or opinions of legal counsel or experts selected
to render advice with respect to the Plan.
4. Participant Compensation Deferral.
4.1 Compensation Deferral. Prior to January 1, 1988, a
Director who wishes to participate in the Plan shall execute
a written Deferred Compensation Agreement, in the format
provided by the Company, whereby the Director elects to defer
a portion of his or her Compensation otherwise earned and
payable on or after January 1, 1988, and through the four-
year period ending December 31, 1991. Prior to January 1,
1992, a Director who wishes to participate in the Plan for the
period from January 1, 1992, through December 31, 1995, shall
execute a written Deferred Compensation Agreement covering
such period. The amount of annual Compensation to be deferred
shall be specified in the Deferred Compensation Agreement.
The period during which Compensation is deferred shall be the
calendar years specified in the Deferred Compensation
Agreement immediately following 1987. The amount deferred
shall result in corresponding reductions in the Compensation
payable to a Participant.
4.2 Participation After January 1, 1988. A Director who
first attains such status subsequent to January 1, 1988, and
prior to December 31, 1991, shall be entitled to participate
in the Plan until December 31, 1991, and shall be bound by
all the other terms and conditions of the Plan. A Director
who first attains such status subsequent to January 1, 1992,
and prior to December 31, 1995, shall be entitled to
participate in the Plan until December 31, 1995, and shall be
bound by all the other terms and conditions of the Plan. A
Director shall complete a Deferred Compensation Agreement
within 30 days of becoming eligible and being notified of the
terms and conditions of the Plan. Contributions to the Plan
shall commence the first of the month following the completion
of the Deferred Compensation Agreement. The Company shall
notify a new Participant promptly upon becoming eligible.
4.3 Alteration of Compensation Deferral. The amount of
Compensation to be deferred, once selected by a Participant,
shall be irrevocable except upon written approval by the
Company. A request to alter the amount of Compensation
deferred must be submitted by a Participant in writing to the
Company prior to January 1 of the year for which such
modification is requested and shall detail the reasons for
the modification. If a modification of the deferral amount
is granted by the Company, the modification shall affect only
future years of participation; and all benefits under the Plan
shall be adjusted to reflect the new deferred amount and also
to reflect any costs incurred by the Company to effect the
adjusted benefits payable to the Participant.
5. Payment of Deferred Amounts.
5.1 Participant Account. The Company shall maintain for
each Participant an account by accumulating his or her
deferred compensation each month, the account shall be updated
with a monthly rate of interest equal to Moody's Times 130%.
5.2 Benefits. Upon Termination for reasons other than
disability, after completing 5 Years of Participation, or
after attaining age 55 with 10 or more Years of Service, a
Participant shall be paid his or her account in a lump sum or
in equal quarterly installments calculated to distribute his
or her account plus accrued interest for a period of not more
than 15 years. Payments shall commence on the date and shall
be made in the manner elected by the Participant in the
Deferred Compensation Agreement. Unpaid balances under the
installment election continue to earn interest at the rate of
Moody's Times 130%. If a Participant does not make an
election, his or her account shall be paid out in quarterly
installments over 15 years beginning January 1 of the year
following Termination. The Participant may request other
forms of payout which are subject to approval by the Company,
pursuant to Section 5.3.
5.3 Change of Election. A Participant may request a
change in the payout election anytime prior to January 1 of
the year benefits are scheduled to be paid, provided that the
request is received by the Company at least 30 days prior to
the date benefits are scheduled to be paid. The changed
payout election must be one of the payout options in the
original deferral agreement. Such request must be in writing
and shall be approved or denied at the sole discretion of the
Company. No change will be permitted that would allow a
payment to be made earlier than originally elected in the
Deferred Compensation Agreement.
Notwithstanding any provision in this Plan to the
contrary, a Participant or Beneficiary may at any time request
a single lump-sum payment of the amount credited to an account
or accounts of the Participant under the Plan. The amount of
the payment shall be equal to (i) the Participant's
accumulated account balance under the Plan as of the payment
date, reduced by (ii) an amount equal to 10% of such
accumulated account balance. This lump-sum payment shall be
subject to withholding of federal, state, and other taxes to
the extent applicable. This request must be made in writing
to the Company. The lump-sum payment shall be made within 30
days of the date on which the Company received the request for
the distribution. If a request is made under this provision,
the Participant shall not be eligible to participate in any
nonqualified deferred compensation plan maintained by the
Company, including this Plan, for a period of 12 months after
such request is made. In addition, in such event any deferred
compensation agreement under any nonqualified deferred
compensation plan of the Company shall not be effective with
respect to Compensation payable to the Participant during this
12-month period.
5.4 Payment on Death After Benefits Commence. If a
Participant dies after his or her benefits have commenced and
prior to the distribution of his or her entire Participant
Account, his or her beneficiary shall receive any benefit
payments in accordance with the Deferred Compensation
Agreement.
5.5 Death Benefit. If a Participant should die prior to
the commencement of Plan distributions, the Company shall pay
his or her designated beneficiary or beneficiaries the greater
of the accumulated account balance or the Minimum Death
Benefit. Payments shall be made as specified in the Deferred
Compensation Agreement. The Participant Account shall be
updated with a monthly rate of interest of Moody's Times 130%.
5.6 Recipient of Payments; Designation of Beneficiary.
All payments to be made by the Company shall be made to the
Participant, if living. In the event of a Participant's death
prior to the receipt of all benefit payments, all subsequent
payments to be made under the Plan shall be to the beneficiary
or beneficiaries of the Participant. The Participant shall
designate a beneficiary by filing a written notice of such
designation with the Company in such form as the Company may
prescribe. If no designation shall be in effect at the time
when any benefits payable under this Plan shall become due,
the beneficiary shall be the spouse of the Participant, or if
no spouse is then living, the representatives of the
Participant's estate.
5.7 Reduction in Benefits. In connection with
participation in this Plan, the Company may require the
completion of health questionnaires and the taking of physical
examinations by Participants. Notwithstanding any other
provision of the Plan, in the event of a Participant's death
during the first two years of his or her participation in the
Plan, if his or her death is the result of suicide, or if a
Participant made any material misstatement or failed to make
a material disclosure of information in connection with his
or her application for participation in the Plan, then in lieu
of any other benefits payable under the Plan the Company shall
distribute to the Participant or his or her designated
beneficiary or beneficiaries a lump-sum payment of his or her
accumulated account balance and no Minimum Death Benefit shall
be payable. The Company at its sole discretion may extend to
a Participant or his or her beneficiary or beneficiaries other
benefits provided under the Plan.
6. Miscellaneous.
6.1 Assignability. A Participant's rights and interests
under the Plan may not be assigned or transferred except, in
the event of the Participant's death, to his or her designated
beneficiary, or in the absence of a designation, by will or
to his or her legal representative.
6.2 Taxes. The Company shall deduct from all payments
made hereunder all applicable federal or state taxes required
by law to be withheld from such payments.
6.3 Construction. The Plan shall be construed according
to the laws of the State of Idaho.
6.4 Form of Communication. Any election, application,
claim, notice or other communication required or permitted to
be made by a Participant to the Company shall be made in
writing and in such form as the Company shall prescribe. Such
communication shall be effective upon mailing, if sent by
first-class mail, postage prepaid, and addressed to the
Company's office at One Jefferson Square, Boise, Idaho 83728.
7. Amendment and Termination. The Board of Directors may, at
any time, amend the Plan, provided that the amendment shall
not adversely affect any right or benefit of a Participant
under the Plan without the prior consent of a Participant.
8. Unsecured General Creditor. Except as provided in
Section 9 hereof, participants and their beneficiaries, heirs,
successors and assigns shall have no legal or equitable
rights, interest or claims in any property or assets of the
Company. Such assets of the Company shall not be held under
any trust for the benefit of Participants, their
beneficiaries, heirs, successors, or assigns, or held in any
way as collateral security for the fulfilling of the
obligations of the Company under this Plan. Any and all
Company assets shall be, and remain, the general, unpledged,
unrestricted assets of the Company. The Company's obligation
under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future.
9. Deferred Compensation and Benefits Trust. The Company is
establishing a Deferred Compensation and Benefits Trust
("Trust"), and the Company shall comply with the terms of the
Trust. Upon the occurrence of any Potential Change in Control
of the Company, the Company shall transfer to the Trust an
amount of cash, marketable securities, or other property
acceptable to the trustee(s) equal in value to 105 percent of
the amount necessary, on an actuarial basis and calculated in
accordance with the terms of the Trust, to pay the Company's
obligations under this Agreement (the "Funding Amount"). The
cash, marketable securities, and other property so transferred
shall be held, managed, and disbursed by the trustee(s)
subject to and in accordance with the terms of the Trust. In
addition, from time to time the Company shall make any and all
additional transfers of cash, marketable securities, or other
property acceptable to the trustee(s) as may be necessary in
order to maintain the Funding Amount with respect to this
Plan.
BOISE CASCADE CORPORATION
1984 KEY EXECUTIVE STOCK OPTION PLAN
As Amended Through February 7, 1992
BOISE CASCADE CORPORATION
1984 KEY EXECUTIVE STOCK OPTION PLAN
1. Establishment and Purpose
1.1 Establishment. Boise Cascade Corporation, a Delaware
corporation, hereby establishes a Stock Option Plan for key
employees, which shall be known as the Boise Cascade Corporation
1984 KEY EXECUTIVE STOCK OPTION PLAN (the "Plan"). It is intended
that some of the options issued pursuant to the Plan may constitute
incentive stock options within the meaning of Section 422A of the
Internal Revenue Code, and the remainder of the options issued
pursuant to the Plan shall constitute nonstatutory options. The
Committee referred to in Section 2.1(c) of this Plan shall
determine which options are to be incentive stock options and which
are to be nonstatutory options and shall enter into option
agreements with Optionees accordingly.
1.2 Purpose. The purpose of this Plan is to attract, retain
and motivate key employees of the Company and to encourage stock
ownership by these employees by providing them with a means to
acquire a proprietary interest or to increase their proprietary
interest in the Company's success.
2. Definitions
2.1 Definitions. Whenever used in this Plan, the following
terms shall have the meanings set forth below:
(a) "Board" means the board of directors of the Company.
(b) "Code" means the Internal Revenue Code of 1954, as
amended.
(c) "Committee" means the Executive Compensation
Subcommittee of the Human Resources Committee of the Board of
Directors of the Company or any successor to the subcommittee.
(d) "Company" means Boise Cascade Corporation, a
Delaware corporation, as well as any subsidiary of which 50% or
more of the outstanding stock is owned by Boise Cascade
Corporation.
(e) "Date of Exercise" means the date the Company
receives written notice, by an Optionee, of the exercise of an
Option or Option and Stock Appreciation Right, pursuant to
subsection 8.1 of this Plan.
(f) "Employee" means a key employee (including an
officer of the Company), who is employed by the Company on a full-
time basis, who is compensated for such employment by a regular
salary and who, in the opinion of the Committee, is in a position
to contribute materially to its continued growth and development
and to its future financial success. The term "Employee" does not
include persons who are retained by the Company only as
consultants.
(g) "Fair Market Value" means the closing price of the
Stock as reported by the consolidated tape of the New York Stock
Exchange on a particular date, or if the Stock is not listed or
traded on the New York Stock Exchange, then the closing sales price
of the Stock on a national securities exchange on a particular
date, or if the Stock is not listed on a national securities
exchange, then the average of the closing bid and asking prices for
the Stock in the over-the-counter market for a particular date, or
if the Stock is not traded in the over-the-counter market, such
value as the Company in its discretion may determine, but in no
event greater than the then fair market value of the Stock for
federal income tax purposes. In the event that there are no Stock
transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were
Stock transactions.
(h) "Grant Price" means an amount not less than 100% of
the Fair Market Value of the Company's Stock on the date of an
Option's grant.
(i) "Option" means the right to purchase Stock of the
Company at the Grant Price for a specified duration. For purposes
of this Plan, an Option may be either (i) an "Incentive Stock
Option" within the meaning of Section 422A of the Code or (ii) a
"Nonstatutory Option."
(j) "Optionee" means an Employee who has been granted
an Option under this Plan.
(k) "Stock" means the common stock, $2.50 par value, of
the Company.
(l) "Stock Appreciation Right" means the right,
exercisable by the Optionee, to receive a cash payment from the
Company upon the exercise of an Option. The amount of this cash
payment and the conditions upon the exercise of the Stock
Appreciation Right shall be determined by the Committee pursuant
to subsection 6.2 and Section 7.
(m) "Tax Offset Bonus" means a cash payment which the
Company makes automatically upon the exercise of an Option equal
to a percentage (as determined by the Committee pursuant to
subsection 6.2 and Section 7) of the excess of the Fair Market
Value of the Stock on a date determined by the Committee over the
Grant Price of the Option, the purpose of which is to offset
partially the federal income tax incurred incident to exercising
a Nonstatutory Option.
(n) "Window Period" means the period described in
Rule 16b-3(e)(3)(iii) under the Securities Exchange Act of 1934.
2.2 Number. Except when otherwise indicated by the context,
the definition of any term in the Plan in the singular shall also
include the plural.
3. Participation
Participation in the Plan shall be determined by the
Committee. Any Employee at any one time and from time to time may
hold more than one Option or Stock Appreciation Right granted under
this Plan or under any other plan of the Company. No member of the
Committee may participate in the Plan.
4. Stock Subject to the Plan
4.1 Number. The total number of shares of Stock as to which
Options and Stock Appreciation Rights may be granted under the Plan
shall not exceed 7,500,000. These shares may consist, in whole or
in part, of authorized but unissued Stock or treasury Stock not
reserved for any other purpose.
4.2 Unused Stock. If any shares of Stock are subject to an
Option or Stock Appreciation Right which, for any reason, expires
or is terminated unexercised as to such shares, such Stock may
again be subjected to an Option or Stock Appreciation Right
pursuant to this Plan.
4.3 Adjustment in Capitalization. In the event of any change
in the outstanding shares of Stock occurring after ratification by
shareholders of this Plan, by reason of a Stock dividend or split,
recapitalization, reclassification, merger, consolidation,
combination or exchange of shares or other similar corporate
change, the aggregate number of shares of Stock under this Plan and
the number of shares of Stock subject to each outstanding Option
and the related Grant Price shall be appropriately adjusted by the
Committee, whose determination shall be conclusive, provided,
however, that fractional shares shall be rounded to the nearest
whole share. No adjustments shall be made in connection with the
issuance by the Company of any warrants, rights or Options to
acquire additional shares of Stock or of securities convertible
into Stock.
5. Duration of the Plan
The Plan shall remain in effect until all Stock subject to it
has been purchased pursuant to the exercise of the Options or Stock
Appreciation Rights granted under the Plan. Notwithstanding the
foregoing, no Options or Stock Appreciation Rights may be granted
pursuant to this Plan on or after the twentieth anniversary of the
Plan's effective date.
6. Options
6.1 Grant of Options. Subject to the provisions of
subsection 4.1 and Section 5, Options may be granted to Employees
at any time and from time to time as shall be determined by the
Committee. The Committee may request recommendations from the
chief executive officer of the Company. The Committee shall
determine whether an Option is to be an Incentive Stock Option
within the meaning of Section 422A of the Code or a Nonstatutory
Option. However, in no event shall any grant of an Incentive Stock
Option provide for the option to be or become exercisable in
amounts in excess of $100,000 per calendar year.
6.2 Option Agreement. As determined by the Committee on the
date of grant, each Option shall be evidenced by a Stock Option
agreement that specifies:
(i) Grant Price;
(ii) duration of the Option;
(iii) number of shares of Stock to which the Option pertains;
(iv) vesting requirements, if any;
(v) whether the Option is an Incentive Stock Option or a
Nonstatutory Option;
(vi) amount and time of payment of Tax Offset Bonuses, if
any;
(vii) The amount of Stock Appreciation Rights, if any, and
any conditions upon their exercise;
(viii) duration of the Stock Appreciation Rights, if any;
(ix) Options to which the Stock Appreciation Rights, if any,
relate;
(x) rights of the Optionees upon termination of employment
with the Company, provided that the termination rights
for Optionees receiving Incentive Stock Options shall
conform with Section 422A of the Code;
(xi) the terms of the loan, if any, that will be made
available in connection with the exercise of an Option;
and
(xii) such other information as the Committee deems
desirable.
No Option shall have an expiration date later than the first
day following the tenth anniversary of the date of its grant. The
Stock Option agreement may be supplemented by adding Stock
Appreciation Rights with or Tax Offset Bonuses to previously
granted Options as provided in Section 7.
6.3 Exercise. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and
conditions as the Committee directs, which need not be the same for
all Optionees.
6.4 Payment. The Grant Price upon exercise of any Option shall
be payable to the Company in full either:
(i) in cash;
(ii) by tendering shares of Stock having a Fair Market Value
at the time of exercise equal to the total Grant Price
(in the exercise of a Nonstatutory Option, an Optionee
may surrender one or more shares of Stock in the
exercise of an Option with instructions to resurrender
any shares acquired upon exercise in one or more
successive, simultaneous exercises until Options
covering the number of shares, which he specifies, have
been exercised);
(iii) with the proceeds of a loan on such terms and
conditions as may be authorized by the Committee
(however, the rate of interest on any such loan shall
not be less than the applicable federal rate under
Section 1274(d) of the Code on the date an Option is
exercised, compounded semiannually); or
(iv) by any combination of (i), (ii) and (iii).
6.5. Cancellation of Previously Granted Options. In the event
the Fair Market Value of Stock is ever less than the Option Price
of any outstanding Nonstatutory Option, the Committee may cancel
the Nonstatutory Option and issue in its place, a new substitute
Nonstatutory Option for up to the same number of shares at the then
current Fair Market Value of the Stock as of that new date of
grant.
7. Stock Appreciation Rights and Tax Offset Bonuses
The Committee may grant Stock Appreciation Rights and/or grant
Options which pay Tax Offset Bonuses on such bases as the Committee
shall determine, including but not limited to Stock Appreciation
Rights which become exercisable or Tax Offset Bonuses which become
payable only upon an Optionee being subject to the restrictions of
Section 16 of the Securities Exchange Act of 1934 at the time of
exercise. A Stock Appreciation Right or Tax Offset Bonus may be
granted only with respect to an Option and may be granted
concurrently with or after the grant of the Option. If Options
granted on a particular date include Stock Appreciation Rights for
only Optionees who are subject to the requirements of Section 16
of the Securities Exchange Act of 1934, an Optionee receiving an
Option on that date and who thereafter becomes subject to those
restrictions shall thereupon be deemed to have received Stock
Appreciation Rights with respect to any unexercised options granted
on the particular date in the same weighted average proportion as
the Stock Appreciation Rights granted on the same grant date to the
Optionees who were subject to the requirements of Section 16 of the
Securities Exchange Act of 1934; provided, however, if 50% or more
of the Board of Directors are employees of the Company and may
receive Options under this plan, then the provisions of this
sentence will apply only if, in each instance, approved by the
Committee. The Committee may cancel or place a limit on the term
of, or the amount payable for, any Stock Appreciation Right or Tax
Offset Bonus at any time and may disapprove the election by the
Optionee to exercise a Stock Appreciation Right rather than the
related Option. The Committee shall determine all other terms and
provisions of any Stock Appreciation Right or Tax Offset Bonus.
Each Stock Appreciation Right or Tax Offset Bonus granted by the
Committee shall expire no later than the expiration of the Option
to which it relates. In addition, any Stock Appreciation Right
granted with respect to an Incentive Stock Option may be exercised
only if:
(i) such Incentive Stock Option is exercisable; and
(ii) the Grant Price of the Incentive Stock Option is less
than the Fair Market Value of the Stock on the Date of
Exercise.
8. Written Notice, Issuance of Stock Certificates, Payment of
Stock Appreciation Rights or Stockholder Privileges
8.1 Written Notice. An Optionee electing to exercise an Option
and any applicable Stock Appreciation Right shall give written
notice to the Company, in the form and manner prescribed by the
Committee, indicating the number of Options to be exercised. Full
payment for the Options exercised shall be received by the Company
prior to issuance of any stock certificates.
8.2 Issuance of Stock Certificates. As soon as reasonably
practicable after the receipt of written notice and payment, the
Company shall issue and deliver to the Optionee or any other person
entitled to exercise an Option pursuant to this Plan a certificate
or certificates for the requisite number of shares of Stock.
8.3 Payment of Stock Appreciation Rights and Tax Offset
Bonuses. As soon as practicable after receipt of written notice,
the Company shall pay to the Optionee, in cash, the amount payable
under the Stock Appreciation Rights and the amount of any Tax
Offset Bonuses.
8.4 Privileges of a Stockholder. An Optionee or any other
person entitled to exercise an Option under this Plan shall not
have stockholder privileges with respect to any Stock covered by
the Option until the Date of Exercise.
8.5 Partial Exercise. An Option may be exercised for less than
the total number of shares granted by the Option. An exercise of
a portion of the shares granted under the Option shall not affect
the right to exercise the Option from time to time for any
unexercised shares subject to the Option.
9. Rights of Employees
9.1 Employment. Nothing in this Plan shall interfere with or
limit in any way the right of the Company to terminate any
Employee's employment at any time, nor confer upon any Employee any
right to continue in the employ of the Company.
9.2 Nontransferability. All Options and Stock Appreciation
Rights granted under this Plan shall be nontransferable by the
Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's
lifetime only by the Optionee or the Optionee's guardian or legal
representative.
10. Optionee Transfer or Leave of Absence
For Plan purposes:
(a) A transfer of an Optionee from the Company to a subsidiary
or vice versa, or from one subsidiary to another; or
(b) A leave of absence duly authorized by the Company, shall
not be deemed a termination of employment. However, an Optionee
may not exercise an Option or any applicable Stock Appreciation
Right during any leave of absence, unless authorized by the
Committee.
11. Administration
11.1 Administration. The Committee shall be responsible for
the administration of the Plan. The Committee, by majority action
thereof, is authorized to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to the Plan, to
determine the form and content of Options to be issued (which need
not be identical) under the Plan, to provide for conditions and
assurances deemed necessary or advisable to protect the interests
of the Company and to make all other determinations necessary or
advisable for the administration of the Plan, but only to the
extent not contrary to the express provisions of the Plan. The
Committee shall determine, within the limits of the express
provisions of the Plan, the Employees to whom and the time or times
at which Options and Stock Appreciation Rights shall be granted,
the number of shares to be subject to each Option and Stock
Appreciation Right and the duration of each Option. In making such
determinations, the Committee may take into account the nature of
the services rendered by such Employees or classes of Employees,
their present and potential contributions to the Company's success
and such other factors as the Committee, in its discretion, shall
deem relevant. The determination of the Committee, its
interpretation or other action made or taken pursuant to the
provisions of the Plan shall be final and shall be binding and
conclusive for all purposes and upon all persons.
11.2 Incentive Stock Options. Notwithstanding any contrary
provision in this Plan, the Committee shall not take any action or
impose any terms or conditions with respect to an Option intended
by the Committee to be an Incentive Stock Option which would cause
such Option to not qualify as such under the Code and applicable
regulations and rulings in effect from time to time.
12. Amendment, Modification and Termination of the Plan
The Board may at any time terminate, and at any time and from
time to time and in any respect, amend or modify the Plan,
provided, however, that no such action of the Board, without
approval of the stockholders, may:
(a) Increase the total amount of Stock which may be
purchased through Options granted under the Plan, except as
provided in subsection 4.3 of the Plan.
(b) Change the requirements for determining which Employees
are eligible to receive Options or Stock Appreciation Rights.
(c) Change the provisions of the Plan regarding the Grant
Price except as permitted by subsection 4.3.
(d) Permit any person, while a member of the Committee, to
be eligible to receive or hold an Option under the Plan.
(e) Change the manner of computing the amount to be paid
through a Stock Appreciation Right.
(f) Materially increase the cost of the Plan.
(g) Extend the period during which Options and Stock
Appreciation Rights may be granted.
No amendment, modification or termination of the Plan shall
in any manner adversely affect the rights of an Optionee under the
Plan without the consent of the Optionee.
13. Acceleration of Stock Options
13.1 Merger or Consolidation. In the event of a dissolution
or a liquidation of the Company or a merger and consolidation in
which the Company is not the surviving corporation, the Options
shall, immediately prior thereto, be exercisable, whether or not
otherwise exercisable, subject to the provisions of this Plan.
13.2 Change of Control. If, while unexercised Options remain
outstanding hereunder (i) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended), other than the Company or an employee benefit plan
maintained by the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under such Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities, or
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, including for
this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were
directors at the beginning of the period, cease for any reason to
constitute a majority thereof, then from or after the date on which
public announcement of the acquisition of such percentage shall
have been made or the date on which the change in the composition
of the Board set forth above shall have occurred, all Options shall
be exercisable in full, whether or not then exercisable under the
terms of their grant.
14. Withholding Taxes
Whenever shares of Stock are issued on the exercise of an
Option under this Plan, the Company shall (a) require the recipient
of the Stock to remit to the Company an amount sufficient to
satisfy all withholding taxes, (b) deduct from a cash payment
pursuant to any Stock Appreciation Right or Tax Offset Bonus an
amount sufficient to satisfy any withholding tax requirements, or
(c) withhold from, or require surrender by, the recipient, as
appropriate, shares of Stock otherwise issuable or issued upon
exercise of the Option the number of shares sufficient to satisfy,
to the extent permitted under applicable law, federal and state
withholding tax requirements resulting from the exercise, provided,
however, that the Company shall not withhold or accept surrender
of Stock under this paragraph unless the recipient of the Stock
has made an irrevocable election to have Stock withheld or
surrendered for this purpose at least six months after the date of
grant of the Option and either (i) six months, or (ii) within a
Window Period, prior to the date the amount of withholding tax is
determined. The Committee may, at any time subsequent to an
election under this paragraph, disapprove the election and require
satisfaction of withholding taxes by other means permitted under
the Plan. Stock withheld or surrendered under this paragraph shall
be valued at its Fair Market Value on the date the amount of
withholding tax is determined.
15. Shareholder Approval and Registration Statement
Initially, the Plan is approved by the Board and will be
submitted to the Company's shareholders for approval at their next
annual meeting following the effective date of the Plan. Options
may be granted under the Plan prior to shareholder approval and
prior to filing with the Securities and Exchange Commission and
having an effective registration statement covering the Stock to
be issued upon the exercise of Options. Any Options granted under
this Plan prior to shareholder approval and having an effective
registration statement shall not be exercisable until and are
expressly conditional upon shareholder approval of the Plan and
having an effective registration statement covering the Stock.
16. Requirements of Law
16.1 Requirements of Law. The granting of Options and the
issuance of shares of Stock upon the exercise of an Option shall
be subject to all applicable laws, rules and regulations, and
shares shall not be issued nor cash payments made except upon
approval of proper government agencies or stock exchanges, as may
be required.
16.2 Governing Law. The Plan, and all agreements hereunder,
shall be construed in accordance with and governed by the laws of
the state of Idaho.
17. Effective Date of Plan
The Plan shall become effective as of July 24, 1984, subject
to ratification by shareholders.
BOISE CASCADE CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
This Nonstatutory Stock Option (the "Option") is granted July 29, 1993,
by BOISE CASCADE CORPORATION (the "Company") to _______________, ("Optionee")
pursuant to the 1984 Key Executive Stock Option Plan (the "Plan"), a copy of
which is attached as Exhibit A, subject to the following terms and conditions.
1. This Agreement is subject to all the terms and conditions of the
Plan, and all capitalized terms not otherwise defined in this Agreement shall
have the meaning given them in the Plan.
2. The Company hereby grants the Optionee a nonstatutory stock option
to purchase up to _________ shares of Stock at a price of $21.25 per share.
3. The Option shall expire on the first to occur of (a) ten years and
one day from the date of this Agreement, (b) three years after Optionee's
retirement, death, or total and permanent disability, or (c) three years
following termination of Optionee's employment with the Company provided
(i) the termination is the direct result of the sale or permanent closure of
any facility or operating unit of the Company, and (ii) Optionee has not, as
of the date of the exercise of the Option, commenced employment with any
competitor of the Company; or (d) three months after termination of Optionee's
employment with the Company for any other reason, except that the Option shall
be canceled in the event of termination for disciplinary reasons.
4. Except as provided in Section 13 of the Plan, this Option shall
not be exercisable until after the first anniversary of the date of this
Agreement, and thereafter it shall be exercisable in full.
5. This Option may be exercised from time to time by delivery of
written notice to the Company specifying the number of shares of Stock to be
purchased. Payment of the Grant Price shall be made as provided in
Section 6.4 of the Plan.
BOISE CASCADE CORPORATION
By _________________________________________
Alice E. Hennessey, Senior Vice President
Human Resources and Corporate Relations
Accepted:
By ___________________________
Optionee
LIFE INSURANCE PLAN
If you are elected an executive officer after December 1, 1987,
Boise Cascade will provide you with company-paid group term life
insurance in the amount of two times your annual base salary.
The value of company-paid life insurance in excess of $50,000 of
coverage is considered taxable income to you and will be reported
in your W-2 earnings on a monthly basis. Appropriate
withholdings on this income will be deducted from your paycheck.
You may also participate in the optional employee-paid group term
life insurance plan, which is the same plan that is available to
all salaried employees. Details of the optional insurance plan
are explained in your U.S. Salaried Employee Handbook.
BOISE CASCADE CORPORATION
SPLIT-DOLLAR LIFE INSURANCE PLAN
(As Amended and Restated as of July 26, 1988)
BOISE CASCADE CORPORATION
SPLIT-DOLLAR LIFE INSURANCE PLAN
1. Purpose of the Plan. The purpose of the Boise Cascade
Corporation Split-Dollar Life Insurance Plan is to provide those
executive officers who participate in the Plan with an insured
death benefit during employment and after retirement. Executive
officers who become a Participant may purchase an ordinary life
insurance policy from a designated insurance carrier. Payment of
policy premiums will be shared by the Company, as described
herein.
Prior to December 1, 1987, the Company designated all
executive officers eligible to participate in the Plan.
Beginning December 1, 1987, the Company intends to continue the
Plan in effect as hereafter restated. Eligibility for participa-
tion will not be made available to newly elected executive
officers.
2. Definitions.
2.1 Annual Premium.
(a) The amount of consideration determined by the Insurance
Carrier for the cost of coverages provided by the Plan. For Plan
purposes, the Annual Premium shall be separated into three
components: (i) The Basic Annual Premium or the Net Annual
Premium, as applicable for the relevant year. The Basic Annual
Premium shall be the amount of the Annual Premium for life insur-
ance coverage determined by the Insurance Carrier's published
rate schedule. The Net Annual Premium shall be the amount of the
Basic Annual Premium described above less the then current
Insurance Policy year's dividend, if paid in cash or if allocated
to reduce the Insurance Policy's Annual Premium. The Basic
Annual Premium or the Net Annual Premium, if any, shall be pay-
able as determined in accordance with the Plan and with the
Premium Payment Schedule, attached hereto (or the Trustee's
Payment Schedule, if applicable); (ii) Waiver of Premium shall be
the amount of premium for the waiver of premium on disability
benefit, if available, determined in accordance with the
Insurance Carrier's published rate schedule; and (iii) any Extra
Premium for an insurance risk, as determined by the Insurance
Carrier.
(b) To the extent that the then current Insurance Policy
year's dividend exceeds the Basic Annual Premium, such amount, if
paid in cash in accordance with the Premium Payment Schedule or
Trustee's Payment Schedule attached hereto, shall be payable to
the Company to be applied in accordance with Paragraph 2.4(b).
2.2 Base Salary. The annual Base Salary paid by the
Company to a Participant for services rendered at the time the
Participant is eligible to purchase an Insurance Policy.
2.3 Change in Control. A Change in Control of a nature
that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"), or any
successor provisions, whether or not the Company is then subject
to such reporting requirement; provided that, without limitation,
such a Change in Control shall be deemed to have occurred if
(A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than the Company or an employee
benefit plan maintained by the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the
Company's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of
such period constitute the Board, including for this purpose any
new director whose election or nomination for election by the
Company's stockholders was approved by a vote of at least two-
thirds of the directors then still in office who were directors
at the beginning of the period, cease for any reason to
constitute a majority thereof.
2.4 Corporate Capital Interest.
(a) During the first seven policy years of an Insurance
Policy, Corporate Capital Interest shall be the Insurance
Policy's Basic Annual Premiums less (i) the amount of the value
of the economic benefit to the Participant set forth in
Paragraph 6.1(a) and (ii) policy loan(s) made during the policy
year, if any; plus the prior policy year's Corporate Capital
Interest, if any.
(b) For the eighth and subsequent policy years, Corporate
Capital Interest shall be the Insurance Policy's Basic Annual
Premium or its Net Annual Premium, if any, whichever is
applicable for the relevant year in accordance with the Premium
Payment Schedule or Trustee's Payment Schedule (whichever
governs), less (i) the amount of any dividend in excess of the
Basic Annual Premium paid in cash to the Company in accordance
with the Premium Payment Schedule or Trustee's Payment Schedule
(whichever governs) attached hereto and (ii) policy loans out-
standing, if any; plus the sum of (i) the Scheduled Amount for
the relevant year, if any; and (ii) the prior year's Corporate
Capital Interest, if any.
2.5 Company. Boise Cascade Corporation.
2.6 Deferred Compensation and Benefits Trust. An
irrevocable trust or trusts ("Trust") established or to be
established by the Company with an independent trustee or
trustees for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which nevertheless will be
subject to claims of the Company's creditors in the event of
bankruptcy or insolvency and with respect to which the Company
shall have received a ruling from the Internal Revenue Service
that the Trust is a "grantor trust" for federal income tax
purposes.
The Deferred Compensation and Benefits Trust contains the
following additional provisions:.
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the
Company may reclaim the assets transferred to the trustee or
trustees subject to the requirement that it be again funded as
stated in the preceding paragraph upon the occurrence of another
Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay the
Company's obligations under this Plan, except to the extent such
obligations are paid by the Company, and the Company and any
successor shall continue to be liable for the ultimate payment of
those amounts.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the Trust assets or upon
payment of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with
the purposes sought to be accomplished by it. Prior to a Change
in Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment
may substantially alter any of the provisions set out in the
preceding paragraphs.
2.7 Effective Date. February 26, 1980.
2.8 Employee. An individual who receives a Base Salary for
personal services rendered to the Company.
2.9 Insurance Carrier. The life insurance companies
selected to issue policies under or pursuant to the Plan.
2.10 Insurance Policy. Any individually purchased whole-
life insurance policy issued by the Insurance Carrier pursuant to
the Plan. Unless required otherwise by the Plan, Insurance
Policy terms used herein shall have the same meaning as in the
Insurance Policy. In amplification, but not in limitation, of
the foregoing, such Insurance Policy terms as policy year,
dividend, and policy loan shall have the same meaning as
contained in the Insurance Policy.
2.11 IRC. Internal Revenue Code of 1986, as amended.
2.12 Participant. An Employee of the Company who is
designated eligible to participate in the Plan and who has met
all the applicable eligibility requirements under the Plan.
2.13 Plan. This Boise Cascade Corporation Split-Dollar Life
Insurance Plan.
2.14 Plan Administrator. The Company's Director of
Compensation, P.O. Box 50, Boise, Idaho 83728, telephone (208)
384-7263, unless a different person is subsequently designated as
Plan Administrator in a resolution adopted by the Board of
Directors of the Company and such person accepts the designation.
2.15 Potential Change in Control. A Potential Change in
Control of the Company shall be deemed to have occurred if (A)
the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control of the
Company; (B) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which, if consummated, would constitute a Change in Control of
the Company; (C) any person becomes the beneficial owner,
directly or indirectly, of securities of the Company representing
9.5% or more of the combined voting power of the Company's then
outstanding securities; or (D) the Board of Directors adopts a
resolution to the effect that a Potential Change in Control of
the Company for purposes of this Plan has occurred.
2.16 Retirement. The termination of employment of a
Participant, for reasons other than death or disability, who has
attained age 55 and ten years of service with the Company as
defined by the Boise Cascade Corporation Pension Plan for
Salaried Employees.
2.17 Assignment. An agreement whereby the Participant, or
his designee, as owner of the Insurance Policy, sets over certain
Insurance Policy rights to the Company as collateral security for
the Company's Corporate Capital Interest, and pursuant to the
Plan.
2.18 Premium Payment Schedule. The schedule of Insurance
Policy premiums payable by the Company, as specified on the form
attached hereto.
2.19 Scheduled Amount. An additional dollar amount
recoverable by the Company at the Insurance Policy's paid-up
date, added annually over the period to such date, to be added to
the Corporate Capital Interest pursuant to Paragraph 2.4.
2.20 Trustee's Payment Schedule. The schedule of Insurance
Policy premiums payable by the Trustee(s) of the Deferred
Compensation and Benefits Trust during the period of a Potential
Change in Control and after a Change in Control, as specified on
the form attached hereto.
3. Administration and Interpretation of the Plan.
3.1 Plan Administrator. Except as otherwise provided in
the Plan, the Plan Administrator shall have control over the
administration and interpretation of the Plan, with all powers
necessary to enable him to carry out his duties in that respect.
The Plan Administrator may adopt such rules and regulations
relating to the Plan as the Administrator may deem necessary or
advisable for the administration of the Plan. The Plan
Administrator may delegate administrative responsibilities to
advisors or other persons and may rely upon the information or
opinions of legal counsel or experts selected to render advice
with respect to the Plan.
3.2 Insurance Carrier. The Insurance Carrier shall be
responsible for all matters relating to any Insurance Policy.
Not in limitation, but in amplification of the foregoing, the
Insurance Carrier shall decide whether it will issue an Insurance
Policy on the life of a Participant who has otherwise met all of
the Plan's eligibility requirements.
4. Eligibility to Participate. In order to become a
Participant in the Plan, an Employee must meet all of the
following requirements:
(a) Be an executive officer prior to December 1, 1987;
(b) Make application in the manner set by the Plan
Administrator;
(c) Meet the insurability requirements of the Insurance
Carrier; and
(d) Sign all documents, including the Assignment, presented
by the Plan Administrator necessary or appropriate to carry out
the intent of the Plan.
5. Benefits.
5.1 Purchase of Insurance. Each Employee designated
eligible to participate in the Plan (or such third party as he
may designate and who is acceptable to the Company and the
Insurance Carrier) may apply for and purchase an Insurance Policy
funded in the manner set forth in Paragraph 6. The face amount
of the Insurance Policy for each Participant shall be based upon
the Participant's Base Salary and chronological age (at the time
specified in Paragraph 5.2), in accordance with the following
schedule, less $50,000.
Through Age 45 Six Times Base Salary
Age 46 - 50 Five Times Base Salary
Age 51 - 55 Four Times Base Salary
Age 56 to Retirement Three Times Base Salary
The face amount of the Insurance Policy shall be rounded up to
the multiple of $10,000, where necessary.
5.2 Timing of Purchase of Insurance. The right of a
Participant (or his designee) to purchase an Insurance Policy
under the Plan is granted only upon the initial adoption of the
Plan, initial eligibility of the Participant under the Plan, or
when a Participant is moved to a job in a higher salary range
which, in applying the schedule set forth in Paragraph 5.1 at the
Participant's then current age and Base Salary, would result in a
minimum face-amount benefit increase of $50,000; provided, how-
ever, that no Insurance Policy may be purchased on or after
December 1, 1987; and provided further, that no increase shall
take place after a Participant reaches age 60. Since participa-
tion under the Plan involves the purchase of an Insurance Policy
which is subject to the Participant's insurability, the Company
does not guarantee that each Participant will be able to acquire
an Insurance Policy pursuant to this Plan.
5.3 Amount of Death Benefit. The death benefit shall be
paid from the Insurance Policy. The amount of the death benefit
payable to the Participant's beneficiary shall be subject to the
Assignment. In addition, the Participant shall receive a $50,000
death benefit pursuant to the Boise Cascade Group Life Insurance
Plan.
5.4 Beneficiary Designation. The death benefit is payable
to the beneficiary or beneficiaries designated by the owner of
the Insurance Policy. If no such beneficiary is designated, the
beneficiary shall be the person or persons entitled to the death
benefit under the terms of the Insurance Policy or applicable
state law, whichever governs.
5.5 Payment of Death Benefit. The death benefits shall be
paid upon the submission to the Insurance Carrier of the
appropriate proof of death and a claim for benefits.
6. Contributions and Funding.
6.1 The First Seven Policy Years. During the first seven
policy years, the responsibility for the payment of the premiums
shall be allocated as follows:
(a) Responsibility of Participant.
(1) The "value of the economic benefit" to the
Participant as determined pursuant to Internal Revenue Service
rules in accordance with a table approved by the Internal Revenue
Service. During the first seven policy years, this amount shall
be paid by the Company on behalf of the Participant and treated
as compensation to the Participant.
(2) Any Extra Premium which is in excess of 40% of the
Basic Annual Premium.
(b) Responsibility of Company.
(1) The difference between the Basic Annual Premium
and that portion for which the Participant is responsible
pursuant to Paragraph 6.1(a)(1).
(2) (i) Any Extra Premium in an amount up to 40% of
the Basic Annual Premium and (ii) any premium for Waiver of
Premium.
The Company shall, at its option, have the authority to
borrow against the Insurance Policy up to an amount not to exceed
the Corporate Capital Interest. However, the Company shall pay
to the Insurance Carrier no fewer than four Annual Premiums
during the first seven policy years, and in no event shall it
borrow an amount greater than the sum of three years' payments
described in Paragraph 6.1(b)(1). All interest payments as a
result of such borrowing shall be the responsibility of the
Company.
6.2 Subsequent Policy Years. The Company, at the beginning
of the eighth policy year, shall repay the Insurance Policy loan
previously made pursuant to Paragraph 6.1(b)(2). The Company
shall participate in the funding for the payment of the Annual
Premiums on the Insurance Policy until the policy anniversary
date on which the Insurance Policy becomes a paid-up contract.
During such period, the responsibility for the payment of
premiums shall be allocated as follows:
(a) Responsibility of the Participant.
(1) The tax on the "value of the economic benefit" as
determined pursuant to Internal Revenue Service rules in a manner
approved by the Internal Revenue Service. The dollar amount of
the "value of the economic benefit" shall be treated as taxable
compensation to the Participant.
(2) Any Extra Premium which is in excess of 40% of the
Basic Annual Premium.
(b) Responsibility of the Company.
(1) (a) The Insurance Policy's Basic Annual Premium,
or its Net Annual Premium, if any, as applicable for the relevant
year; (b) any Extra Premium in an amount up to 40% of the Basic
Annual Premium; (c) any premium for Waiver of Premium.
(2) Except in the event of a Change in Control, the
Company shall, at its option, have the authority to borrow
against the Insurance Policy up to an amount not to exceed the
Corporate Capital Interest, as provided for in the Assignment.
All interest payments as a result of such borrowing shall be the
responsibility of the Company.
(3) Immediately upon a Potential Change in Control or
upon a Change in Control, the Company shall repay Insurance
Policy loans, if any, and shall not make any policy loans, as
otherwise provided for in Paragraph 6.2(b)(2), within a one-year
period after a Potential Change in Control, or at any time after
a Change in Control, except upon the date specified in
Paragraph 6.3.
6.3 Termination of Company Funding. Notwithstanding any
other provisions in this Plan, and except in the event of or
after a Change in Control, the Company shall terminate its
participation in the funding of the Insurance Policy on the first
of the following events:
(a) The date the Insurance Policy becomes a paid-up
contract;
(b) The death of a Participant; or
(c) The termination of employment of a Participant other
than by death or retirement; however, at the Company's sole
discretion, it may continue its participation in the funding
until the date the Insurance Policy becomes a paid-up contract.
In the event of a termination described in (a) above, the
Company will recover its Corporate Capital Interest by Insurance
Policy loan and release its interest in the Insurance Policy.
In the event of a termination described in (b), the Company
shall recover its Corporate Capital Interest out of the death
benefit of the Insurance Policy. Thereafter, the Participant's
beneficiary shall succeed to full control of the balance of the
proceeds.
In the event of a termination described in (c) above, the
Participant may purchase any portion of the Company's Corporate
Capital Interest in the Insurance Policy pursuant to terms as
established by the Plan Administrator. Any amount purchased
shall result in the Company's recovery of its Corporate Capital
Interest equal to the amount purchased. Any portions of the
Insurance Policy not purchased by the Participant shall be
treated in a manner deemed appropriate by the Plan Administrator.
The provisions of Paragraph (c) shall be subject to any
applicable severance agreement between the Company and the
Participant.
6.4 Company Release and Reassignment. Upon any termination
of company funding, the Company will release Insurance Policy
rights granted to it by the Assignment. Thereafter, the Company
shall have no involvement whatsoever, direct or indirect, in the
Insurance Policy. From such date, the Participant shall be
solely responsible for the payment of any premium and Insurance
Policy loan interest due.
7. Disqualification and Reduction, Loss, Forfeiture, or Denial
of Benefits. The benefits to be provided under this Plan will
not be available to an Employee upon any of the following events:
(a) Except in the event of a Change in Control, the Company
may, at any time, amend or terminate the Plan, provided that the
Company may not reduce or modify the level of benefits provided
to the Participant prior to the amendment or termination without
prior consent of the Participant;
(b) In any event the Plan is terminated, whether as to all
Participants or as to an individual Participant, a Participant
shall be able to preserve and continue the Insurance Policy on
his or her life by paying the Company its Corporate Capital
Interest. Thereafter, the Participant will be responsible for
all future premiums and Insurance Policy loan interest due;
(c) After any termination of Company Funding, policy
benefits may be reduced or terminated with respect to a
Participant if not properly funded by the Participant; or
(d) The amount of a Participant's death benefits may vary
each year. Not in limitation, but in amplification of the
foregoing, the amount of policy dividends of the Insurance
Policies and the amount of the Corporate Capital Interest may
vary the death benefits.
8. Deferred Compensation and Benefits Trust. The Company is
establishing a Deferred Compensation and Benefits Trust and shall
comply with the terms of the Trust. Upon the occurrence of any
Potential Change in Control of the Company, the Company shall
transfer to the Trust an amount of cash, marketable securities,
or other property acceptable to the trustee(s) equal in value to
105 percent of the amount necessary, on an actuarial basis and
calculated in accordance with the terms of the Trust, to pay the
Company's obligations under this Plan (the "Funding Amount").
The cash, marketable securities, and other property so
transferred shall be held, managed, and disbursed by the
trustee(s) subject to and in accordance with the terms of the
Trust. In addition, from time to time, the Company shall make
any and all additional transfers of cash, marketable securities,
or other property acceptable to the trustee(s) as may be
necessary in order to maintain the Funding Amount with respect to
the Plan.
8.1 Trustee's Rights and Obligation. In the event of a
Change in Control or a Potential Change in Control, the
trustee(s) for the Deferred Compensation and Benefits Trust shall
at all times thereafter be obligated for amounts payable in
accordance with the Trustee's Payment Schedule. The Company
shall notify the Insurance Carrier of a Change in Control or of a
Potential Change in Control.
8.2 Plan Funding. In the event of a Change in Control, the
calculation of the Funding Amount shall be made without regard to
the provisions of Paragraph 6.3(c) and the Company shall be
required to participate in the funding of each Insurance Policy
until the date the Insurance Policy becomes a paid-up contract.
8.3 Termination of Funding. In the event of and after a
Change in Control, the Trustee(s) shall be required to continue
the funding of the Insurance Policy until the later of (a) the
applicable date specified in Paragraph 6.3(a) or 6.3(b), which-
ever is earlier, or (b) the date specified in any severance
agreement between the Company and the Participant.
8.4 Amendment and Termination. In the event of and after a
Change in Control, the Plan may not be amended or terminated and
a Participant shall have the right to rely on the continuation of
the Funding of an Insurance Policy as provided in this
Paragraph 8.
9. Claim Procedure. All death benefits provided under the Plan
are to be paid from the Insurance Policies. The Company has
adopted the claim procedure established by the Insurance Carrier
as a claim procedure for the Plan. The beneficiary of the policy
proceeds must file a claim for benefits with the Insurance
Carrier in whatever form the Insurance Carrier may reasonably
require. If the Insurance Carrier denies the claim, the
beneficiary who wants to have that denial reviewed will have to
follow the Insurance Carrier's claims-review procedure. The
Company shall have no liability in the event an Insurance Carrier
denies a beneficiary's claim for benefits.
10. Miscellaneous.
10.1 Employment Not Guaranteed by the Plan. Neither this
Plan nor any action taken hereunder shall be constructed as
giving a Participant a right to be retained as an executive
officer or as an Employee of the Company for any period.
10.2 Taxes. The Company shall deduct from each
Participant's compensation all applicable Federal or State taxes
that may be required by law to be withheld resulting from the
Company's funding of the Insurance Policy under the Plan.
10.3 Governing Law. The Plan shall be constructed according
to the laws of the State of Idaho.
10.4 Form of Communication. Any election, application,
claim, notice, or other communication required or permitted to be
made by a Participant to the Plan Administrator shall be made in
writing and in such form as the Plan Administrator shall
prescribe. Such communication shall be effective upon mailing if
sent by first-class mail, postage prepaid, and addressed to the
Company's office at One Jefferson Square, Boise, Idaho 83728.
10.5 Amendment and Termination. Except after a Change in
Control, the Board of Directors may, at any time, amend or
terminate the Plan. At any date of termination not preceded by a
Change in Control, a Participant shall be entitled to preserve
and continue the Insurance Policy in accordance with
Paragraph 6.3(c).
10.6 Agent for Service of Process. The Plan Administrator
is designated as the agent to receive service of legal process on
behalf of the Plan.
10.7 Constructional Rules. When appropriate, the singular
as used in this Plan shall include the plural, and vice versa,
and the masculine shall include the feminine, and vice versa.
11. Statement of ERISA Rights. Each Participant in the Plan is
entitled to certain rights and protections under the Employee
Retirement Income Security Act of 1974 (ERISA). ERISA provides
that all Participants shall be entitled to:
(a) Examine, without charge, at the Plan Administrator's
office all Plan documents.
(b) Obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator. The
Plan Administrator may make a reasonable charge for the copies.
(c) File suit in a federal court if any materials requested
are not received within 30 days of the Participant's request,
unless the materials were not sent because of matters beyond the
control of the Plan Administrator. The court may require the
Plan Administrator to pay up to $100 for each day's delay until
the materials are received.
In addition to creating rights for Participant's, ERISA
imposed obligations upon the persons who are responsible for the
operation of the Plan. As "fiduciaries," these persons must act
solely in the interest of the Participants and they must exercise
prudence in the performance of their Plan duties. Fiduciaries
who violate ERISA may be removed and required to make good any
losses they have caused the Plan. The Company may not fire,
discriminate against, or prevent a Participant from obtaining a
welfare benefit or exercising his or her rights under ERISA. If
a Participant is improperly denied a welfare benefit in full or
in part, he or she has a right to file suit in a federal or state
court. If Plan fiduciaries are misusing the Plan's money, a
Participant has a right to file suit in a federal court or
request assistance from the U.S. Department of Labor. If a
Participant is successful in the lawsuit, the court may, if it so
decides, require the other party to pay his or her legal costs,
including attorney's fees.
If a Participant has any questions about the foregoing or
his or her rights under ERISA, the Participant should contact the
Plan Administrator or the nearest area office of the U.S. Labor-
Management Service Administration, Department of Labor.
[New Standard Form of Severance Contract for Officers]
[ ]
As amended through February 7, 1992
[ ]
Dear [ ]:
Boise Cascade Corporation (the "Company") considers it
essential to the best interests of its stockholders to foster the
continuous employment of key management personnel. In this
connection, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with many publicly held cor-
porations, the possibility of a change in control may exist and
that such possibility, and the uncertainty and questions which it
may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its stockholders.
The Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including
yourself, to their assigned duties without distraction in the face
of potentially disturbing circumstances arising from the
possibility of a change in control of the Company, although no such
change is now contemplated.
In order to induce you to remain in the employ of the Company
and in consideration of your agreement set forth in Section 2(ii)
hereof, the Company agrees that you shall receive the severance
benefits set forth in this letter agreement in the event your
employment with the Company is terminated subsequent to a "change
in control of the Company" (as defined in Section 2 hereof) under
the circumstances described below.
1. Term of Agreement. This Agreement shall commence on the
date hereof and shall continue in effect through [ ];
provided, however, that commencing on [ ], and each
January 1 thereafter, the term of this Agreement shall
automatically be extended so as to terminate on the third
anniversary of such date, unless, not later than September 30 of
the preceding year, the Company shall have given notice not to
extend this Agreement; provided, however, if a change in control
of the Company as defined in Section 2 hereof shall have occurred
during the term of this Agreement, this Agreement shall continue
in effect for a period of not less than twenty-four months beyond
the month in which such change in control of the Company occurred.
2. Change in Control.
(i) No benefits shall be payable hereunder unless there
shall have been a change in control of the Company, as set forth
below, and your employment by the Company shall thereafter have
been terminated in accordance with Section 3 below. For purposes
of this Agreement, a "change in control of the Company" shall mean
a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor provisions, whether or not the
Company is then subject to such reporting requirement; provided
that, without limitation, such a change in control shall be deemed
to have occurred if (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than the
Company or an employee benefit plan maintained by the Company, is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board, including for this purpose any new
director whose election or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning
of the period, cease for any reason to constitute a majority
thereof.
(ii) For purposes of this Agreement, a "potential change
in control of the Company" shall be deemed to have occurred if (A)
the Company enters into an agreement, the consummation of which
would result in the occurrence of a change in control of the
Company, (B) any person (including the Company) publicly announces
an intention to take or to consider taking actions which if
consummated would constitute a change in control of the Company;
(C) any person becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 9.5% or more
of the combined voting power of the Company's then outstanding
securities; or (D) the Board of Directors adopts a resolution to
the effect that a potential change in control of the Company for
purposes of this Agreement has occurred. You agree that, subject
to the terms and conditions of this Agreement, in the event of a
potential change in control of the Company, you will at the option
of the Company remain in the employ of the Company for a period of
six months from the occurrence of the first such potential change
in control of the Company.
3. Termination Following Change in Control. If any of the
events described in Section 2 hereof constituting a change in
control of the Company shall have occurred and be continuing, you
shall be entitled to the benefits provided in Section 4 hereof upon
the subsequent termination of your employment during the term of
this Agreement unless such termination is (A) because of your
death, (B) by the Company for Cause or Disability or (C) by you
other than for Good Reason.
(i) Disability. If, as a result of your incapacity due
to physical or mental illness, you shall have been absent from your
duties with the Company on a full-time basis for six consecutive
months, and within thirty days after written notice of termination
is given you shall not have returned to the full-time performance
of your duties, the Company may terminate your employment for
"Disability."
(ii) Cause. Termination by the Company of your
employment for "Cause" shall mean termination upon (A) the willful
and continued failure by you to substantially perform your duties
with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from your termination for Good
Reason), after a demand for substantial performance is delivered
to you by the Board which specifically identifies the manner in
which the Board believes that you have not substantially performed
your duties, or (B) the willful engaging by you in conduct which
is demonstrably and materially injurious to the Company, monetarily
or otherwise. For purposes of this Subsection, no act, or failure
to act, on your part shall be considered "willful" unless done, or
omitted to be done, by you not in good faith and without reasonable
belief that your action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to you 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 the purpose (after reasonable notice to you and an opportunity
for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty
of conduct set forth above in clauses (A) or (B) of the first
sentence of this Subsection and specifying the particulars thereof
in detail.
(iii) Good Reason. You shall be entitled to terminate
your employment for Good Reason. For purposes of this Agreement,
"Good Reason" shall, without your express written consent, mean:
(A) The assignment to you of any duties incon-
sistent with your status as an Executive Officer of the Company or
a substantial alteration in the nature or status of your
responsibilities from those in effect immediately prior to a change
in control of the Company;
(B) The disposition of the business of the Company
for which your services are principally performed by the Company
pursuant to a partial or complete liquidation of the Company, a
sale of assets (including stock of a subsidiary) of the Company,
or otherwise, unless such disposition has been approved by the
Board, a majority of the members of which were members of the Board
immediately prior to the change in control;
(C) A reduction by the Company in your annual base
salary as in effect on the date hereof or as the same may be
increased from time to time, except for across-the-board salary
reductions similarly affecting all executives of the Company and
all executives of any person in control of the Company;
(D) The Company's requiring you to be based
anywhere other than in the metropolitan area in which you were
based immediately prior to a change in control, except for required
travel on the Company's business to an extent substantially
consistent with your present business travel obligations; and
except for relocation to Boise, Idaho, approved by the Board, a
majority of the members of which were members of the Board
immediately prior to the change in control;
(E) The failure by the Company to continue in
effect any compensation plan in which you were participating
immediately prior to the change in control, including but not
limited to your participation, if any, in the Company's Key
Executive Performance Plan for Executive Officers (the "KEPP"),
1982 and 1986 Executive Officer Deferred Compensation Plans, the
1987 Key Executive Deferred Compensation Plan (the "Deferred
Compensation Plans"), the 1984 Key Executive Stock Option Plan (the
"1984 Stock Option Plan"), or any substitute or additional plans
adopted prior to the change in control, unless an equitable
arrangement (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan in connection with the
change in control of the Company, or unless the plan has expired
in accordance with its terms in effect immediately prior to the
change in control; or the failure by the Company to continue your
participation therein;
(F) The failure by the Company to continue to
provide you with benefits substantially similar to those enjoyed
by you under any of the Company's pension, life insurance, medical,
health and accident, or disability plans, including, without
limitation, the Company's Split-Dollar Life Insurance Plan ("Split-
Dollar Plan"), and the Supplemental Early Retirement Plan for
Executive Officers ("Early Retirement Plan"), the Pension Plan for
Salaried Employees (the "Qualified Plan"), the Savings and
Supplemental Retirement Plan (the "SSRP"), the Supplemental
Retirement Programs (the "Excess Benefit Plans"), and any other
nonqualified pension agreement between you and the Company, in
which you may have been participating at the time of a change in
control of the Company, the taking of any action by the Company
which would directly or indirectly materially reduce any of such
benefits or deprive you of any material fringe benefit enjoyed by
you at the time of the change in control of the Company, or the
failure by the Company to provide you with the number of paid
vacation days to which you are entitled on the basis of years of
service with the Company in accordance with the Company's normal
vacation policy in effect at the time of the change in control;
(G) The failure of the Company to obtain a
satisfactory agreement from any successor to assume and agree to
perform this Agreement, as contemplated in Section 7 hereof; or
(H) Any purported termination of your employment
which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection (iv) below (and, if
applicable, Subsection (ii) above); and for purposes of this
Agreement, no such purported termination shall be effective.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to physical
or mental illness.
(iv) Notice of Termination. Any purported termination
by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section
8 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under the
provision so indicated.
(v) Date of Termination, Etc. "Date of Termination"
shall mean (A) if your employment is terminated for Disability,
thirty days after Notice of Termination is given (provided that you
shall not have returned to the performance of your duties on a
full-time basis during such thirty-day period), and (B) if your
employment is terminated pursuant to Subsection (ii) or (iii) above
or for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination pursuant to
Subsection (ii) above shall not be less than thirty days, and in
the case of a termination pursuant to Subsection (iii) above shall
not be more than sixty days, respectively, from the date such
Notice of Termination is given); provided that if within thirty
days after any Notice of Termination is given the party receiving
such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by
mutual written agreement of the parties or by a final judgment,
order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected); and provided further that the Date of Termination shall
be extended by a notice of dispute only if such notice is given in
good faith and the party giving such notice pursues the resolution
of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute, the Company will continue to pay you
your full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, base salary) and
continue you as a participant in all compensation, benefit and
insurance plans in which you were participating when the notice
giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section. Amounts paid under this
Section are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
4. Compensation Upon Termination or During Disability.
(i) During any period that you fail to perform your
duties hereunder as a result of incapacity due to physical or
mental illness, you shall continue to receive your full base salary
at the rate then in effect and all compensation, including under
the KEPP, paid during the period until this Agreement is terminated
pursuant to Section 3(i) hereof. Thereafter, your benefits shall
be determined in accordance with the insurance programs then in
effect of the Company or subsidiary corporation by which you are
employed, and any qualified retirement plan and any executive
supplemental retirement plan in effect immediately prior to the
change in control of the Company.
(ii) If your employment shall be terminated for Cause or
by you other than for good reason, the Company shall pay you only
your full base salary through the Date of Termination at the rate
in effect at the time Notice of Termination is given, plus all
other amounts to which you are entitled under any compensation plan
of the Company at the time such payments are due, and the Company
shall have no further obligations to you under this Agreement.
(iii) If your employment shall be terminated other than
for Cause or Disability, or by you for Good Reason, then you shall
be entitled to the benefits provided below:
(A) The Company shall pay you, not later than the
fifth day following the Date of Termination, your full base salary
through the Date of Termination at the rate in effect at the time
Notice of Termination is given, plus all other amounts to which you
are entitled under any compensation plan of the Company at the time
such payments are due; and
(B) The Company shall pay to you a severance
payment equal to the greater of the amount payable in accordance
with the Company's Severance Pay Policy for Executive Officers as
in effect immediately prior to the change in control or as in
effect on Date of Termination; and
(C) The Company shall pay to you, not later than
the fifth day following the Date of Termination, a lump sum amount
equal to the greater of the value of your unused and accrued
vacation entitlement in accordance with the Company's Vacation
Policy as in effect immediately prior to the change in control or
as in effect on Date of Termination; and
(D) The Company shall pay to you, not later than
the fifth day following the Date of Termination, a lump sum amount
equal to the sum of (x) any unpaid bonus (excluding deferred
awards, plus interest, credited to your account, which shall be
payable under the KEPP in accordance with its terms) pursuant to
the KEPP allocable to you in respect of the Plan year preceding
that in which the Date of Termination occurs, and (y) a KEPP award
for the year in which the Date of Termination occurs, equal to the
greater of (a) 30% of your base salary for such year, prorated
through the month in which the Date of Termination occurs, or
(b) the actual KEPP award as determined by actual year-to-date
earnings per share through the last day of the month prior to the
month in which the Date of Termination occurs in accordance with
the KEPP award criteria in which you are participating as of the
Date of Termination, prorated through the month in which the Date
of Termination occurs; and
(E) Anything to the contrary notwithstanding in any
agreement or agreements pursuant to which, either prior to or after
the date hereof, you were or will be granted options ("Options")
under the Company's 1984 Stock Option Plan or any other stock
option plan of the Company, effective at and as of the Date of
Termination all such options held by you which then remain
outstanding and unexercised shall be automatically canceled and in
lieu thereof the Company shall pay to you, not later than the fifth
day following the Date of Termination, a lump sum amount equal to
the sum of:
(x) In the case of those canceled Options held
by you which were incentive stock options ("Incentive Stock
Options"), as defined under Section 422A of the Internal Revenue
Code of 1986, as amended (the "Code"), granted after the date of
this Agreement, the product of (a) the difference (to the extent
such difference is a positive number) obtained by subtracting the
per share exercise price of each such Incentive Stock Option to the
extent then exercisable, from: if the Company Shares are then
listed on a national securities exchange, on the trading day
immediately preceding the date of payment thereof, or if Company
Shares are not listed on a national securities exchange on such
date, then the average of the closing bid and asked prices for
Company Shares in the over-the-counter market for the last
preceding date on which there was a sale of such Company Shares in
such market, or if Company Shares are not then traded in the over-
the-counter market, such value as the Company in its discretion may
determine, but in no event greater than the fair market value of
such shares for federal income tax purposes, and (b) the number of
Company Shares covered by each such Incentive Stock Option;
(y) In the case of all other canceled Options
held by you, the sum of (I), the product of (a) the difference (to
the extent that such difference is a positive number) obtained by
subtracting the per share exercise price of each such Option,
whether or not then fully exercisable, from the higher of (1) if
the Company Shares are then listed on a national securities
exchange, the closing sales price on the Date of Termination of
Company Shares on such national securities exchange, or if Company
Shares are not listed on a national securities exchange on such
date, then the average of the closing bid and asked prices for
Company Shares in the over-the-counter market for the last
preceding date on which there was a sale of such Company Shares in
such market, of if Company Shares are not then traded in the over-
the-counter market, such value as the Company in its discretion may
determine, or (2) the highest price per Company Share actually paid
in connection with any change in control of the Company, and
(b) the number of Company Shares covered by such Option, plus (II),
the amount of any tax bonus that would be payable upon the exercise
of such Option at the price set forth above; and
(F) The Company shall also pay to you all legal
fees and expenses incurred by you as a result of such termination
(including all such fees and expenses, if any, incurred in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this Agreement).
(iv) If your employment shall be terminated (A) by the
Company or subsidiary corporation by which you are employed other
than for Cause, or Disability or (B) by you for Good Reason, then
for a twelve-month period following such termination, the Company
shall maintain, in full force and effect for your continued
benefit, all life, disability, accident and health insurance plans
or arrangements, and financial counseling services in which you may
have been participating immediately prior to the change in control,
provided your continued participation (or a particular type of
coverage) is possible under the general terms and provisions of
such plans and arrangements. In the event your participation (or
a particular type of coverage) under any such plan or arrangement
is barred, the Company shall arrange to provide you with benefits,
at substantially the same cost to you, which are substantially
similar to those which you are entitled to receive under such plans
and arrangements. Notwithstanding the foregoing, the Company shall
continue to pay such amounts as may be required to maintain any
insurance you may have had in force pursuant to the Split-Dollar
Plan until the later of your sixty-fifth birthday or ten years
after the insurance policy is issued, after which the Company will
release to you its interest in each such policy.
(v) If your employment shall be terminated (A) by the
Company or subsidiary corporation by which you are employed other
than for Cause or Disability or (B) by you for Good Reason, then
in addition to the aggregate retirement benefits to which you are
entitled under the Company's Qualified Plan, the Company's Excess
Benefit Plans, any other nonqualified pension agreement or
arrangement, or any successor plans thereto, the Company shall pay
you amounts equal to (I), (II), (III), or (IV), whichever is
applicable:
(I) If you have satisfied the service, but not the age,
requirements of the Early Retirement Plan, as in effect
immediately prior to the change in control, you shall receive
a monthly benefit, commencing on your fifty-fifth birthday
equal to the benefit to which you would have been entitled
under the Early Retirement Plan, as in effect immediately
prior to the change in control, had you satisfied the age and
service requirements as of the Date of Termination; or
(II) If you have satisfied the age, but not the service,
requirement of the Early Retirement Plan, as in effect
immediately prior to the change in control, you shall receive
a monthly benefit, commencing as of the Date of Termination
equal to the benefit to which you would have been entitled
under the Early Retirement Plan, as in effect immediately
prior to the change in control, had you satisfied the age and
service requirements as of the Date of Termination; or
(III) If you have satisfied neither the age nor the service
requirements of the Early Retirement Plan, as in effect
immediately prior to the change in control, you shall receive
a monthly benefit, commencing on your fifty-fifth birthday
equal to the benefit to which you would have been entitled
under the Early Retirement Plan, as in effect immediately
prior to the change in control, had you satisfied the age and
service requirements as of the Date of Termination; or
(IV) If you have satisfied both the age and the service
requirements of the Early Retirement Plan, as in effect
immediately before the change in control, you shall receive
the benefits to which you are entitled under the Early
Retirement Plan.
The benefits under this paragraph (v) shall be paid in the same
manner as, and shall otherwise possess the same rights and
privileges as were available with respect to, benefits under the
terms of the Early Retirement Plan as in effect immediately prior
to the change in control.
(vi) If your employment shall be terminated (A) by the
Company or subsidiary corporation by which you are employed other
than for Cause or Disability or (B) by you for Good Reason, then
you shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided
for in this Section 4 (except as otherwise provided in the
immediately succeeding sentence) be reduced by any compensation
earned by you as the result of employment by another employer or
by retirement benefits after the Date of Termination, or otherwise.
Benefits otherwise receivable by you pursuant to Section 4(iv)
shall be reduced to the extent comparable benefits are actually
received by you during the twelve-month period following your
termination, and any such benefits actually received by you shall
be reported to the Company.
5. Protective Limitation. Notwithstanding any provision
hereof to the contrary, in the event you (a) would receive pay-
ments under this Agreement or under any other plan, program, or
policy sponsored by the Company; (b) which payments relate to a
Change in Control of the Company and which are determined (whether
by the Company, your legal counsel, or the IRS) to be subject to
excise tax under Section 4999 of the Code; and (c) if this excise
tax would cause the net after-tax parachute payments, within the
meaning of Section 280G of the Code, ("Parachute Payments")
actually received by you to be less than the net amount you would
have received, after application of federal and state income taxes,
had the present value of your total Parachute Payments equaled
$1.00 less than three times your base amount, as defined under
Section 280G of the Code, then your Parachute Payments attribut-
able to payments under this Agreement shall be reduced (by the
minimum possible amount), so that their aggregate present value
equals $1.00 less than three times your base amount. In the event
payments under this Agreement are reduced, such reduction shall be
made first from payments made pursuant to Section 4(iii)(E) and
second from Section 4(iii)(B). For purposes of this paragraph,
your tax rate will be the maximum marginal federal and state income
tax rate on earned income, with the maximum federal rate to be
computed with regard to Section 1(g) of the Code and applying any
available deduction of state and local taxes for federal income tax
purposes. If you and the Company are unable to agree as to the
amount of the reduction described above, if any, you may select a
law firm or accounting firm from among those firms regularly
consulted by the Company regarding federal income tax matters or
other firms acceptable to the Company, and this law firm or
accounting firm shall determine the amount of any reduction and the
firm's determination shall be final and binding on you and the
Company.
6. Deferred Compensation and Benefits Trust. The Company
is establishing a Deferred Compensation and Benefits Trust, and
shall comply with the terms of that Trust. Upon the occurrence of
any Potential Change in Control of the Company, the Company shall
transfer to the Trust an amount of cash, marketable securities, or
other property acceptable to the trustee(s) equal in value to 105%
of the amount necessary, on an actuarial basis and calculated in
accordance with the terms of the Trust, to pay the Company's
obligations under this Agreement (the "Funding Amount"). The cash,
marketable securities, and other property so transferred shall be
held, managed, and disbursed by the trustee(s) subject to and in
accordance with the terms of the Trust. In addition, from time to
time, the Company shall make any and all additional transfers of
cash, marketable securities, or other property acceptable to the
trustee(s) as may be necessary in order to maintain the Funding
Amount with respect to this Agreement. The determination of the
amount required to be transferred by the Company to the Trust shall
include any amounts that could in any circumstances be payable in
the future under Section 4 hereof, calculated in accordance with
the following rules: (1) Upon a Potential Change in Control of the
Company, the Company will calculate the amount required to be
transferred to the Trust based on the assumption that your
employment, if not previously terminated, will be terminated by the
Company other than for Cause, Retirement, or Disability on the
second anniversary of the Potential Change in Control; (2) Upon any
subsequent recalculation, your employment will be deemed to have
been terminated by the Company other than for Cause, Retirement,
or Disability on the later of the date of actual termination or
the date of such recalculation; and (3) For purposes of calculating
the amount payable under Section 4(iii)(E)(y) hereof, the amount
determined under Section 4(iii) (E)(y)(1) shall be deemed to be the
higher of 200% of the closing sale price of Company Shares on the
date of the Potential Change in Control or the highest price at
which Company Shares traded during the period between the Potential
Change in Control of the Company and the date as of which the
calculation is being made.
For this purpose, the term Deferred Compensation and Benefits
Trust shall mean an irrevocable trust or trusts established or to
be established by the Company with an independent trustee or
trustees for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which nevertheless will be
subject to claims of the Company's creditors in the event of
bankruptcy or insolvency and with respect to which the Company
shall have received a ruling from the Internal Revenue Service that
the trust is a "grantor trust" for federal income tax purposes.
The Deferred Compensation and Benefits Trust contain the
following additional provisions:
(a) If a Change in Control of the Company does not occur
within one year after the Potential Change in Control, the Company
may reclaim the assets transferred to the trustee or trustees
subject to the requirement that it be again funded upon the
occurrence of another Potential Change in Control.
(b) Upon a Change in Control, the assets of the Deferred
Compensation and Benefits Trust shall be used to pay benefits under
this Agreement, except to the extent such benefits are paid by the
Company, and the Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
(c) The Deferred Compensation and Benefits Trust will be
terminated upon the exhaustion of the trust assets or upon payment
of all the Company's obligations.
(d) The Deferred Compensation and Benefits Trust shall
contain other appropriate terms and conditions consistent with the
purposes sought to be accomplished by it. Prior to a Change in
Control, the Deferred Compensation and Benefits Trust may be
amended from time to time by the Company, but no such amendment may
substantially alter any of the provisions set out in the preceding
paragraphs.
7. Successors; Binding Agreement.
(i) The Company will 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 to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you
would be entitled hereunder if you terminate your employment for
Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination. As used in this Agree-
ment, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be
payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee or if there is no such designee, to your
estate.
(iii) Any dispute between you and the Company regarding
this Agreement may be resolved either by binding arbitration or by
judicial proceedings at your sole election, and the Company agrees
to be bound by your election in that regard.
8. Notice. For the purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses
set forth on the first page of this Agreement, provided that all
notices to the Company shall be directed to the attention of the
Board with a copy to the Secretary of the Company, or to such other
address as either party may have furnished to the other in writing
in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
9. Miscellaneous. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by you and such
officer as may be designated by the Board. No waiver by either
party hereto at any time of any breach by the other party hereto
of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the
same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party
which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement
shall be governed by the laws of the state of Idaho (regardless of
the law which may be applicable under principles of conflicts of
law). All references to sections of the Exchange Act or the Code
shall be deemed also to refer to any successor provisions to such
sections. If the obligations of the Company under Section 4 arise
prior to the expiration of the term of this Agreement, such
obligations shall survive the expiration of the term.
10. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
12. No Guaranty of Employment. Neither this contract nor any
action taken hereunder shall be construed as giving you a right to
be retained as an employee of the Company.
13. Other Benefits. Any payments due to you as provided
herein are in addition to, and not in lieu of, any amounts to which
you may be entitled under any other employee benefit plan, program
or policy of the Company.
If this letter correctly sets forth our agreement on the
subject matter hereof, kindly sign and return to the Company the
enclosed copy of this letter which will then constitute our
agreement on this subject.
Sincerely,
BOISE CASCADE CORPORATION
By___________________________
Alice E. Hennessey
Senior Vice President
Corporate Relations and
Human Resources
Agreed to this [ ] day
of [ ],
as amended as of
February 7, 1992.
______________________________
[Name of Officer]
Enclosure
BOISE CASCADE CORPORATION
SUPPLEMENTAL HEALTH CARE PLAN FOR EXECUTIVE OFFICERS
SUPPLEMENTAL HEALTH CARE PLAN FOR EXECUTIVE OFFICERS
INTRODUCTION
Boise Cascade's Supplemental Health Care Plan for Executive
Officers is provided to you in addition to the Boise Cascade
Comprehensive Medical Plan, Dental Plan, Vision Plan, and Mail-
Order Prescription Drug Plan for salaried employees. While you
share in the cost of your medical care by paying a monthly
contribution, a deductible and a percentage of the remaining
expenses, the combination of the plans pays most of the major
charges for covered health care expenses for you and your family.
WHO IS ELIGIBLE
As a Boise Cascade executive officer, you are automatically
eligible for coverage under the Supplemental Health Care Plan for
Executive Officers on January 1, 1989, or from the time you are
elected an officer, whichever is later. Your dependents'
coverage under the plan will become effective on the same date
that your own coverage begins.
Your dependents who are eligible for coverage under this plan
include your spouse plus any unmarried children under age 23, if
they do not regularly work full-time and are dependent on you for
support. Under certain circumstances, a handicapped child may be
covered beyond age 23.
HOW BENEFITS BECOME PAYABLE
Medical benefits become payable under this plan after benefits
for covered charges under the Comprehensive Medical Plan have
been applied to medical expenses incurred by you or your covered
dependent. The plan will pay 100% of the remaining charges for
the treatment, services, and supplies listed under "What the Plan
Covers." Amounts applied to the deductible and copayments under
the Comprehensive Medical Plan are not covered under this plan.
Dental and vision benefits become payable under this plan after
benefits for scheduled amounts covered under the Dental Plan or
Vision Plan have been applied to dental or vision expenses
incurred by you or your covered dependent. The plan will pay
100% of the remaining charges for the services and supplies shown
under "What the Plan Covers."
No benefits are payable under this plan for prescription drugs
obtained under the Mail-Order Prescription Drug Plan.
WHAT THE PLAN COVERS
Medical expenses incurred will be reduced by the amount
considered as covered charges under the Comprehensive Medical
Plan. The plan will pay 100% of the remaining charges for the
following medical expenses:
o Hospital room and board charges.
o Hospital intensive care (ICU) and cardiac care unit (CCU)
charges.
o Hospital services and supplies (inpatient or outpatient).
o Medical treatment or surgery by a physician.
o Outpatient surgical facility services and supplies.
o Private-duty nursing by a registered nurse (R.N.), a
licensed vocational nurse (L.V.N.), or a licensed practical
nurse (L.P.N.) upon the written recommendation of a
physician.
o Ambulance service.
o Prescription drugs and medicines.
o Immunizations.
o Anesthetics and oxygen and their administration.
o Rental or purchase (at Boise Cascade's option) of approved
durable medical equipment and appliances.
o Physical therapy by a licensed physiotherapist for treatment
by physical or mechanical means only.
o Outpatient rehabilitative speech and occupational therapy.
Care must be provided by a licensed therapist who is
referred and supervised by a licensed physician.
o Blood and blood plasma which are not replaced by donation,
and their administration.
o Diagnostic x-rays and laboratory tests.
o Extended-care facility confinement, including services and
supplies.
o Medical social services while a patient is in an extended-
care facility.
o Psychiatric care provided by a physician.
o Mammograms.
The plan will pay 100% of the remaining charges for vision exams,
eyeglasses, contact lenses, hearing aids, and dental expenses
(including orthodontia and expenses for repair and maintenance of
covered items) after benefits under the Dental Plan, Vision Plan,
or Comprehensive Medical Plan have been applied.
WHAT THE PLAN DOES NOT COVER
Expenses for items shown in the list that follows are not covered
under the Supplemental Health Care Plan for Executive Officers:
o Injury or illness resulting from war or an act of war,
whether declared or undeclared.
o Items payable by workers' compensation or any other
government program, except items furnished by a government
program for civilian employees of the government.
o Items for which no charge would have been made in the
absence of medical coverage, or items for which you are not
legally obligated to pay.
o Prescription drugs obtained through Boise Cascade's Mail-
Order Drug Plan.
o Items for which Boise Cascade, by law or regulation, may not
provide benefits.
o Medical services rendered prior to the date your coverage by
this plan began.
o Charges which are applied to the deductible and copayments
under the Comprehensive Medical Plan.
o Charges which are applied to additional deductibles under
HealthMAP or the Mandatory Second Surgical Opinion Program.
HEALTH CARE CLAIMS
The necessary forms to file a claim for covered health care
expenses under the Executive Officer Health Care Program are
available from the Medical Director's Office in Boise.
PLAN ADMINISTRATION, ERISA RIGHTS
Your Salaried Employee Handbook identifies the plan administrator
and explains your ERISA rights under this plan, as well as other
Boise Cascade benefits plans.
SOURCE OF FUNDING
This plan is self-insured by Boise Cascade Corporation. Payments
for benefits under this plan are made from the general assets of
the company as benefits become payable.
TAXABILITY
All benefits payable under this plan are considered taxable
income to you, are subject to tax withholding requirements, and
will be reflected in W-2 form earnings.
COVERAGE DURING A LEAVE OF ABSENCE
Your medical coverages may be continued while you are still
employed by Boise Cascade but are not actively at work because of
an accident or illness or certain other company-approved leaves
of absence. Under such conditions, coverage will continue in
keeping with the provisions of the leave.
WHEN YOUR COVERAGE ENDS
Your coverage under Boise Cascade's Supplemental Health Care Plan
for Executive Officers ends on the earliest of the following
dates:
o On the date your employment with Boise Cascade ends.
o On the date you become ineligible to participate in these
coverages -- for example, if you cease to be an executive
officer.
o On the date Boise Cascade elects to discontinue this plan.
WHEN YOUR DEPENDENTS' COVERAGE ENDS
Your dependents' coverage under Boise Cascade's health and
dependent life insurance plans ends on the earliest of the
following dates:
o On the date your coverage ends.
o On the date your dependent ceases to be eligible because of
a change in age or dependent status as defined under a plan.
o On the date your dependent begins active duty in the armed
forces of any country, state, or international organization.
o On the date Boise Cascade elects to discontinue this plan.
NONBUSINESS USE OF CORPORATE AIRCRAFT
You may charter corporate aircraft for nonbusiness use. The
Aviation Division must be informed at the time an aircraft is
reserved for a nonbusiness charter that a nonbusiness trip is
involved. If the aircraft is required for business-related
travel subsequent to its being reserved for a nonbusiness trip,
the business-related travel will take priority and the
nonbusiness use will be preempted.
The value of a nonbusiness trip will be calculated based on a
formula which takes into consideration the actual distance flown,
but not deadhead segments. The value of the nonbusiness trip
will not be billed to you but will be considered as income to you
and reported in your W-2 earnings on a monthly basis. Boise
Cascade will pay you a cash gross-up payment equal to the tax
liability of the nonbusiness charter based upon a 33% federal
income tax rate and your state income tax rate. This gross-up
payment will be made for you and each guest on the charter who is
a family member. Appropriate withholdings on the value of a
nonbusiness trip and the tax gross-up will be deducted from your
paycheck.
For any questions you have regarding personal use of corporate
aircraft, please contact the Aviation Division in Boise
(extension 7580).
You or members of your immediate family also may fly on corporate
aircraft on a space-available basis. The value of this space-
available use will be calculated in the same manner as used for
nonbusiness charter. Nonbusiness, space-available charges will
not be billed to you but will be considered as income to you and
reported in your W-2 earnings on a monthly basis. The company
will pay you a cash gross-up payment equal to the tax liability
on the space-available use based upon a 33% federal income tax
rate and your state income tax rate. Appropriate withholdings on
space-available travel and the tax gross-up will be deducted from
your paycheck.
FINANCIAL COUNSELING
As an executive officer of Boise Cascade, you have a choice of
two financial-counseling programs.
Deloitte & Touche Program
This program provides complete financial-counseling services
through the accounting firm of Deloitte & Touche. Deloitte &
Touche will review your present financial profile, develop and
quantify personal financial goals, review income tax and
investment strategies, develop a retirement plan, prepare cash-
flow forecasts, review risk-management strategies, assist with
stock option strategies, and review and assist in the development
of an estate plan. The counseling in subsequent years includes
updating of the above items as necessary and preparation of
annual tax returns.
The value of the first year of participation in the Deloitte &
Touche program is estimated to be up to $7,500. Continuing
services are estimated to be valued at up to $5,500 per year.
Since many of Deloitte & Touche's activities will be focusing on
Boise Cascade programs, a portion of these fees will be billed
directly to Boise Cascade. As a result, your actual out-of-
pocket cost will be the tax on Deloitte & Touche's fees for
personal planning unrelated to Boise Cascade programs, which are
estimated to be $5,500 for the first year and $4,500 per year
thereafter. If Deloitte & Touche's actual billing is less than
these amounts, the actual costs will be added to your W-2 income.
A maximum of $1,000 is also available during the first 12 months
of this program to cover legal costs associated with the
preparation and updating of wills and trusts. There is no gross-
up for taxes payable under this program.
Under this program, Deloitte & Touche will invoice you directly
for their fees related to your personal financial plan. You
should approve the invoice and forward it to the Human Resources
Controller, Boise, who will pay Deloitte & Touche directly.
Alternative Program
The alternative financial-counseling program makes available up
to $4,500 for your use in obtaining financial-counseling services
during your first 12 months as an executive officer. After that,
you are allowed $3,000 per calendar year for financial-counseling
services. You may carry over unused amounts, up to one year's
allowance ($3,000), from one year to the next.
Your initial allowance will include $4,500 for the first 12-
month period plus a proration of the annualized $3,000 allowance
for the months remaining in a subsequent calendar year.
Thereafter, your financial-counseling allowance will be available
for your use on a calendar-year basis.
Under this program, the counsel you seek and how you spend your
allowance are completely up to you as long as the money is spent
for one or more of the following services: investment planning,
tax preparation, tax planning and compliance, or estate planning.
This may include several people, including an accountant, a
lawyer, and an investment counselor.
Invoices for these services should be sent to the Human Resources
Controller's office after you have approved them with your
signature. The company will either reimburse you for these
expenditures or pay the charges directly.
Since the expenses of these services are generally not deductible
for federal income tax purposes, you will receive a cash gross-
up payment on reimbursed charges. The gross-up payment will help
cover the tax on the payment for services and the tax on the tax
payment. The current gross-up is 38.9% based upon a 28% federal
tax rate. The gross-up payment will also be deducted from your
annual allowance and will be made after the invoice for service
has been paid.
Money paid on your behalf by Boise Cascade for these services and
gross-up payments are taxable and are reported in your W-2
earnings on a monthly basis, and appropriate withholdings will be
deducted from your paycheck on these amounts.
Under either the Deloitte & Touche or the alternative program, it
is your responsibility to evaluate the advice you receive and
make appropriate decisions in response. Boise Cascade is not
responsible for the quality of any services you receive and
cannot guarantee the services or results.
FAMILY TRAVEL
You have available for your use up to $3,000 per calendar year
for travel expenses incurred by members of your immediate family
while accompanying you on a business-related trip. You may carry
over up to one year's allowance ($3,000) from one year to the
next. This program is in addition to any spouse travel required
for company-related business reasons.
Family travel reimbursements under this program are taxable
income and will be reported in your W-2 earnings on a monthly
basis, and appropriate withholdings will be deducted from your
paycheck.
Immediate family members include your spouse, children, mother,
father, brother, sister, mother- and father-in-law, and son- and
daughter-in-law. Types of expenses that will be reimbursed are
air or surface travel, meals, lodging, and tips. Entertainment
expenses are excluded.
Family travel expenses should be submitted for reimbursement to
the Human Resources Controller, Boise, on a Boise Cascade Expense
Report form. When submitting these expenses, please follow the
same instructions you use in filling out an Expense Report for
your own company travel expenses.
DIRECTORS' INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of *_________, 199*___, between
BOISE CASCADE CORPORATION, a Delaware corporation (the
"Company"), and *_____________________ (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and
attract as directors the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted
against directors of public companies in today's environment;
WHEREAS, basic protection against undue risk of personal
liability of directors heretofore has been provided through
insurance coverage providing reasonable protection at reasonable
cost, and Indemnitee has relied on the availability of such
coverage; but as a result of substantial changes in the market-
place for such insurance, it has become increasingly more diffi-
cult to obtain such insurance on terms providing reasonable
protection at reasonable cost;
WHEREAS, the Bylaws of the Company require the Company to
indemnify and advance expenses to its directors to the full
extent permitted by law, and the Indemnitee has been serving and
continues to serve as a director of the Company in part in
reliance on such Bylaws;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability in order to enhance Indem-
nitee's continued service to the Company in an effective manner,
any inadequacy of the Company's director liability insurance
coverage, and Indemnitee's reliance on the aforesaid Bylaws and
in part to provide Indemnitee with specific contractual assurance
that the protection promised by such Bylaws will be available to
Indemnitee (regardless of, among other things, any amendment to
or revocation of such Bylaws or any change in the composition of
the Company's board of directors or acquisition transaction
relating to the Company), the Company wishes to provide in this
Agreement for the indemnification of and the advancing of ex-
penses to Indemnitee to the full extent permitted by law and as
set forth in this Agreement and, to the extent insurance is main-
tained, for the continued coverage of Indemnitee under the
Company's directors' liability insurance policies;
NOW, THEREFORE, in consideration of the premises and of
Indemnitee's continuing to serve the Company directly, or at its
request with another enterprise, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Change in Control: shall be deemed to have
occurred if: (i) any "person" (as such term is used in Sec-
tions 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than a trustee or other fiduciary holding securi-
ties under an employee benefit plan of the Company or a corpora-
tion, owned directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership
of stock of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 20% or more of the com-
bined voting power of the Company's then outstanding Voting
Securities; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the
board of directors of the Company and any new director whose
election by the board of directors or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election
or nomination for election was previously so approved cease for
any reason to constitute a majority thereof; or (iii) the stock-
holders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of
the combined voting power of the Voting Securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
(b) Claim: any threatened, pending, or completed
action, suit, or proceeding or any inquiry or investigation,
whether conducted by the Company or any other party, that Indem-
nitee in good faith believes might lead to the institution of any
such action, suit, or proceeding, whether civil, criminal,
administrative, investigative, or other.
(c) Expenses: include attorneys' fees and all other
costs, expenses, and obligations paid or incurred in connection
with investigating, defending, being a witness in, or partici-
pating in (including on appeal) or preparing to defend, be a
witness in, or participate in any Claim relating to any Indemni-
fiable Event.
(d) Indemnifiable Event: any event or occurrence
related to the fact that Indemnitee is or was a director, em-
ployee, agent, or fiduciary of the Company or is or was serving
at the request of the Company as a director, officer, employee,
trustee, agent, or fiduciary of another corporation, partnership,
joint venture, employee benefit plan, trust, or other enterprise
or by reason of anything done or not done by Indemnitee in any
such capacity.
(e) Potential Change in Control: shall be deemed to
have occurred if (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change
in Control; (ii) any person (including the Company) publicly
announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control;
(iii) any person, other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company, who is or becomes the benefi-
cial owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of the
Company's then outstanding Voting Securities increases his or her
beneficial ownership of such securities by 5% or more over the
percentage so owned by such person on the date hereof; or
(iv) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
(f) Reviewing Party: any appropriate person or body
consisting of a member or members of the Company's board of
directors or any other person or body appointed by the board
(including the special, independent counsel referred to in
Section 3) who is not a party to the particular Claim for which
Indemnitee is seeking indemnification.
(g) Voting Securities: any securities of the Company
which vote generally in the election of directors.
2. Basic Indemnification Arrangement.
(a) In the event Indemnitee was, is, or becomes a
party to or witness or other participant in or is threatened to
be made a party to or witness or other participant in a Claim by
reason of (or arising in part out of) an Indemnifiable Event, the
Company shall indemnify Indemnitee to the fullest extent per-
mitted by law as soon as practicable, but in any event no later
than 30 days after written demand is presented to the Company,
against any and all Expenses, judgments, fines, penalties, and
amounts paid in settlement (including all interest, assessments,
and other charges paid or payable in connection with or in
respect of such Expenses, judgments, fines, penalties, or amounts
paid in settlement) of such Claim. Notwithstanding anything in
this Agreement to the contrary, prior to a Change in Control,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indem-
nitee against the Company or any director or officer of the
Company unless the Company has joined in or consented to the
initiation of such Claim. If so requested by Indemnitee, the
Company shall advance (within two business days of such request)
any and all Expenses to Indemnitee (an "Expense Advance").
(b) Notwithstanding the foregoing, (i) the obligations
of the Company under Section 2(a) shall be subject to the condi-
tion that the Reviewing Party shall not have determined (in a
written opinion, in any case in which the special, independent
counsel referred to in Section 3 hereof is involved) that Indem-
nitee would not be permitted to be indemnified under applicable
law; and (ii) the obligation of the Company to make an Expense
Advance pursuant to Section 2(a) shall be subject to the condi-
tion that, if, when, and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so
indemnified under applicable law, the Company shall be entitled
to be reimbursed by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid, provided,
however, that if Indemnitee has commenced legal proceedings in a
court of competent jurisdiction to secure a determination that
Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would
not be permitted to be indemnified under applicable law shall not
be binding and Indemnitee shall not be required to reimburse the
Company for any Expense Advance until a final judicial deter-
mination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has
not been a Change in Control, the Reviewing Party shall be
selected by the board of directors, and if there has been such a
Change in Control, the Reviewing Party shall be the special,
independent counsel referred to in Section 3 hereof. If there
has been no determination by the Reviewing Party or if the
Reviewing Party determines that Indemnitee substantively would
not be permitted to be indemnified in whole or in part under
applicable law, Indemnitee shall have the right to commence
litigation in any court in the states of *____________ or
Delaware having subject matter jurisdiction thereof and in which
venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any
aspect thereof, and the Company hereby consents to service of
process and to appear in any such proceeding. Any determination
by the Reviewing Party otherwise shall be conclusive and binding
on the Company and Indemnitee.
3. Change in Control. The Company agrees that if there is
a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's
board of directors who were directors immediately prior to such
Change in Control), then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnity payments
and Expense Advances under this Agreement or any other agreement
or Company Bylaw now or hereafter in effect relating to Claims
for Indemnifiable Events, the Company shall seek legal advice
only from special, independent counsel selected by Indemnitee and
approved by the Company (which approval shall not be unreasonably
withheld) ("Approved Counsel"). The Approved Counsel shall
(i) be located in New York City; (ii) consist of 100 or more
attorneys; (iii) be rated "a v" by Martindale-Hubbell Law
Directory; and (iv) not otherwise have performed services for the
Company within the last ten years (other than in connection with
such matters) or for the Indemnitee. The Approved Counsel may
consult with counsel admitted to the bar in the state of Delaware
in connection with all matters arising hereunder. Such Approved
Counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent the
Indemnitee would be permitted to be indemnified under applicable
law. The Company agrees to pay the reasonable fees of the
Approved Counsel referred to above and to fully indemnify such
counsel against any and all expenses (including attorneys' fees),
claims, liabilities, and damages arising out of or relating to
this Agreement or its engagement pursuant hereto.
4. Establishment of Trust. In the event of a Potential
Change in Control, the Company shall, upon written request by
Indemnitee, create a trust for the benefit of the Indemnitee and
from time to time upon written request of Indemnitee shall fund
such trust to the extent permitted by law in an amount sufficient
to satisfy any and all Expenses reasonably anticipated at the
time of each such request to be incurred in connection with
investigating, preparing for, and defending any Claim relating to
an Indemnifiable Event, and any and all judgments, fines, penal-
ties, and settlement amounts of any and all Claims relating to an
Indemnifiable Event from time to time actually paid or claimed,
reasonably anticipated, or proposed to be paid. The amount or
amounts to be deposited in the trust pursuant to the foregoing
funding obligation shall be determined by the Reviewing Party in
any case in which the special, independent counsel referred to
above is involved. The terms of such trust shall provide that
upon a Change in Control (i) the trust shall not be revoked or
the principal thereof invaded, without the written consent of the
Indemnitee; (ii) the trustee shall advance, within two business
days of a request by the Indemnitee, any and all Expenses to the
Indemnitee (and the Indemnitee hereby agrees to reimburse the
trust under the circumstances under which the Indemnitee would be
required to reimburse the Company under Section 2(b) of this
Agreement); (iii) the trust shall continue to be funded by the
Company in accordance with the funding obligation set forth
above; (iv) the trustee shall promptly pay to the Indemnitee all
amounts for which the Indemnitee shall be entitled to indem-
nification pursuant to this Agreement or otherwise; and (v) all
unexpended funds in such trust shall revert to the Company upon a
final determination by the Reviewing Party or a court of compe-
tent jurisdiction, as the case may be, that the Indemnitee has
been fully indemnified under the terms of this Agreement. The
trustee shall be chosen by the Indemnitee. Nothing in this
Section 4 shall relieve the Company of any of its obligations
under this Agreement.
5. Indemnification for Additional Expenses. The Company
shall indemnify Indemnitee against any and all expenses (includ-
ing attorneys' fees) and, if requested by Indemnitee, shall
(within two business days of such request) advance such expenses
to Indemnitee, which are incurred by Indemnitee in connection
with any claim asserted against or action brought by Indemnitee
for (i) indemnification or advance payment of Expenses by the
Company under this Agreement or any other agreement or Company
Bylaw now or hereafter in effect relating to Claims for Indem-
nifiable Events and/or (ii) recovery under any directors' liabil-
ity insurance policies maintained by the Company, regardless of
whether Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment, or insurance
recovery, as the case may be.
6. Partial Indemnity, etc. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for some or a portion of the Expenses, judgments, fines,
penalties, and amounts paid in settlement of a Claim but not,
however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to
which Indemnitee is entitled. Moreover, notwithstanding any
other provision of this Agreement, to the extent that Indemnitee
has been successful on the merits or otherwise in defense of any
Claim relating in whole or in part to an Indemnifiable Event or
in defense of any issue or matter therein, including dismissal
without prejudice, Indemnitee shall be indemnified against all
Expenses incurred in connection therewith. In connection with
any determination by the Reviewing Party or otherwise as to
whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
7. No Presumption. For purposes of this Agreement, the
termination of any claim, action, suit, or proceeding, by judg-
ment, order, settlement (whether with or without court approval),
or conviction, or upon a plea of nolo contendere or its equiva-
lent, shall not create a presumption that Indemnitee did not meet
any particular standard of conduct or have any particular belief
or that a court has determined that indemnification is not
permitted by applicable law.
8. Nonexclusivity, etc. The rights of the Indemnitee
hereunder shall be in addition to any other rights Indemnitee may
have under the Company's Bylaws or the Delaware General Corpora-
tion Law or otherwise. To the extent that a change in the
Delaware General Corporation Law (whether by statute or judicial
decision) permits greater indemnification by agreement than would
be afforded currently under the Company's Bylaws and this Agree-
ment, it is the intent of the parties hereto that Indemnitee
shall enjoy by this Agreement the greater benefits so afforded by
such change.
9. Liability Insurance. To the extent the Company main-
tains an insurance policy or policies providing directors'
liability insurance, Indemnitee shall be covered by such policy
or policies, in accordance with its or their terms, to the
maximum extent of the coverage available for any Company
director.
10. Period of Limitations. No legal action shall be
brought, and no cause of action shall be asserted by or on behalf
of the Company or any affiliate of the Company against Indem-
nitee, Indemnitee's spouse, heirs, executors, or personal or
legal representatives after the expiration of two years from the
date of accrual of such cause of action, and any claim or cause
of action of the Company or its affiliate shall be extinguished
and deemed released unless asserted by the timely filing of a
legal action within such two-year period, provided, however, that
if any shorter period of limitations is otherwise applicable to
any such cause of action, such shorter period shall govern.
11. Amendments, etc. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in
writing by both of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute
a waiver of any other provisions hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver.
12. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of Indemnitee, who shall
execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring
suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be
liable under this Agreement to make any payment in connection
with any claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance
policy, Bylaw, or otherwise) of the amounts otherwise
indemnifiable hereunder.
14. Binding Effect, etc. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
parties hereto and their respective successors, assigns, includ-
ing any direct or indirect successor by purchase, merger, con-
solidation, or otherwise to all or substantially all of the
business and/or assets of the Company, spouses, heirs, and
personal and legal representatives. This Agreement shall con-
tinue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other
enterprise at the Company's request.
15. Severability. The provisions of this Agreement shall
be severable in the event that any of the provisions hereof
(including any provision within a single section, paragraph, or
sentence) are held by a court of competent jurisdiction to be
invalid, void, or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent
permitted by law.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the state
of Delaware applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts
of laws.
Executed as of the *______ day of *____________, 199*___.
BOISE CASCADE CORPORATION
By ____________________________
Name: John B. Fery
Title: Chairman of the Board &
Chief Executive Officer
INDEMNITEE
_______________________________
*[Name]
BOISE CASCADE CORPORATION
DEFERRED COMPENSATION AND BENEFITS TRUST
__________________
TRUST AGREEMENT
By and Between
BOISE CASCADE CORPORATION
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
Dated
November 2, 1987
As Amended and Restated
As of December 1, 1988
CONTENTS
Article Page
I. The Plans
Section 1.01 Plans............................... 4
II. Trust and the Trust Corpus
Section 2.01 Delivery of Funds................... 5
Section 2.02 Trust Corpus........................ 8
III. Change in Control
Section 3.01 Definition of Potential Change
in Control..................................... 10
Section 3.02 Definition of Change in Control..... 10
Section 3.03 Notice of Change.................... 11
IV. Release of the Trust Corpus
Section 4.01 Delivery to the Company............. 11
Section 4.02 Deliveries to Participants.......... 12
Section 4.03 Deliveries to Creditors of
the Company.................................... 15
Section 4.04 Notification of Bankruptcy or
Insolvency..................................... 16
V. Trustee
Section 5.01 Trustee............................. 16
Section 5.02 Successor Trustee................... 19
VI. Termination and Amendment
Section 6.01 Termination......................... 21
Section 6.02 Amendment........................... 21
VII. General Provisions
Section 7.01 Further Assurances.................. 23
Section 7.02 Certain Provisions Relating to
This Trust..................................... 23
Section 7.03 Notices............................. 24
Section 7.04 Trust Beneficiaries................. 25
Attachments
Exhibit A Severance Pay Policy
Schedule 1 Executive List
Schedule 2 Trustee's Fee Schedule
Exhibit B Trust Portfolios and Funding Assumptions
BOISE CASCADE CORPORATION
DEFERRED COMPENSATION AND BENEFITS TRUST
TRUST AGREEMENT (the "Trust"), dated November 2, 1987, as
amended and restated as of December 1, 1988, by and between BOISE
CASCADE CORPORATION, a Delaware corporation (the "Company"), and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (the
"Trustee").
WHEREAS, the Company is or may become obligated under certain
employee benefit plans or agreements to make payments to certain of
its directors and executives (the "Executives"); and
WHEREAS, the aforesaid obligations of the Company are not
funded or otherwise secured and the Company has agreed to assure
that the future payment of such amounts will not be improperly
withheld in the event that a "Change in Control" of the Company (as
defined herein) should occur; and
WHEREAS, for purposes of assuring that such payments will be
made in accordance with the terms of the plans, the Company may, in
its discretion, desire to deposit with the Trustee, subject only to
the claims of the Company's creditors as provided herein, amounts of
cash, marketable securities, and other property acceptable to the
Trustee, sufficient to fund such payments as they may become due and
payable; and
WHEREAS, this Trust is intended to be a grantor trust within
the meaning of Section 671 of the Internal Revenue Code of 1986;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties
hereto agree as follows:
ARTICLE I
THE PLANS
SECTION 1.01 Plans. The following Company plans and agree-
ments (collectively referred to as the "Plans") are subject to this
Trust:
(a) The Boise Cascade Corporation Executive Officer
Severance Pay Policy, a copy of which is attached as Exhibit A.
(b) Such other plans and agreements as the Company may,
from time to time, add to this Trust, pursuant to the terms herein.
Attached as Schedule 1 is a list of the names and mailing
addresses of Executives currently participating in the Plans (the
"Executive List"). The Company will revise the Executive List no
less often than quarterly to reflect, among other things, the
addition of new Plans and changes in the identity of Executives
participating in the Plans.
The creation and funding of this Trust will not discharge
the Company's obligations under the Plans. Distributions made from
the Trust to or for Executives in respect of the Plans pursuant to
Section 4.02 hereof, shall, to the extent of such distributions,
satisfy the Company's obligation to pay benefits to such Executive
under the Plans.
Subject to the terms of each of the Plans, the Company
reserves the right to amend any of the Plans at any time prior to a
Change in Control of the Company, in which case the Plans, as
amended, shall continue to be subject to this Trust. At any time
prior to a Change in Control of the Company, the Company may cause
additional plans to become Plans subject to this Trust. Any amended
or additional plans shall become Plans subject to this Trust only
upon receipt by the Trustee of the amended or additional plan
documents. Upon and after a Change in Control of the Company, the
Company may not amend any Plan, withdraw any Plan from this Trust,
cause any additional plans to become Plans hereunder, or add any
participants to any Plan.
ARTICLE II
TRUST AND THE TRUST CORPUS
SECTION 2.01 Delivery of Funds.
(a) (1) Concurrently with the execution of this Trust,
the Company is delivering to the Trustee to be held in trust here-
under the sum of $1,000.00 in cash to be administered and disposed
of by the Trustee as provided herein. (2) Immediately upon a Poten-
tial Change in Control of the Company (as defined in Article III
hereof), the Company may, in its discretion, deliver to the Trustee
(in accordance with Section 6.01) such sums of cash, marketable
securities, and other property acceptable to the Trustee in an
amount up to 105% of the amount necessary to provide on an actu-
arial basis for the payment when due of all the Company's obliga-
tions to or on behalf of Executives under the Plans (the "Funding
Amount") which shall be invested by the Trustee and administered in
accordance with the terms of this Trust. The Trustee shall have no
duty to perform or independently evaluate the calculations and
determinations of the Company made pursuant to this Section 2.01(a).
(b) In the event of a Potential Change in Control of the
Company, the Company shall, no less often than every six months from
the date of such Potential Change in Control unless the entire Trust
Corpus shall theretofore have been released pursuant to Article IV
hereof, recalculate the Funding Amount as of the end of the month
immediately preceding such six-month interval date as if the
Potential Change in Control had occurred at the end of such month.
If the amount so calculated exceeds the then fair market value of
the Trust Corpus, the Company may transfer to the Trustee an amount
in cash, marketable securities, or any other property acceptable to
the Trustee equal to such excess. If the Funding Amount so
calculated is less than the then fair market value of the Trust
Corpus, the Trustee, upon receipt of a written request from the
Company and subject to Section 4.03, shall distribute to the Company
such difference in cash.
(c) After a Change in Control shall have occurred, and at
all times prior to the release of the entire Trust Corpus pursuant
to Article IV hereof, the Funding Amount shall be recalculated by
Milliman & Robertson, Inc., consulting actuaries (the "Actuary"),
and subject to the limitations of Section 4.02(b) hereof, such
recalculation by the Actuary shall be binding on the Company, the
Executives, and the Trustee. The Trustee shall have no duty to
perform or independently evaluate the determination of the Actuary
made pursuant to this Section 2.01(b). If Milliman & Robertson,
Inc. should decline to serve as Actuary or should discontinue
business with no successor, or if 65% or more in number of the
Executives reflected on the then most recent Executive List should
notify the Trustee in writing to select another Actuary, the Trustee
shall select another firm of consulting actuaries to serve as
Actuary hereunder. The Trustee and the Company shall provide the
Actuary with such relevant information as may be in its possession
that is necessary to make such recalculation. The first such
recalculation shall be made by the Actuary as soon as possible after
the end of the second calendar year following the year in which the
Change in Control occurred, and thereafter the Actuary shall
recalculate the Funding Amount annually. Upon any such re-
calculation by the Actuary, if the amount so calculated exceeds the
then fair market value of the Trust Corpus, the Actuary shall so
notify the Company and the Trustee, and the Company may forthwith
transfer to the Trustee an amount in cash equal to such excess, and
if the then fair market value of the Trust Corpus exceeds 125% of
the Funding Amount so calculated, the Trustee, upon receipt of a
written request from the Company and subject to Section 4.03, shall
distribute to the Company in cash an amount equal to such excess.
(d) The Funding Amount shall be determined from time to
time in accordance with the terms of each of the Plans and in
accordance with the assumptions set forth in Exhibit B hereto.
(e) Payment by the Company pursuant to Section 2.01(a),
(b), or (c) hereof shall be accompanied by a Payment Schedule (as
defined in Section 4.02(a) hereof) with respect to each Executive
for whose account such payment is being made.
SECTION 2.02 Trust Corpus.
(a) As used herein, the term "Trust Corpus" shall mean
the amounts delivered to the Trustee pursuant to the terms hereof,
less amounts distributed or paid from the Trust pursuant to the
terms hereof, plus all income earned by the Trust, in whatever form
held or invested as provided herein. Upon and after the transfer to
the Trustee of the amounts provided in subsection (2) of Sec-
tion 2.01(a), the Trust Corpus shall consist of two portfolios as
follows: (i) a short-term fixed income portfolio (the "Short-Term
Portfolio") which, except as otherwise provided below in this Sec-
tion 2.02(a), shall be invested solely in U.S. Treasury obligations
having maturities of less than one year, and (ii) an immunized/
dedicated fixed income portfolio ("the "Dedicated Portfolio") which
shall constitute a portfolio of cash and/or U.S. Treasury obliga-
tions that will produce a cash flow sufficient to provide for the
payment when due of all the Company's obligations to Executives
under those Plans the benefits under which are to be paid from the
Dedicated Portfolio, as reflected on Exhibit B hereto. So long as
the Dedicated Portfolio has a current and projected cash flow
sufficient to pay when due all amounts to be paid from such Dedi-
cated Portfolio, the Trustee shall hold the assets of the Dedicated
Portfolio in that form. If the Trustee is advised by the Actuary
that the Dedicated Portfolio is no longer sufficient for that pur-
pose, the Trustee shall liquidate and reinvest such assets in the
Trust Corpus as may be necessary to cause the Dedicated Portfolio to
be sufficient for that purpose, or as nearly so as possible, all in
accordance with the instructions of Loomis, Sayles and Company,
Inc., or its successor (the "Advisor"), or if that Company has
discontinued business with no successor, with the instructions of a
recognized professional expert in the creation of immunized/
dedicated fixed income portfolios to be selected by the Trustee.
The Trustee shall have no responsibility to verify such advice by
the Actuary or instructions from the Advisor. Any portion of the
Trust Corpus not allocated to the Dedicated Portfolio shall be
allocated to the Short-Term Portfolio. Prior to a Potential Change
in Control of the Company, the original funding of $1,000 shall be
held uninvested by the Trustee.
(b) All expenses (including, as provided in Section 5.01
hereof, any expenses of the Trustee) charged against the Trust
Corpus shall be for the account of the Company and the Company shall
be obligated promptly to reimburse the Trust Corpus for any expense
charged against the Trust Corpus except to the extent that such
amounts have been applied to reduce amounts payable to the Company
pursuant to Section 2.01(b) or (c) hereof. The Trustee shall notify
the Company from time to time of the amount of such expenses, and
the Company shall promptly reimburse the Trust Corpus for those
amounts. Notwithstanding the foregoing, in determining the expenses
charged against the Trust Corpus, no amounts that may be paid
pursuant to the Payment Schedules shall be considered to be
"expenses."
ARTICLE III
CHANGE IN CONTROL
SECTION 3.01 Definition of Potential Change in Control. For
purposes of this Trust, a "Potential Change in Control" of the
Company means that (i) the Company has entered into an agreement,
the consummation of which would result in the occurrence of a Change
in Control of the Company; (ii) any person (including the Company)
has publicly announced an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of
the Company; (iii) any person has become the beneficial owner,
directly or indirectly, of securities of the Company representing
9.5% or more of the combined voting power of the Company's then
outstanding securities; or (iv) the Board of Directors has adopted a
resolution to the effect that a Potential Change in Control of the
Company for purposes of this Trust has occurred.
SECTION 3.02 Definition of Change in Control. For purposes of
this Trust, a "Change in Control" of the Company means a change in
control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor provisions, whether or not the Company is
then subject to such reporting requirement; provided that, without
limitation, such a Change in Control shall be deemed to have oc-
curred if (i) any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than the Company or an em-
ployee benefit plan maintained by the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company repre-
senting 20% or more of the combined voting power of the Company's
then outstanding securities or (ii) during any period of two con-
secutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company, including for this
purpose any new director whose election or nomination for election
by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who were directors
at the beginning of the period, cease for any reason to constitute a
majority thereof.
SECTION 3.03 Notice of Change. For purposes of this Trust, a
Potential Change in Control or a Change in Control of the Company
shall be deemed to have occurred only upon receipt by the Trustee of
written notice to that effect from the Board of Directors or the
Chief Executive Officer of the Company.
ARTICLE IV
RELEASE OF THE TRUST CORPUS
SECTION 4.01 Delivery to the Company. Except as provided in
Section 4.03, in the event the Company delivers the Funding Amount
to the Trustee upon a Potential Change in Control, the remaining
Trust Corpus less the original funding of $1,000 shall be returned
to the Company one year after delivery to the Trustee unless a
Change in Control shall have occurred during such one-year period.
Such one-year period shall recommence in the event of and upon the
date of any subsequent Potential Change in Control. If another
Potential Change in Control should occur after the Funding Amount
has been returned to the Company as provided in this Section 4.01,
the Company may deliver a new Funding Amount to the Trustee pur-
suant to Section 2.01. The Company shall provide written notice to
the Trustee of the occurrence of a Change in Control or Potential
Change in Control or the passage of the one-year period requiring
the return of trust assets to the Company pursuant to the terms of
this Section 4.01.
SECTION 4.02 Deliveries to Participants. The Trustee shall
hold the Trust Corpus in its possession under the provisions of this
agreement until authorized to deliver the Trust Corpus or any
specified portion thereof as follows:
(a) In connection with any payment of the Funding
Amount, the Company shall deliver to the Trustee schedules (the
"Payment Schedules") indicating the amounts payable to or on behalf
of each Executive, or providing a formula or instructions for
determining the amounts so payable, the person or persons to whom so
payable, the form in which such amount is to be paid (as provided
for or available under the Plans), and the time of commencement for
payment of such amounts. The Company (or, after a Change in Control
of the Company, the Actuary) shall revise the Payment Schedules from
time to time to the extent required under the Plans or pursuant to
this Trust Agreement. The appropriate Payment Schedule also shall
be delivered by the Trustee to each Executive. Modified Payment
Schedules shall be delivered by the Company or the Actuary to the
Trustee and by the Trustee to the Executives at each time that
additional amounts are paid by the Company to the Trustee (or
refunded to the Company) under the terms hereof and upon the
occurrence of any event, such as the addition of new Executives or
Plans or early retirement of an Executive, requiring a modification
of any Payment Schedule. The Trustee shall have no duty to perform
or to evaluate independently the determination of the Company or the
Actuary made pursuant to this Section 4.02(a). At any time prior to
a Change in Control of the Company, the Company may add additional
Plans or additional Executives under any of the Plans, in which case
both the Payment Schedules and the Funding Amount shall be adjusted
accordingly. Except as otherwise provided herein, the Trustee shall
make payments to or for the Executives only in accordance with the
Payment Schedules. Upon and after a Change in Control of the
Company, the Company may not cause any additional plans to become
Plans hereunder, nor may any additional Executive be added under any
of the Plans.
(b) After a Change in Control of the Company has oc-
curred, an Executive who reasonably believes that the then current
Funding Amount is inadequate or that the then current Payment
Schedule applicable to him or her does not properly reflect the
amount payable to or for such Executive or the time or form of
payment from the Trust Corpus in respect of the Plans, may deliver
to the Trustee written notice (the "Executive's Notice") setting
forth the Funding Amount and/or payment instructions for the amount
the Executive believes is due under the relevant terms of the Plans.
The Trustee shall deliver a copy of the Executive's Notice to the
Company and the Actuary and to each other Executive within ten
business days of the delivery to the Trustee, and the Trustee will
engage one or more independent attorneys, accountants, actuaries, or
other experts (the "Experts"), including, if the Trustee so
determines, the Actuary and/or the Advisor, to determine the correct
Funding Amount and the correct Payment Schedule. The Trustee shall
have no duty to perform or independently evaluate the determination
of the Experts made pursuant to this Section 4.02(b). After any
such determinations, appropriate adjustments to the Funding Amount
and the affected Payment Schedule may be made in accordance with the
determination of the Experts, and any increase in the Funding Amount
may be paid by the Company, in its sole discretion, to the Trustee
as provided in Section 2.01(c).
(c) The Trustee shall withhold from any payment due to an
Executive hereunder the amount required by law to be so withheld
under federal, state, and local wage withholding requirements or
otherwise, and shall pay over to the appropriate government
authority the amounts so withheld.
(d) Except as otherwise provided herein, in the event of
any final determination by the Internal Revenue Service or a court
of competent jurisdiction, which determination is not appealable or
with respect to which the time for appeal has expired, that the
Executives or any particular Executive is subject to federal income
taxation on amounts held in Trust hereunder prior to the
distribution to the Executives or Executive of such amounts, the
Trustee shall, on receipt by the Trustee of notice of such
determination, pay to each Executive the portion of the Trust Corpus
includible in such Executive's federal gross income.
(e) Any revisions, modifications, or additions pertain-
ing to Payment Schedules, Plans or the Executive List shall not be
subject to this Trust until receipt by the Trustee of copies
thereof.
SECTION 4.03 Deliveries to Creditors of the Company. The
Trust Corpus is and shall remain at all times subject to the claims
of the general creditors of the Company in the event of the Com-
pany's insolvency or bankruptcy as defined in Section 4.04. Accord-
ingly, the Company shall not create, and except as otherwise pro-
vided by Section 5.01(f), this Trust Agreement shall not be con-
strued to create, a security interest in the Trust Corpus in favor
of the Executives or any creditor. If the Trustee receives the
notice provided for in Section 4.04 hereof, or if the Trustee re-
ceives a written allegation from a person or entity claiming to be a
creditor of the Company that the Company is bankrupt or insolvent,
the Trustee shall discontinue payments to or on behalf of any of the
Executives. The Trustee shall, as soon as practicable thereafter,
determine whether the Company is bankrupt or insolvent, based upon
such evidence as may be available to the Trustee which would provide
a reasonable basis for making such a determination. Unless the
Trustee has actual knowledge or has received the notice or written
allegation referred to hereinabove, the Trustee shall have no duty
to inquire or determine whether the Company is bankrupt or
insolvent. If the Trustee determines that the Company is bankrupt
or insolvent, the Trustee shall hold the Trust Corpus for the
benefit of the Company's general creditors and deliver any re-
maining Trust Corpus to satisfy the claims of such creditors as a
court of competent jurisdiction may direct, and the Trustee is
authorized to institute or participate in appropriate legal pro-
ceedings to obtain such directions or to determine if the Company is
bankrupt or insolvent. The Trustee shall resume distributions of
Trust Corpus to or for the Executives under the terms hereof,
including any arrearages, after so notifying the Company, if it
determines that the Company was not, or is no longer, bankrupt or
insolvent, or pursuant to an order of a court of competent
jurisdiction.
SECTION 4.04 Notification of Bankruptcy or Insolvency. The
Board of Directors and Chief Executive Officer of the Company shall
advise the Trustee in writing of the Company's bankruptcy or
insolvency within three business days following the occurrence of an
event of bankruptcy or insolvency. The Company shall be deemed to
be bankrupt or insolvent upon the occurrence of either of the
following:
(i) The Company is unable to pay its debts as such debts
become due; or
(ii) The Company is subject to a pending proceeding as a
debtor under the Bankruptcy Code.
ARTICLE V
TRUSTEE
SECTION 5.01 Trustee.
(a) The duties and responsibilities of the Trustee shall
be limited to those expressly set forth in this Trust, and no implied
covenants or obligations shall be read into this Trust against the
Trustee. The Trustee shall be entitled to reasonable fees for the
performance of its duties hereunder, as reflected on Schedule 2,
attached.
(b) The Trustee shall maintain such books, records and
accounts as may be necessary for the proper administration of the
Trust Corpus based upon information supplied to the Trustee by the
Company or the Actuary. After the delivery to the Trustee of the
amounts specified in Section 2.01(a) hereof, the Trustee shall render
to the Company and to each Executive, on or prior to each April 1
until the termination of this Trust (and within a reasonable period
of time after the date of such termination), an accounting with
respect to the Trust Corpus as of the end of the then most recent
calendar year (and as of the date of such termination). Unless the
Company or any Executive shall have filed with the Trustee written
exceptions or objections to any such accounting within 180 days after
receipt thereof, the Company or the Executive, as the case may be,
shall be deemed to have approved such accounting, and in such case
the Trustee shall be forever released and discharged with respect to
all matters and things reported in such accounting as though it had
been settled by a decree of a court of competent jurisdiction in an
action or proceeding to which the Company and the Executive were
parties.
(c) The Trustee shall not be liable for any act taken or
omitted to be taken hereunder if taken or omitted to be taken by it
in good faith. Subject to the express provisions of Section 4.03,
the Trustee shall rely at all times on, and shall have no duty of
inquiry with respect to the most current Payment Schedule, Plans,
Executive List, or other notice or instruction provided to it in
accordance with this Trust Agreement.
(d) The Trustee may consult with legal counsel, the
Actuary, the Advisor, or other experts to be selected by it, and the
Trustee shall not be liable for any action taken or suffered by it in
good faith in accordance with the advice of such experts.
(e) The Company shall reimburse the Trustee for all
reasonable expenses incurred in connection with the performance of
duties hereunder, including, but not limited to, any fees or expenses
incurred by the Trustee, the Actuary, the Experts, or any Executives
pursuant to Sections 2.01(c), 4.02(b), 4.03, 5.01, or 5.02. The
provisions of this Section 5.01(e) shall survive the termination of
this Trust Agreement.
(f) The Company agrees to indemnify and hold harmless the
Trustee from and against any and all damages, losses, claims or
expenses as incurred (including, without limitation, expenses of
legal proceedings, including reasonable counsel fees, investigation,
and fees and disbursements of the Actuary, the Advisor, the Experts
or counsel to the Trustee, and any taxes imposed on the Trust Corpus
or income of the Trust) arising out of or in connection with the
performance by the Trustee of its duties hereunder. Notwithstanding
any other provision hereof, any amount payable under paragraph (e) of
this Section 5.01 or this paragraph (f) and not previously paid by
the Company shall be paid by the Company promptly upon demand
therefor or, if the Trustee so chooses in its sole discretion, from
the Trust Corpus. In the event that payment is made hereunder from
the Trust Corpus, the Trustee shall promptly notify the Company in
writing of the amount of such payment. The Company agrees that, upon
receipt of such notice, it will deliver to the Trustee to be held in
the Trust an amount in cash equal to any payments made from the Trust
Corpus pursuant to paragraph (e) of this Section 5.01 or this
paragraph (f). The failure of the Company to transfer any such
amount shall not in any way impair the Trustee's right to
indemnification, reimbursement, and payment pursuant to paragraph (e)
of this Section 5.01 or this paragraph (f).
(g) The Trustee is specifically authorized to take such
action as may be necessary or appropriate, including the institution
of litigation or other legal process, to enforce the Company's
obligations hereunder on behalf of either itself or the Executives.
Notwithstanding anything in this Trust Agreement to the contrary, the
Trustee shall not be obligated to take or to continue any action
hereunder that would cause an expense to it in excess of the then
fair market value of the Trust Corpus.
(h) Payments to or for Executives hereunder shall be made
when due in accordance with the Plans and the Payment Schedules. In
the event the Trust Corpus should be insufficient to pay when due all
amounts payable hereunder to or for the Executives, amounts due first
in time shall be paid in full without proration until the Trust
Corpus is exhausted. The Trustee shall have no duty to make payments
hereunder except from the Trust Corpus.
SECTION 5.02 Successor Trustee. The Trustee may resign from
its duties hereunder at any time by giving notice in writing of such
resignation to the Company and each Executive specifying a date (not
less than thirty days after the giving of such notice) when such
resignation shall take effect. Promptly after such notice, the
Company, or if a Change in Control shall previously have occurred,
the Company and a least 65% in number of the Executives reflected on
the then most recent Executive List, shall appoint a successor
trustee, and such trustee shall become Trustee hereunder upon the
resignation date specified in such notice. If the Company is unable
to designate a successor or if the Company and such Executives are
unable to so agree upon a successor trustee within thirty days after
such notice, the successor trustee shall be selected by the vote of
not less than 65% in number of such Executives. If such Executives
cannot so agree on a successor trustee, the Trustee shall be entitled
to petition a United States District Court or any court of competent
jurisdiction in the state in which the Trustee maintains its
principal place of business to relieve the Trustee of its duties
hereunder. The Trustee shall continue to serve until its successor
accepts the trust and receives delivery of the Trust Corpus. The
Company, or if a Change in Control shall previously have occurred,
the Company and at least 65% in number of the Executives reflected on
the then most recent Executive List, may at any time substitute a new
trustee by giving fifteen days' notice thereof to the Trustee then
acting. In the event of such removal or resignation, the Trustee
shall duly file with the Company and, on and after a Change in
Control, the Executives, a written statement or statements of
accounts and proceedings as provided in Section 5.01(b) hereof for
the period since the last previous annual accounting of the Trust,
and if written objection to such account is not filed as provided in
Section 5.01(b) hereof, the Trustee shall to the maximum extent
permitted by applicable law be forever released and discharged from
all liability and accountability with respect to the propriety of its
acts and transactions shown in such account. Any successor trustee
shall have no liability for the acts or omissions of a predecessor
trustee.
ARTICLE VI
TERMINATION AND AMENDMENT
SECTION 6.01 Termination. Except as provided herein, this
Trust shall be irrevocable. At any time prior to a Change in Con-
trol of the Company, this Trust may be terminated by agreement of the
Company and at least 65% in number of the Executives reflected on the
then most recent Executive List. Upon or after a Change in Control
of the Company, this Trust shall be terminated upon the earliest to
occur of the following events: (i) the written agreement to so
terminate of the Company and all of the Executives reflected on the
then most recent Executive List, provided, however, that no
termination due to this event shall operate to accelerate payment of
any amount to or for the Executives; (ii) the final payment from the
Trust of the remaining balance of the Trust Corpus; or (iii) twenty-
one years after the death of the last survivor of all of the
Executives included on the original Executive List and those persons
now living who have been designated as beneficiaries of such
Executives in accordance with the terms of any of the Plans.
Promptly upon termination of this Trust, any remaining portion of the
Trust Corpus shall be paid to the Company or its successor in
interest.
SECTION 6.02 Amendment.
(a) At any time prior to a Change in Control of the Com-
pany, this Trust may be amended by the Company, provided, however,
that no such amendment may be made that would contravene the terms of
any of the Plans or accelerate payment to or for the Executives
thereunder and provided further that the Trustee must consent to any
amendment that would increase its duties hereunder.
(b) Upon and after a Change in Control of the Company, the
following rules will govern amendments: (i) this Trust may not be
amended except by an instrument in writing signed on behalf of the
Trustee and the Company, together with the written consent of at
least 65% in number of the Executives reflected on the then most
recent Executive List; (ii) notwithstanding the foregoing, any such
amendment may be made by written agreement of the Trustee and the
Company without obtaining the consent of the Executives if such
amendment does not adversely affect the rights of any Executive
hereunder or if such amendment is necessary in order to obtain a
favorable determination of the Internal Revenue Service as to the
federal income tax consequences to the Executives of the creation and
funding of the Trust hereunder; (iii) no such amendment relating to
this Trust may be made that would decrease the amounts payable
hereunder to a particular Executive unless such Executive has agreed
in writing to such amendment; and (iv) no such amendment relating to
this Trust may be made that would contravene the terms of any of the
Plans as in existence prior to a Change in Control of the Company or
accelerate payment to or for the Executives thereunder.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01 Further Assurances. The Company shall, at any
time and from time to time, upon the reasonable request of the
Trustee, execute and deliver such further instruments and do such
further acts as may be necessary or proper to effectuate the pur-
poses of this Trust. The Trustee shall incur no liability under this
Trust Agreement for any failure to act pursuant to any notice,
direction, or other communication from any person entitled to in-
struct the Trustee hereunder, or in the absence thereof, unless and
until the Trustee shall have received instructions in form
satisfactory to it.
SECTION 7.02 Certain Provisions Relating to This Trust.
(a) This Trust sets forth the entire understanding of the
parties with respect to the subject matter hereof and supersedes any
and all prior agreements, arrangements and understandings relating
thereto. This Trust shall be binding upon and inure to the benefit
of the parties and their respective successors and legal
representatives.
(b) This Trust shall be governed by and construed in
accordance with the laws of the State of Illinois, other than and
without reference to any provisions of such laws regarding choice of
laws or conflict of laws.
(c) In the event that any provision of this Trust or the
application thereof to any person or circumstances shall be
determined by a court of proper jurisdiction to be invalid or un-
enforceable to any extent, the remainder of this Trust, or the
application of such provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each provision of this Trust shall be valid and
enforced to the fullest extent permitted by law.
(d) No Executive shall have any preferred claim on, or any
beneficial ownership interest in, any assets of the Trust before such
assets are paid to or for the Executive as provided in Section 4.02,
and all rights created under the Trust and the Plans shall be
unsecured contractual rights of the Executive against the Company.
No part of, or claim against, the assets of the Trust may be
assigned, anticipated, alienated, encumbered, garnished, attached, or
in any other manner disposed of by any of the Executives, and no such
part or claim shall be subject to any legal process or claims of
creditors of any of the Executives. Any amounts transferred to the
Trust shall not in any way represent security for payment of benefits
under the Plans, and benefits under the Plans are in no way governed
or limited by the amounts of assets, if any, held in this Trust. The
Company shall make no representation that the assets of the Trust are
not subject to claims of the Company's creditors in the event of
bankruptcy or insolvency of the Company.
SECTION 7.03 Notices. Any notice, report, demand or waiver
required or permitted hereunder shall be in writing and shall be
given personally or by prepaid registered or certified mail, return
receipt requested, addressed as follows:
If to the Company: Boise Cascade Corporation
Attention General Counsel
One Jefferson Square
P.O. Box 50
Boise, ID 83728
If to the Trustee: American National Bank and Trust
Company of Chicago
Attention Trust Administration
Division
33 North LaSalle Street
Chicago, IL 60690
If to an Executive, to the address of such Executive as listed on the
then most recent Executive List.
A notice shall be deemed received upon the date of delivery
if given personally or, if given by mail, upon the receipt thereof.
SECTION 7.04 Trust Beneficiaries. Each Executive is an
intended beneficiary under this Trust, and shall be entitled to
enforce all terms and provisions hereof with the same force and
effect as if such person had been a party hereto.
IN WITNESS WHEREOF, the parties have executed this Trust as of
the date first written above.
BOISE CASCADE CORPORATION
By ___________________________
Title ________________________
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By ___________________________
Title ________________________
AMENDMENT NO. 1
THIS AMENDMENT NO. 1 to the Trust Agreement between BOISE
CASCADE CORPORATION and AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO dated November 2, 1987, as amended and restated as of
December 1, 1988 (the "Trust Agreement"), is entered into as of
this 15th day of December, 1988, and amends the Trust Agreement
as follows:
Plans. In accordance with Section 1.01 of the Trust
Agreement, the following plans and agreements of Boise Cascade
Corporation, in the form attached hereto and as they may be
amended hereafter from time to time, are hereby made subject to
the Trust Agreement and are added to Exhibit A thereto:
1. Split-Dollar Life Insurance Plan (Exhibit A(b))
2. Executive Officer Severance Agreements for Executive
Officers listed on Schedule 1 to the Trust Agreement
(Exhibit A(c) -- form of Agreement)
3. 1982 Executive Officer Deferred Compensation Plan
(Exhibit A(d))
4. 1986 Executive Officer Deferred Compensation Plan
(Exhibit A(e))
5. 1983 Board of Directors Deferred Compensation Plan
(Exhibit A(f))
6. 1987 Board of Directors Deferred Compensation Plan
(Exhibit A(g))
7. 1987 Key Executive Deferred Compensation Plan
(Exhibit A(h))
8. Key Executive Performance Plan for Executive Officers
(Exhibit A(i))
9. Supplemental Early Retirement Plan for Executive
Officers (Exhibit A(j))
10. Boise Cascade Corporation Supplemental Retirement
Policy (Exhibit A(k))
IN WITNESS WHEREOF, the parties have executed this Amendment
No. 1 as of the date first written above.
BOISE CASCADE CORPORATION AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By /s/ J. E. Clute By____________________________
Title Senior Vice President Title_________________________
AMENDMENT NO. 2
This Amendment No. 2 to the Trust Agreement between Boise
Cascade Corporation and American National Bank and Trust Company
of Chicago dated November 2, 1987, as amended and restated as of
December 1, 1988, and as further amended December 15, 1988 (the
"Trust Agreement"), is entered into as of this 30th day of June,
1989, and amends Section 3.01 of the Trust Agreement, effective
June 30, 1989, to read as follows:
SECTION 3.01 Definition of Potential Change in
Control. For purposes of this Trust, a "Potential Change
in Control" of the Company means that (i) the Company has
entered into an agreement, the consummation of which
would result in the occurrence of a Change in Control of
the Company; (ii) any person (including the Company) has
publicly announced an intention to take or to consider
taking actions which if consummated would constitute a
Change in Control of the Company; (iii) any person, other
than the Company or an employee benefit plan maintained
by the Company, has become the beneficial owner, directly
or indirectly, of securities of the Company representing
9.5% or more of the combined voting power of the
Company's then outstanding securities; or (iv) the Board
of Directors has adopted a resolution to the effect that
a Potential Change in Control of the Company for purposes
of this Trust has occurred.
In witness whereof, the parties have executed this
Amendment No. 2 as of the date first written above.
BOISE CASCADE CORPORATION
By /s/ J. E. Clute
Title Senior Vice President, Human
Resources and General Counsel
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By_________________________________
Title Vice President
BOISE CASCADE CORPORATION
1991 DIRECTOR STOCK OPTION PLAN
As Amended February 7, 1992
BOISE CASCADE CORPORATION
1991 DIRECTOR STOCK OPTION PLAN
1. PLAN ADMINISTRATION AND ELIGIBILITY
1.1 Purpose. The purpose of the 1991 Director Stock Option
Plan (the "Plan") of Boise Cascade Corporation (the "Company") is
to encourage ownership of the Company's common stock by its
nonemployee directors.
1.2 Administration. This Plan shall be administered by the
Executive Compensation Subcommittee (the "Committee") of the
Human Resources Committee of the Board of Directors of the
Company. The Committee shall have full authority to administer
this Plan, including authority to interpret and construe any
provision of this Plan and to adopt such rules for administrating
this Plan as it may deem necessary or appropriate. Decisions of
the Committee shall be final and binding on all persons who have
an interest in this Plan.
1.3 Participation in the Plan. Directors of the Company
who are not employees of the Company or any of its subsidiaries
are eligible to participate in this Plan.
2. STOCK SUBJECT TO THE PLAN
2.1 Number of Shares. The maximum number of shares of the
Company's $2.50 par value Common Stock ("Common Stock" or
"Shares") which may be issued pursuant to options granted under
this Plan shall be one hundred thousand (100,000) Shares, subject
to adjustment as provided in Section 4.4.
2.2 Nonexercised Shares. If any outstanding option under
this Plan for any reason expires or is terminated without having
been exercised in full, the Shares allocable to the unexercised
portion of the option shall again become available for issuance
under options granted pursuant to this Plan.
2.3 Share Issuance. Upon the exercise of an option, the
Company may issue new Shares or reissue Shares previously
repurchased by or on behalf of the Company.
3. OPTIONS
3.1 Option Grant Dates. Options shall be granted
automatically to each participating director on December 31 of
each year (or, if December 31 is not a business day, on the
immediately preceding business day) (the "Grant Date").
3.2 Option Price. The purchase price per share for the
Shares covered by each option shall be $2.50 (the "Option
Price").
3.3 Number of Option Shares. The number of Shares subject
to options granted to each participating director on each Grant
Date will be the aggregate number of Shares determined by the
following formulas:
3.3.1 Elected Portion of Annual Retainer and Meeting
Fee Shares. The number of option Shares equal to the nearest
whole number determined by the following formula:
Elected Portion of Annual Retainer Number
and Meeting Fees = of
(Fair Market Value - $2.50) Option Shares
3.3.2 Dividend Equivalent Shares. The number of
option Shares equal to the nearest whole number determined by the
following formula:
Dividend Equivalent = Number of
(Fair Market Value - $2.50) Option Shares
3.3.3 Definitions. For purposes of determining the
number of Shares granted under this Section 3.3, the following
definitions will apply:
3.3.3.1 "Annual Retainer." The dollar amount
of compensation paid to eligible directors each year which is
identified by the Company as an annual retainer.
3.3.3.2 "Meeting Fees." The amount of
compensation, in excess of the Annual Retainer, paid to eligible
directors for their services as directors of the Company,
including but not limited to fees earned for service as committee
chairpersons and for meeting participation, but excluding amounts
paid as reimbursement for actual expenses.
3.3.3.3 "Dividend Equivalent." The aggregate
dollar value, determined each year, equal to the product of
(i) the number of Shares subject to options held by a director
pursuant to this Plan on each respective Record Date during the
year plus one-half the number of Shares to be granted under
Sections 3.3.1 and 3.3.2 for the year in which this calculation
is being made, multiplied by (ii) the value of the dividend per
Share paid by the Company for each respective Record Date.
3.3.3.4 "Elected Portion of Annual Retainer and
Meeting Fees." A dollar amount determined each year for each
director equal to the dollar amount of both the percentage of the
Annual Retainer, if any, and the percentage of Meeting Fees, if
any, which the director has irrevocably elected, in writing, to
have paid in the form of options granted under this Plan. This
written election must be received by the secretary of the Company
on or before December 31 of each year and shall specify a
percentage, up to 100%, of the director's Annual Retainer and a
percentage, up to 100%, of the director's Meeting Fees for the
following year to be paid in the form of options under this Plan;
provided, however, that in the initial year of the Plan's
operation a director's written election must be received by the
secretary of the Company on or before February 28, 1992, and
shall be effective only for Annual Retainer and Meeting Fee
amounts earned during the period April 1, 1992, through
December 31, 1992. Eligible directors initially elected or
appointed to office as directors of the Company after adoption of
this plan may make a written election under this paragraph within
30 days following their initial election or appointment to
office, which election shall be effective for Annual Retainer and
Meeting Fee amounts earned during the calendar year of their
initial election or appointment to office.
3.3.3.5 "Fair Market Value." The closing price
for Shares on July 31 as reported on The New York Stock Exchange
Composite Tape or, if the New York Stock Exchange is not open for
trading on July 31, on the immediately preceding trading day (the
"Valuation Date").
3.3.3.6 "Record Date." Each date declared as a
record date by the Board of Directors for the purpose of deter-
mining shareholders eligible to receive a dividend to be paid on
Shares.
3.4 Director Terminations. If a director participating in
this Plan retires, resigns, dies, or otherwise terminates his or
her position on the Company's Board of Directors, on December 31
of the year in which the termination occurs the director shall be
granted an option for Shares under this Plan equal in value to
(i) the Elected Portion of Annual Retainer and Meeting Fees and
(ii) the Dividend Equivalent. For purposes of this Section 3.4,
the amount of the Annual Retainer shall be prorated through the
date of termination.
3.5 Written Agreements. Each grant of an option under this
Plan shall be evidenced by a written agreement, which shall com-
ply with and be subject to the terms and conditions contained in
this Plan.
3.6 Nonstatutory Stock Options. Options granted under this
Plan shall not be entitled to special tax treatment under
Section 422A of the Internal Revenue Code of 1986.
3.7 Period of Option. No option may be exercised within
six months of its Grant Date, provided, however, that options
held by a director shall be immediately exercisable upon (i) that
director's retirement because of age, disability, or death, or
(ii) the occurrence of any of the events described in Section
3.11, [recognizing that Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Act"), may limit a director's
ability to resell the Shares acquired upon the exercise until six
months after the Grant Date]. No option shall be exercisable
after expiration of three years from the date upon which the
option holder terminates his or her position as a director of the
Company.
3.8 Exercise of Options. Options may be exercised only by
written notice to the secretary of the Company and payment of the
exercise price in (i) cash, (ii) Shares (a director may surrender
one or more Shares in the exercise of an Option with instructions
to resurrender any Shares acquired upon exercise in one or more
successive, simultaneous exercises until Options covering the
number of specified Shares have been exercised), (iii) a loan
from the Company, or (iv) delivery of an irrevocable written
notice instructing the Company to deliver the Shares being pur-
chased to a broker, subject to the broker's written guarantee to
deliver cash to the Company, in each case equal to the full
consideration of the Option Price for the Shares which are being
exercised. Options may be exercised in whole or in part.
3.9 Options Nontransferable. Each option granted under
this Plan shall not be transferable by the optionee otherwise
than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title I of the
Employee Retirement Income Security Act of 1974, as amended, and
the rules and regulations thereunder. No option granted under
this Plan, or any interest therein, may be otherwise transferred,
assigned, pledged, or hypothecated by the director to which the
option was granted during his or her lifetime, whether by opera-
tion of law or otherwise, or be made subject to execution,
attachment, or similar process.
3.10 Exercise by Representative Following Death of Director.
A director, by written notice to the Company, may designate one
or more persons (and from time to time change such designation),
including his or her legal representative, who, by reason of the
director's death, shall acquire the right to exercise all or a
portion of an option granted under this Plan. Any exercise by a
representative shall be subject to the provisions of this Plan.
3.11 Acceleration of Stock Options.
3.11.1 Merger or Consolidation. Notwithstanding
Section 3.7, in the event of a dissolution or a liquidation of
the Company or a merger and consolidation in which the Company is
not the surviving corporation, any unexercised options granted
prior to the date of the merger or consolidation shall become
exercisable immediately prior to the date of the merger or
consolidation. In addition, upon the occurrence of any of these
events, any pro rata amounts of the Elected Portion of Annual
Retainer, Meeting Fees earned, and Dividend Equivalent for the
year in which such event occurs, which would otherwise have been
paid in the form of options granted under this Plan shall be
promptly paid to each participating director in cash.
3.11.2 Change of Control. If, while unexercised
options remain outstanding hereunder, (i) any "person" (as this
term is used in Sections 13(d) and 14(d) of the Act) other than
the Company or an employee benefit plan maintained by the Company
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding securities or (ii) during any
period of two consecutive years, individuals who at the beginning
of the period constitute the company's board of directors,
including for this purpose any new director whose election or
nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the
period, cease for any reason to constitute a majority of the
members of the board, then from and after the date on which
public announcement of the acquisition of such percentage is made
or the date on which the change in the composition of the Board
set forth above occurs, all options previously granted under this
Plan shall be immediately exercisable in full.
4. GENERAL PROVISIONS
4.1 Effective Date of This Plan. This Plan shall be
effective January 1, 1992, subject to approval by the share-
holders of the Company. Options may be granted under this Plan
only after shareholder approval of this Plan. Directors may give
written notice pursuant to Section 3.3.4.4 any time after
December 1, 1991.
4.2 Duration of This Plan. This Plan shall remain in
effect until all Shares subject to option grants have been
purchased or all unexercised options have expired. Notwith-
standing the foregoing, no options may be granted pursuant to
this Plan on or after the tenth anniversary of this Plan's
effective date.
4.3 Amendment of This Plan. The Committee may suspend or
discontinue this Plan or revise or amend it in any respect,
provided, however, that without approval of a majority of the
Company's shareholders no revision or amendment shall (i) change
the number of Shares subject to this Plan (except as provided in
Section 4.4), (ii) change the designation of the class of direc-
tors eligible to participate in the Plan, (iii) change the
formulas to determine the amount, price, or timing for the
grants, or (iv) materially increase the benefits accruing to
participants under this Plan. Moreover, in no event may these
Plan provisions be amended more than once every six months, other
than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules and
regulations thereunder. No amendment, modification, or
termination of this Plan shall in any manner adversely affect the
rights of directors holding options granted under this Plan
without their consent.
4.4 Changes in Shares. In the event of any merger, con-
solidation, reorganization, recapitalization, stock dividend,
stock split, or other change in the corporate structure or
capitalization affecting the Shares, appropriate adjustment shall
be made in the number (including the aggregate numbers specified
in Section 2.1) and kind of Shares or other securities which are
or may become subject to options granted under this Plan prior to
and subsequent to the date of the change.
4.5 Limitation of Rights.
4.5.1 No Right to Continue as a Director. Neither
this Plan, nor the granting of an option under this Plan, nor any
other action taken pursuant to this Plan shall constitute or be
evidence of any agreement or understanding, express or implied,
that the Company will retain a director for any period of time,
or at any particular rate of compensation.
4.5.2 No Shareholders' Rights for Options. An
optionee shall have no rights as a shareholder with respect to
the Shares covered by his or her options until the date of the
issuance to him or her of a stock certificate therefor.
4.6 Assignments. The rights and benefits under this Plan
may not be assigned except as provided in Sections 3.9 and 3.10.
4.7 Notice. Any written notice to the Company required by
any of the provisions of this Plan shall be addressed to the
secretary of the Company and shall become effective when it is
received.
4.8 Shareholder Approval and Registration Statement. This
Plan shall be approved by the Board of Directors and submitted to
the Company's shareholders for approval. Directors may elect to
participate in this Plan prior to shareholder approval and prior
to filing (and effectiveness of) a registration statement with
the Securities and Exchange Commission covering the Shares to be
issued upon the exercise of options. Any options granted under
this Plan prior to effectiveness of the registration statement
shall not be exercisable until, and are expressly conditional
upon, the effectiveness of a registration statement covering the
Shares.
4.9 Governing Law. This Plan and all determinations made
and actions taken pursuant hereto shall be governed by and
construed in accordance with the laws of the state of Delaware.
EXHIBIT 12
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings (Losses) to Fixed Charges
Year Ended December 31
1989 1990 1991 1992 1993
(dollar amounts expressed in thousands)
Interest costs $ 109,791 $ 142,980 $ 201,006 $ 191,026 $ 172,170
Interest capitalized during the period 15,981 35,533 6,498 3,972 2,036
Interest factor related to
noncapitalized leases (1) 3,387 3,803 5,019 7,150 7,485
_________ _________ _________ _________ _________
Total fixed charges $ 129,159 $ 182,316 $ 212,523 $ 202,148 $ 181,691
Income (loss) before income taxes $ 436,870 $ 121,400 $(128,140) $(252,510) $(125,590)
Undistributed (earnings) losses of
less than 50% owned persons, net
of distributions received (68) 2,966 (1,865) (2,119) (922)
Total fixed charges 129,159 182,316 212,523 202,148 181,691
Less: Interest capitalized (15,981) (35,533) (6,498) (3,972) (2,036)
Guarantee of interest on
ESOP debt (12,236) (24,869) (24,283) (23,380) (22,208)
_________ _________ _________ _________ _________
Total earnings (losses) from operations
before fixed charges $ 537,744 $ 246,280 $ 51,737 $ (79,833) $ 30,935
Ratio of earnings (losses) to fixed charges 4.16 1.35 - (2) - (2) - (2)
(1) Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for
each lease.
(2) Total fixed charges exceeded total earnings (losses) from operations by $160,786,000, $281,981,000, and
$150,756,000 at December 31, 1991, 1992, and 1993.
Financial Highlights
1993 1992 1991
_____________________________________________________________________________________________________
Sales $3,958,300,000 $3,715,590,000 $3,950,490,000
Net loss $ (77,140,000) $ (227,480,000)(1)$ (79,450,000)
Net loss per common share
Primary $(3.17) $(6.73) $(2.46)
Fully diluted(2) $(3.17) $(6.73) $(2.46)
Shareholders' equity per common share $25.92 $29.95 $37.49
Capital expenditures $ 221,481,000 $ 282,951,000 $ 298,674,000
Number of employees 17,362 17,222 19,619
Number of common shareholders 25,930 31,006 30,352
Number of shares of common stock
outstanding 37,987,529 37,940,312 37,944,725
_____________________________________________________________________________________________________
(1) Includes a one-time noncash charge of $73,450,000 after tax, or $1.94 per fully diluted common
share, for the adoption of Financial Accounting Standards Board requirements to accrue
postretirement benefits other than pensions.
(2) The computation of fully diluted net loss per common share for the periods shown was antidilutive;
therefore, the amounts reported for primary and fully diluted net loss are the same.
FINANCIAL REVIEW
Income From Operations
Boise Cascade reported a net loss of $77.1 million, or $3.17 per
fully diluted common share, in 1993. This compares with a net loss
of $227.5 million, or $6.73 per fully diluted share, in 1992. The
1993 loss includes pretax gains on the sales of assets totaling
$13.9 million, or 23 cents per fully diluted share, and a net
charge of $2.1 million, or 6 cents per fully diluted share,
resulting from changes in statutory tax rates in the U.S. and
Canada.
The 1992 loss includes a charge of $73.5 million after tax, or
$1.94 per fully diluted share, for the adoption of Financial
Accounting Standards Board requirements to accrue the cost of
postretirement benefits other than pensions.
After excluding gains and charges in both years, the Company lost
$83.6 million, or $3.34 per share, in 1993, compared with a loss
of $154.0 million, or $4.79 per share, in 1992. Sales in 1993 were
$4.0 billion, compared with $3.7 billion in 1992. The increase in
sales was due primarily to higher lumber and plywood prices in the
Company's building products segment.
The Company's loss in 1993 was due principally to weak prices in
our paper business. All of the Company's grades of paper have
suffered in recent years, as domestic and overseas economies
weakened and paper consumption flattened or declined. At the same
time, significant new industry capacity started up over the last
several years.
The Company's paper and paper products segment reported an
operating loss of $138 million in 1993, compared with a loss of
$187 million in 1992. The improvement in paper-segment results
was due to significantly reduced manufacturing costs, an upgraded
product mix, and modestly stronger unit sales volume. Segment
sales were about flat, compared with those of a year ago.
Prices for uncoated business, printing, converting, and forms
papers, newsprint, and coated papers rose modestly on average from
year-ago levels, while average containerboard and market pulp
prices declined. The average price per ton for all of Boise
Cascade's pulp and paper sold in 1993 was about the same as in
1992. Prices declined 10 percent that year, 14 percent in 1991,
and 6 percent in 1990.
Offsetting the continued weak prices was the impact of the
Company's cost-reduction efforts. Through previous capital
investment and process improvements, the Company's unit
manufacturing costs in paper declined 4 percent in 1993 from 1992
levels.
Additionally, unit sales volume grew 2 percent to 3.6 million tons
in 1993, despite 68,000 tons of market-related machine downtime
taken throughout the year. The additional tonnage came mostly from
the new business and printing paper machine in International Falls,
Minnesota, which reached its rated production capacity in 1993.
Operating income for the office products segment was $36 million
in 1993, nearly twice the $19 million earned in 1992, as we added
sales volume and reduced operating costs to improve margins.
Profits were about the same as those in 1991, which, at that time,
included sales from our wholesale office products operations. In
early 1992, we sold our wholesale operations in order to expand in
the commercial channel.
After excluding the sales volume of the Company's former wholesale
operations, dollar sales volume for the office products segment
increased 10 percent to $683 million due to volume from new and
recently acquired facilities and additional volume from existing
facilities. Sales volume was up 5 percent on a comparable-unit
basis.
Operating income for the Company's building products segment was
a record $159 million in 1993, compared with $115 million in 1992.
Sales increased 21 percent to $1.5 billion. The improvement in
operating income was due to rising lumber and plywood prices,
which, on average, were 22 percent and 18 percent higher,
respectively, than they were a year earlier. Higher product prices
resulted from a constrained supply of timber available for
commercial harvest in the Pacific Northwest and concerns about
potential future supply constraints. The cost of logs delivered
to our wood products operations increased for the same reason --
up 22 percent in 1993 over 1992 costs.
Financial Condition
In 1993, operations provided $131 million in cash, compared with
$67 million in 1992. The working capital ratio was 1.3:1 at the
end of 1993, compared with 1.2:1 at the end of 1992.
The Company's effective tax rate increased to 40.3 percent in 1993
from 39.0 percent in 1992. Net interest expense in 1993 was
$148 million, down 11 percent from $166 million in 1992 due to
reduced interest rates and reduced debt.
On December 31, 1993, the Company's total debt amounted to
$2.0 billion, down from $2.2 billion a year ago. Our long-term
debt-to-equity ratio was 1.2:1, compared with 1.4:1 at the end of
1992. The improvement in debt and the debt-to-equity ratio
reflects improved cash flow from operations and equity offerings
during the year, offset by capital spending.
Our debt and debt-to-equity ratio include the guarantee by the
Company of the remaining $247 million of debt incurred by the
trustee of our leveraged Employee Stock Ownership Plan (ESOP).
While that guarantee has a negative impact on our debt-to-equity
ratio, it has virtually no effect on our cash coverage ratios or
on other measures of our financial strength.
In January 1993, $100 million of 11.875 percent notes were retired
when they came due, and the Company redeemed the $92 million of
10.25 percent notes due in 1996. In the fourth quarter, the
Company retired $50 million of medium-term notes.
In January 1993, the Standard & Poor's Corporation reduced the
Company's senior long-term debt rating to BB+ from BBB- with a
stable outlook. In July 1993, Moody's Investors Service reduced
the Company's senior long-term debt rating to Baa3 from Baa2 with
a stable outlook.
The Company has revolving credit totaling $880 million. We
maintain a committed revolving agreement of $750 million with a
group of banks. As of December 31, 1993, borrowings under the
existing agreement totaled $275 million. At the time of expiration
in May 1994, any amount outstanding will be payable in four
quarterly installments unless the agreement is replaced. At
year-end, the Company was negotiating a replacement revolving
credit agreement.
One of our Canadian subsidiaries also maintains committed revolving
credit of $130 million with a group of banks. As of December 31,
1993, borrowings under this agreement totaled $110 million. At the
time of expiration in 1995, any amount outstanding will be payable
in four quarterly installments.
The existing revolving credit agreements require the Company to
maintain a minimum ratio of assets to indebtedness and to exceed
certain minimum interest coverage tests. The Company believes it
will be able to maintain adequate liquidity to meet our various
financial requirements.
The amount of dividends that may be paid on the Company's common
stock is restricted by a covenant in the Company's revolving credit
agreements. Under this covenant, on December 31, 1992, and
December 31, 1993, $49 million and $60 million, respectively, of
retained earnings were available for the payment of dividends.
This covenant does not restrict the payment of dividends on the
preferred stock, but preferred stock dividends reduce the amount
available under the covenant for payment of dividends on the
Company's common stock. Additional equity and income add to the
amount available for payment of dividends, and losses reduce the
amount.
Additional information about the Company's credit agreements and
debt is contained in Note 4 accompanying the financial statements.
In February 1993, the Company issued $115 million, before costs of
issuance, of nonconvertible cumulative preferred stock. The
offering consisted of 4.6 million depositary shares, each
representing one-fortieth of a share of nonconvertible cumulative
preferred stock, Series F. The proceeds of the offering were
primarily used to reduce debt.
In September 1993, the Company issued $182 million, before costs
of issuance, of conversion preferred stock. The offering consisted
of 8.6 million depositary shares, each representing one-tenth of
a share of conversion preferred stock, Series G. The proceeds of
the offering were primarily used to pay down debt.
Additional information about the Company's preferred stock is
contained in Note 6 accompanying the financial statements.
Capital Investment
Capital investment in 1993 was $221 million, compared with $283
million in 1992. The Company's capital investment in 1994 is
expected to be approximately $300 million and will be allocated to
cost-saving, modernization, replacement, maintenance,
environmental, and safety projects.
Dividends
In 1993, Boise Cascade's quarterly cash dividend was 15 cents per
common share, the same as in 1992. The quarterly dividend was
44.75 cents on each depositary share of the Company's Series E
conversion preferred stock, 58.75 cents on each depositary share
of the Company's Series F cumulative preferred stock, and
39.5 cents on each depositary share of the Company's Series G
conversion preferred stock.
Postemployment Benefits
In the fourth quarter of 1993, the Company adopted Financial
Accounting Standards Board requirements to accrue certain
severance, disability, and other benefits provided to former or
inactive employees. The amount of that charge was immaterial.
Timber Supply
In recent years, heightened attention has been paid to developing
and implementing recovery plans throughout the U.S. for species
listed as threatened or endangered under the Endangered Species Act
of 1973. Some of these plans have caused or could cause sharp
curtailment in the use of public and private timberlands in the
Pacific Northwest. The case of the spotted owl is a highly visible
example of the negative impact of these plans on the paper and
forest products industry.
In July 1993, the Clinton Administration announced a forest
management plan that would reduce harvests in the so-called spotted
owl forests of western Washington, western Oregon, and northern
California to an average of 1.2 billion board feet annually for ten
years -- about a 75 percent reduction in harvest levels from those
of the mid-'80s.
If the plan is implemented as announced, as much as 50 percent of
the wood products manufacturing capacity in the owl forests could
be shut down over time, as compared with 1988 levels. In this
environment, Boise Cascade has a number of relative advantages.
An important share of our raw material needs is met by our own
timberland -- some 1.3 million acres in Washington, Oregon, and
Idaho. And our wood products facilities are among the most
efficient in the region, allowing us to bid competitively for any
timber that is available.
The Company's Northwest pulp and paper mills already receive
approximately 73 percent of their wood chip supply either directly
from or through trades with our wood products and whole-log
chipping operations. The Company is taking additional steps to
reduce our need for outside chip purchases. Our cottonwood tree
plantation near our Wallula, Washington, mill should be ready for
harvest in 1997, supplying a portion of our Northwest wood chip
needs. In addition, two of our Northwest paper mills are now using
recycled fiber -- and will use more -- to produce recycled-content
paper products.
Thus, the Company is better positioned than most Northwest
producers to compete in an era of reduced log supply. However,
because of further potential litigation, legislation, and
regulation related to this issue, we cannot predict how the next
several years will unfold. At year-end, the Company's lumber
capacity had been reduced 8.5 percent from the year-end 1992 level
to 756 million board feet, primarily reflecting shift reductions
due to limited log supply.
Also difficult to predict is the impact of these timber constraints
on the cost structure of the Northwest paper and forest products
industry. Log costs for wood products facilities have already
climbed dramatically over the last several years, while wood chip
costs for our Northwest pulp mills rose 75 percent from 1987 to
1991, before leveling off. Lumber and plywood prices, however,
have outpaced log cost increases, resulting in strong profit
margins in the wood products business. Because of excess industry
supply, paper prices have not climbed to meet higher wood chip
costs in the Northwest.
It is unclear what impact the developing recovery plans for various
threatened or endangered species will have on pricing and cost
trends in future years in the Northwest or across the nation.
Environmental Issues
The Environmental Protection Agency (EPA) has proposed new rules
to regulate air and water emissions from pulp and paper mills.
These proposed rules would, among other things, set extremely
stringent standards for color, chemical oxygen demand, and the
discharge of all chlorinated organics. "Chlorinated organics"
refers to a family of thousands of organic compounds that occur
naturally and are also produced as byproducts of pulp-bleaching
processes that use chlorine compounds.
Although the majority of these chemical compounds discharged are
environmentally benign, a small percentage, including the chemical
dioxin, are known to be toxic at sufficiently high concentrations.
With this knowledge, Boise Cascade has invested in new pulping and
bleaching equipment and has changed bleaching processes so that,
today, the level of dioxin in mill effluent at most of our pulp
mills is so small that it cannot be measured using acceptable
methodology.
Unfortunately, the proposed EPA rules do not discriminate between
known toxins and other chlorinated organics, but rather seek to
regulate the levels of all such compounds, regardless of their
actual impact on human health or the environment. This approach
is likely to require the elimination of elemental chlorine and may
require the elimination of all chlorine compounds from the
pulp-bleaching process, despite a lack of evidence that totally
chlorine-free bleaching would result in significant or
cost-effective improvement in the environment or public health.
Moreover, the estimated cost of changing bleaching processes and
capturing air emissions to accommodate the proposed regulations is
staggering -- as much as $12 billion for the U.S. pulp and paper
industry as a whole. For Boise Cascade, the cost of complying with
the proposed rules utilizing current technology could be several
hundred million dollars over the next four or five years. We are
working with industry associations and the EPA to achieve revisions
to the proposed regulations that would better reflect scientific
understanding of the effects, the risks of alternative
pulp-bleaching processes, and the costs.
As of December 31, 1993, the Company was notified that we are a
"potentially responsible party" under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) or
similar federal and state laws with respect to 53 sites where
hazardous substances or other contaminants are located. The
Company has resolved issues relating to several of these sites at
minimal cost and believes that we may have minimal or no
responsibility with regard to several other of these sites. In
most cases, the Company is one of many potentially responsible
parties, and our alleged contribution to these sites has been
minor. For those sites where a range of potential liability has
been determined, the Company has established appropriate reserves.
With respect to all of the currently outstanding sites, the Company
cannot predict with certainty the total response and remedial
costs, the Company's share of the total costs, the extent to which
contributions will be available from other parties, the amount of
time necessary to complete the cleanups, or the availability of
insurance coverage. However, based on our investigations, our
experience with respect to cleanup of hazardous substances, the
fact that expenditures will in many cases be incurred over extended
periods of time, and the number of solvent potentially responsible
parties, the Company does not presently believe that the known
actual and potential response costs will, in the aggregate, have
a material adverse effect on our financial condition or the results
of operations.
Common Stock Prices
1993 1992 1991
Quarter High Low High Low High Low
First $26 3/8 $19 1/2 $25 3/8 $20 7/8 $29 1/4 $23 7/8
Second 27 1/2 22 1/2 22 7/8 17 3/4 28 5/8 24
Third 24 19 5/8 20 1/2 16 3/8 28 3/8 24 1/4
Fourth 24 7/8 20 3/8 22 17 1/4 27 18 3/8
The Company's common stock is traded principally on the New York Stock Exchange.
Common Stock Dividends
1993 1992 1991
Paid Per Share
$.15 $.15 $.38
.15 .15 .38
.15 .15 .38
.15 .15 .38
1993 Capital Investment by Business
Replacement,
Quality/ Timber and Environmental,
Expansion Efficiency(1) Timberlands and Other Total
(expressed in millions)
Paper and paper products $ 25 $ 43 $ - $ 111 $ 179
Office products 1 1 - 1 3
Building products 8 7 - 14 29
Timber and
timberlands - - 4 - 4
Other 2 - - 4 6
________ ________ ________ ________ ________
Total $ 36 $ 51 $ 4 $ 130 $ 221
(1) Quality and efficiency projects include quality improvements, modernization, energy, and
cost-saving projects.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Revenues
Sales $3,958,300 $3,715,590 $3,950,490
Other income, net (Note 1) 24,140 14,800 93,220
__________ __________ __________
3,982,440 3,730,390 4,043,710
__________ __________ __________
Costs and expenses
Materials, labor, and other
operating expenses 3,373,300 3,223,910 3,345,230
Depreciation and cost of
company timber harvested 267,710 265,790 245,270
Selling and administrative
expenses 321,650 335,170 411,020
__________ __________ __________
3,962,660 3,824,870 4,001,520
__________ __________ __________
Income (loss) from operations 19,780 (94,480) 42,190
__________ __________ __________
Interest expense (148,310) (166,450) (175,340)
Interest income 1,330 1,830 4,700
Foreign exchange gain 1,610 6,590 310
__________ __________ __________
(145,370) (158,030) (170,330)
__________ __________ __________
Loss before income taxes (125,590) (252,510) (128,140)
Income tax benefit (Note 2) (48,450) (98,480) (48,690)
__________ __________ __________
Loss before cumulative
effect of accounting change (77,140) (154,030) (79,450)
Cumulative effect of accounting
change, net of tax (Note 5) - (73,450) -
__________ __________ __________
Net loss $ (77,140) $ (227,480) $ (79,450)
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF INCOME (LOSS)
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Net loss per common
share (Note 1)
Primary
Loss before cumulative
effect of accounting change $(3.17) $(4.79) $(2.46)
Cumulative effect of accounting
change, net of tax (Note 5) - (1.94) -
______ ______ ______
Net loss per share $(3.17) $(6.73) $(2.46)
Fully diluted
Loss before cumulative
effect of accounting change $(3.17) $(4.79) $(2.46)
Cumulative effect of accounting
change, net of tax (Note 5) - (1.94) -
______ ______ _____
Net loss per share $(3.17) $(6.73) $(2.46)
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
December 31
Assets 1993 1992 1991
(expressed in thousands)
Current
Cash and cash items (Note 1) $ 14,860 $ 12,588 $ 15,156
Short-term investments at cost,
which approximates market (Note 1) 7,569 7,744 6,855
__________ __________ __________
22,429 20,332 22,011
Receivables, less allowances of
$1,264,000, $1,757,000, and
$4,891,000 366,187 366,891 367,218
Inventories (Note 1) 446,609 415,930 479,432
Deferred income tax benefits 38,831 49,518 47,894
Other 13,397 12,993 16,680
__________ __________ __________
887,453 865,664 933,235
__________ __________ __________
Property (Note 1)
Property and equipment
Land and land improvements 56,871 56,601 64,334
Buildings and improvements 571,712 556,266 593,649
Machinery and equipment 4,642,434 4,498,287 4,417,202
__________ __________ __________
5,271,017 5,111,154 5,075,185
Accumulated depreciation (2,261,360) (2,044,189) (1,912,660)
__________ __________ __________
3,009,657 3,066,965 3,162,525
Timber, timberlands, and timber
deposits 366,054 385,955 389,454
__________ __________ __________
3,375,711 3,452,920 3,551,979
__________ __________ __________
Other assets (Note 1) 249,809 241,122 243,952
__________ __________ __________
Total assets $4,512,973 $4,559,706 $4,729,166
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
BALANCE SHEETS
December 31
Liabilities and Shareholders' Equity 1993 1992 1991
(expressed in thousands)
Current
Notes payable $ 31,000 $ 4,000 $ 58,000
Current portion of long-term debt (Note 4) 145,185 243,723 41,443
Accounts payable 288,300 268,962 291,956
Accrued liabilities
Compensation and benefits 103,188 107,007 122,414
Interest payable 32,194 42,847 44,487
Other 88,568 83,192 93,212
__________ __________ __________
688,435 749,731 651,512
__________ __________ __________
Debt (Note 4)
Long-term debt, less current portion 1,593,348 1,680,183 1,915,997
Guarantee of ESOP debt 246,856 261,695 275,058
__________ __________ __________
1,840,204 1,941,878 2,191,055
__________ __________ __________
Other
Deferred income taxes (Note 2) 222,464 279,011 348,903
Other long-term liabilities 257,346 231,490 90,083
__________ __________ __________
479,810 510,501 438,986
__________ __________ __________
Commitments and contingent liabilities
(Notes 1, 2, 5, and 7)
Shareholders' equity (Note 6)
Preferred stock - no par value;
10,000,000 shares authorized;
Series D ESOP: $.01 stated value;
6,395,047, 6,475,198, and 6,672,496
shares outstanding 287,777 291,384 300,262
Deferred ESOP benefit (246,856) (261,695) (275,058)
Series E: $.01 stated value; 862,500
shares outstanding in 1993 and 1992 191,466 191,471 -
Series F: $.01 stated value; 115,000
shares outstanding in 1993 111,043 - -
Series G: $.01 stated value; 862,500
shares outstanding in 1993 176,404 - -
Common stock - $2.50 par value;
200,000,000 shares authorized;
37,987,529, 37,940,312, and
37,944,725 shares outstanding 94,969 94,851 94,862
Retained earnings (Notes 1 and 4) 889,721 1,041,585 1,327,547
__________ __________ __________
Total shareholders' equity 1,504,524 1,357,596 1,447,613
__________ __________ __________
Total liabilities and shareholders'
equity $4,512,973 $4,559,706 $4,729,166
Shareholders' equity per common share $25.92 $29.95 $37.49
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Cash provided by (used for) operations
Net loss $ (77,140) $ (227,480) $ (79,450)
Items in loss not using
(providing) cash
Cumulative effect of accounting
change, net of tax - 73,450 -
Depreciation and cost of company timber
harvested 267,710 265,790 245,270
Deferred income tax benefit (46,243) (59,815) (42,059)
Amortization and other 11,547 28,549 11,841
Gain on sales of operating assets (Note 1) (8,300) (25,020) (99,716)
Receivables (116) (46,322) 65,551
Inventories (30,679) (3,319) 5,540
Accounts payable and accrued liabilities 15,696 9,216 (45,635)
Current and deferred income taxes 13,137 53,572 4,640
Other (14,391) (1,947) 3,019
__________ __________ __________
Cash provided by operations 131,221 66,674 69,001
__________ __________ __________
Cash provided by (used for) investment
Expenditures for property and equipment (216,818) (275,414) (293,609)
Expenditures for timber and timberlands (4,663) (7,537) (5,065)
Sales of operating assets (Note 1) 23,992 202,156 143,374
Other 8,867 (31,387) (24,831)
__________ __________ __________
Cash used for investment (188,622) (112,182) (180,131)
__________ __________ __________
Cash provided by (used for) financing
Cash dividends paid
Common stock (22,772) (22,765) (57,680)
Preferred stock (44,731) (32,712) (22,191)
__________ __________ __________
(67,503) (55,477) (79,871)
Notes payable 27,000 (54,000) 18,000
Additions to long-term debt 83,807 130,937 369,041
Payments of long-term debt (269,180) (164,380) (197,158)
Issuance of preferred stock (Note 6) 287,442 191,471 -
Other (2,068) (4,722) (2,817)
__________ __________ __________
Cash provided by financing 59,498 43,829 107,195
__________ __________ __________
Increase (decrease) in cash and short-term
investments 2,097 (1,679) (3,935)
Balance at beginning of the year 20,332 22,011 25,946
__________ __________ __________
Balance at end of the year $ 22,429 $ 20,332 $ 22,011
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1991, 1992, and 1993
________________________________________________________________________________________________________________
Total
Common Share- Deferred
Shares holders' Preferred ESOP Common Retained
Outstanding Notes 1, 4, 5, and 6 Equity Stock Benefit Stock Earnings
________________________________________________________________________________________________________________
(expressed in thousands)
37,948,511 Balance at December 31, 1990 $1,575,531 $ 302,807 $ (285,678) $ 94,871 $1,463,531
________________________________________________________________________________________________________________
Net loss (79,450) (79,450)
Cash dividends declared
Common stock (48,950) (48,950)
Preferred stock (22,191) (22,191)
(3,786) Other 22,673 (2,545) 10,620 (9) 14,607
________________________________________________________________________________________________________________
37,944,725 Balance at December 31, 1991 1,447,613 300,262 (275,058) 94,862 1,327,547
________________________________________________________________________________________________________________
Net loss (227,480) (227,480)
Cash dividends declared
Common stock (22,765) (22,765)
Preferred stock (36,571) (36,571)
Issuance of preferred stock 191,471 191,471
(4,413) Other 5,328 (8,878) 13,363 (11) 854
________________________________________________________________________________________________________________
37,940,312 Balance at December 31, 1992 1,357,596 482,855 (261,695) 94,851 1,041,585
________________________________________________________________________________________________________________
Net loss (77,140) (77,140)
Cash dividends declared
Common stock (22,813) (22,813)
Preferred stock (50,841) (50,841)
Issuance of preferred stock 287,442 287,442
47,217 Other 10,280 (3,607) 14,839 118 (1,070)
________________________________________________________________________________________________________________
37,987,529 Balance at December 31, 1993 $1,504,524 $ 766,690 $ (246,856) $ 94,969 $ 889,721
The accompanying notes are an integral part of these Financial Statements.
BOISE CASCADE CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION. The financial statements include the accounts of the
Company and all subsidiaries after elimination of intercompany balances
and transactions.
OTHER INCOME. "Other income, net" on the Statements of Income (Loss)
includes equity in earnings and losses of joint ventures, gains and
losses on the sale and disposition of property, and other miscellaneous
income and expense items. Results for 1993 include a net pretax gain
of $13,944,000, which was primarily attributable to sales of assets.
A 1993 adoption of Financial Accounting Standards Board requirements
to accrue certain severance, disability, and other benefits provided
to former or inactive employees did not have a material impact on
reported results. In 1992, strategic sales made by the Company
included the sale of essentially all of its wholesale office products
distribution operations at their approximate book value. Additionally,
the Company sold 11 corrugated container plants at a gain of
$25,020,000 and wrote off certain pulp and paper mill start-up costs
(see "Start-Up Costs" in this note). During 1991, the Company sold
timberlands at a gain of $62,648,000 and sold its 50% interest in a
joint venture which operated corrugated container plants in Austria and
Germany at a gain of $37,068,000. Partially offsetting these gains
were reserves of $12,257,000 related to costs associated with the
divestiture of certain assets.
FOREIGN CURRENCY TRANSLATION. Foreign exchange gains and losses
reported on the Statements of Income (Loss) arose primarily from
activities of the Company's Canadian subsidiaries. At December 31,
1993, contracts for the purchase of 50,000,000 Canadian dollars were
outstanding. Gains or losses in the market value of the forward
contracts are recorded as they are incurred during the year and
partially offset gains or losses arising from translation of the
Canadian subsidiaries' net liabilities.
NET LOSS PER COMMON SHARE. Net loss per common share was determined
by dividing net loss, as adjusted below, by applicable shares
outstanding. The computation of fully diluted net loss per share was
antidilutive in each of the periods presented; therefore, the amounts
reported for primary and fully diluted loss are the same.
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Net loss as reported $ (77,140) $(227,480) $ (79,450)
Preferred dividends (43,076) (27,711) (13,767)
_________ _________ _________
Primary loss (120,216) (255,191) (93,217)
Assumed conversions:
Preferred dividends eliminated 33,407 27,711 13,767
Interest on 7% debentures
eliminated 3,644 4,108 4,468
Supplemental ESOP contribution (12,381) (10,285) (6,833)
_________ _________ _________
Fully diluted loss $ (95,546) $(233,657) $ (81,815)
Average number of common shares
Primary 37,958 37,942 37,946
Fully diluted 55,825 53,283 45,596
Primary loss includes the aggregate amount of dividends on the
Company's preferred stock. The dividend attributable to the Company's
Series D convertible preferred stock held by the Company's ESOP
(employee stock ownership plan) is net of a tax benefit. To determine
the fully diluted loss, dividends and interest, net of any applicable
taxes, have been added back to primary loss to reflect assumed
conversions. The fully diluted loss was increased by the after-tax
amount of additional contributions that the Company would be required
to make to its ESOP if the Series D ESOP preferred shares were
converted to common stock.
For the years ended December 31, 1993, 1992, and 1991, primary average
shares include only common shares outstanding. For these periods,
common stock equivalents attributable to stock options, Series E
conversion preferred stock subsequent to issuance in January 1992, and
Series G conversion preferred stock subsequent to issuance in September
1993 were excluded because they were antidilutive. Excluded common
equivalent shares were 10,840,000 at December 31, 1993, compared with
7,998,000 shares and 16,695 shares at December 31, 1992 and 1991. In
addition to common and common equivalent shares, fully diluted average
shares include common shares that would be issuable upon conversion of
the Company's other convertible securities (see Notes 4 and 6).
CASH AND SHORT-TERM INVESTMENTS. Short-term investments consist of
investments that had a maturity of three months or less at the date of
purchase. At December 31, 1993, $9,371,000 of cash, short-term
investments, and certain receivables of a wholly owned insurance
subsidiary was committed for use in maintaining statutory liquidity
requirements of that subsidiary.
INVENTORY VALUATION. The Company uses the last-in, first-out (LIFO)
method of inventory valuation for raw materials and finished goods
inventories at substantially all of its domestic wood products and
paper manufacturing facilities. All other inventories are valued at
the lower of cost or market, with cost based on the average or first-
in, first-out (FIFO) valuation method. Manufactured inventories
include costs for materials, labor, and factory overhead.
Inventories include the following:
December 31
1993 1992 1991
(expressed in thousands)
Finished goods and work
in process $ 255,395 $ 237,603 $ 298,447
Logs 106,649 76,653 60,995
Other raw materials and
supplies 167,192 165,798 180,600
LIFO reserve (82,627) (64,124) (60,610)
__________ __________ __________
$ 446,609 $ 415,930 $ 479,432
PROPERTY. Property and equipment are recorded at cost. Cost includes
expenditures for major improvements and replacements and the net amount
of interest cost associated with significant capital additions.
Capitalized interest was $1,118,000 in 1993, $3,492,000 in 1992, and
$6,498,000 in 1991. Substantially all of the Company's paper and wood
products manufacturing facilities determine depreciation by the units-
of-production method, and other operations use the straight-line
method. Gains and losses from sales and retirements are included in
income as they occur except at certain pulp and paper mills that use
composite depreciation methods. At those facilities, gains and losses
are included in accumulated depreciation. Estimated service lives of
principal items of property and equipment range from 3 to 40 years.
Cost of company timber harvested and amortization of logging roads are
determined on the basis of the annual amount of timber cut in relation
to the total amount of recoverable timber. Timber and timberlands are
stated at cost, less the accumulated total of timber previously
harvested.
A portion of the Company's wood requirements are acquired from public
and private sources. Except for deposits required pursuant to wood
supply contracts, no amounts are recorded until such time as the
Company becomes liable for the timber. At December 31, 1993, based on
average prices at the time, the unrecorded amount of those contracts
was estimated to be approximately $210,000,000.
START-UP COSTS. Preoperating costs incurred during the construction
and start-up of major expansions or new manufacturing facilities are
capitalized. In mid-1992, the Company elected to write off certain
pulp and paper mill costs that had been capitalized prior to 1987 and
were being amortized over 15 years. The write-off reflected a change
in the estimated period benefited by such expenditures. The remaining
unamortized balance attributable to the expansion and modernization
project at the pulp and paper mill in International Falls, Minnesota,
is being amortized over a five-year period.
The unamortized balance of start-up costs, included in "Other assets"
on the Balance Sheets, is as follows:
December 31
1993 1992 1991
(expressed in thousands)
Balance at beginning of the year $ 32,475 $ 61,232 $ 50,460
Amortized (8,119) (9,789) (3,990)
Written off - (18,968) -
Capitalized - - 14,762
__________ __________ __________
Balance at end of the year $ 24,356 $ 32,475 $ 61,232
RESEARCH AND DEVELOPMENT COSTS. Research and development costs are
expensed as incurred. During 1993, research and development expenses
were $11,496,000, compared with $11,785,000 in 1992 and $10,982,000 in
1991.
2. INCOME TAXES
Effective as of January 1, 1993, the Company adopted Financial
Accounting Standards Board requirements that govern the way deferred
taxes are calculated and reported. The one-time adjustment made to
record the initial adoption of the standard had no effect on the
Company's 1993 net loss. The impact of changes in the statutory tax
rate on deferred taxes subsequent to the initial adoption are discussed
below. Financial statements for prior periods have not been restated.
The income tax benefit shown on the Statements of Income (Loss)
includes the following:
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Current income tax refund $ (2,207) $ (38,665) $ (6,631)
Deferred income tax benefit (46,243) (59,815) (42,059)
__________ __________ __________
Total income tax benefit
before cumulative effect
of accounting change $ (48,450) $ (98,480) $ (48,690)
Deferred tax attributable
to cumulative effect
of accounting change $ - $ (44,950) $ -
During 1993, the Company received income tax refunds, net of cash
payments, of $48,025,000, compared with net refunds of $60,081,000 in
1992 and $45,451,000 in 1991.
A reconciliation of the statutory U.S. federal tax rate and the
Company's reported tax benefit rate is as follows:
Year Ended December 31
1993 1992 1991
Statutory tax rate 35.0% 34.0% 34.0%
Increases (decreases) in
tax rate resulting from:
State taxes 3.3 1.9 3.7
Foreign loss tax benefit
at more than theoretical
rate .9 2.9 1.4
Other 1.1 .2 (1.1)
__________ __________ __________
Effective tax rate 40.3 39.0 38.0
Tax rate adjustments to net
deferred tax liabilities (1.7) - -
__________ __________ __________
Reported tax rate 38.6% 39.0% 38.0%
During 1993, the U.S. federal government increased its statutory rate
from 34% to 35%. The increase in net deferred tax liabilities due to
that increase was partially offset by decreases due to reductions in
Canadian tax rates. The Canadian federal rate was decreased from 23.8%
to 22.8%, and a further decrease to 21.8% was effective for 1994. The
difference between the effective and reported tax rates shown above for
1993 resulted in a net increase in deferred tax liabilities of $2,100,000
at December 31, 1993.
The components of the net deferred tax liability on the Balance Sheet
at December 31, 1993, as determined in accordance with the new
standard, were as follows (expressed in thousands):
Deferred Tax
Assets Liabilities
Operating loss carryover $ 169,758 $ -
Employee benefits 98,262 17,359
Property and equipment and
timber and timberlands 89,025 589,380
Alternative minimum tax 79,775 -
Tax credit carryovers 47,268 -
Reserves 11,578 1,498
Inventories 9,767 412
State income taxes 3,892 29,026
Deferred charges 313 14,591
Differences in basis of
nonconsolidated entities - 17,909
Other 9,790 32,886
__________ __________
$ 519,428 $ 703,061
The components of the deferred tax benefit portion of the total income
tax benefit on the Statements of Income (Loss) for the years ended
December 31, 1992 and 1991, were determined in accordance with
accounting requirements used prior to January 1, 1993, and related to
differences in recognition of revenue and expense for tax and financial
reporting purposes. The nature and tax effect of each were as follows:
Year Ended December 31
1992 1991
(expressed in thousands)
Reduction of deferred tax liabilities
due to losses $(109,682) $(140,397)
Book depreciation less than tax
depreciation 59,745 85,832
Expenses deferred for book more (less)
than tax (12,560) 7,059
Provision for pensions less than
pension funding 1,376 6,944
Other 1,306 (1,497)
_________ _________
Deferred income tax benefit
before cumulative effect of
accounting change $ (59,815) $ (42,059)
At December 31, 1993, the Company had loss carryforwards for tax
purposes in the U.S. of $406,000,000 expiring in 2007 through 2008 and
$33,000,000 in Canada expiring in 2000. Additionally, the Company had
income tax credits in the U.S. of $35,300,000 expiring in 1997 through
2007 and $11,900,000 in Canada expiring in 1995 through 2003. The
Company also had $80,000,000 of U.S. minimum tax credits, which may be
carried forward indefinitely. The loss carryforwards, the Canadian
income tax credits, and the U.S. minimum tax credits are realizable
through future reversals of existing taxable temporary differences.
Management believes that the U.S. tax credits will be fully realized
based on future reversals of existing taxable temporary differences,
future earnings, or available tax planning strategies.
At December 31, 1993, Canadian subsidiaries of the Company had
$201,840,000 of undistributed earnings which have been indefinitely
reinvested. It is not practical to make a determination of the
additional U.S. income taxes that would be due upon remittance of these
earnings until the remittance occurs.
Pretax income (loss) from domestic and foreign sources is as follows:
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Domestic $(100,319) $(214,696) $(158,842)
Foreign (25,271) (37,814) 30,702
_________ _________ _________
Pretax loss $(125,590) $(252,510) $(128,140)
The Company's federal income tax returns have been examined through
1989. Tax returns for 1990 and 1991 are currently under review.
Certain deficiencies have been proposed, but the amount of the
deficiencies, if any, that may result upon settlement of these years
cannot be determined at this time. The Company believes that it has
adequately provided for any such deficiencies and that settlements will
not have a material adverse effect on the Company's financial condition
or results of operations.
3. LEASES
Lease obligations for which the Company assumes substantially all
property rights and risks of ownership are capitalized. All other
leases are treated as operating leases. Rental expenses for operating
leases, net of sublease rentals, were $30,877,000 in 1993, $28,821,000
in 1992, and $27,808,000 in 1991.
The Company has various operating leases with remaining terms of more
than one year. These leases have minimum lease payment requirements,
net of sublease rentals, of $17,533,000 for 1994, $15,527,000 for 1995,
$13,912,000 for 1996, $12,053,000 for 1997, and $11,566,000 for 1998,
with total payments thereafter of $171,987,000.
Substantially all lease agreements have fixed payment terms based upon
the passage of time. Some lease agreements provide the Company with
the option to purchase the leased property. Additionally, certain
agreements contain renewal options ranging up to 15 years, with fixed
payment terms similar to those in the original lease agreements.
4. DEBT
At December 31, 1993, the Company had an unsecured revolving credit
agreement that permitted it to borrow up to $750,000,000, $275,000,000
of which was outstanding at that date. One of the Company's Canadian
subsidiaries had a $130,000,000 unsecured revolving credit agreement
that permitted borrowing in either U.S. or Canadian dollars. Amounts
drawn under this revolver are guaranteed by the Company and are
consolidated with borrowings of the Company for reporting purposes.
On December 31, 1993, borrowings of US$110,000,000 were outstanding
under the Canadian revolver.
The revolving credit agreements provide a choice of several pricing
formulas. At December 31, 1993, the interest rates would have ranged
from 3.9% to 6.5% for borrowings in U.S. dollars and from 4.5% to 5.5%
for borrowings in Canadian dollars. Commitment fees are required on
the unused portion of the credits. The revolving period on the
$750,000,000 lending commitment expires in May 1994, and any borrowings
outstanding at that time are payable in quarterly installments ending
in May 1995. The revolving period on the $130,000,000 Canadian lending
commitment expires in May 1995, and any amounts outstanding at that
time are payable in quarterly installments ending in June 1996.
Compensating balances are not required.
The revolving credit agreements limit the amount of common dividends
that may be declared by the Company. In general, the amount available
under this restriction will be increased (or decreased) by an amount
equal to 75% of net income (or loss) before adjustments for
extraordinary items and certain noncash accounting adjustments,
increased by an amount equal to 50% of the proceeds from the sale of
any stock, reduced by the amount of any dividends or distributions of
cash, assets, or securities (other than common stock), and reduced by
the amount expended to repurchase, redeem, or retire any shares of
Company stock. These restrictions do not apply to the payment of
dividends on preferred stock, although any dividends paid on preferred
stock reduce the amount available under the restrictions for payment
of dividends on common stock. The aggregate dividend limitation was
$60,016,000 at December 31, 1993. The limitation was $49,142,000 at
December 31, 1992, and $133,703,000 at December 31, 1991. The
revolving credit agreements also require the Company to maintain a
minimum ratio of assets to indebtedness and to exceed a defined minimum
interest coverage. The Company believes it will be able to maintain
adequate liquidity to meet its various financial requirements. At
year-end, the Company was in the process of renegotiating its revolving
credit agreements.
At December 31, 1993, the Company had $115,900,000 of shelf capacity
registered with the Securities and Exchange Commission for additional
debt securities.
In 1993, the Company entered into a ten-year, $100,000,000 notional
amount "interest rate swap" agreement under which the Company pays 7.1%
and receives 9.625% until 1995 and a variable interest rate thereafter
until 2003. The interest payments made or received pursuant to the
swap are netted for reporting purposes. In the event the swap is
terminated before its expiration, the Company would no longer pay or
receive interest payments pursuant to the swap. At December 31, 1993,
the liquidation value to the Company, based on interest rates available
for instruments with similar characteristics, would have been
approximately $1,100,000.
The Company has guaranteed debt used to fund an employee stock
ownership plan that is part of the Savings and Supplemental Retirement
Plan for the Company's U.S. salaried employees (see Note 5). The
Company has recorded the debt on its Balance Sheets, along with an
offset in the shareholders' equity section that is titled "Deferred
ESOP benefit." The Company has guaranteed certain tax indemnities on
the ESOP debt, and the interest rate on the guaranteed debt is subject
to adjustment for events described in the loan agreement.
The Company may redeem all or part of the 7% unsecured convertible
subordinated debentures at specified amounts that decline to $50 par
value per debenture on May 1, 1996. Sinking fund payments are required
after May 1, 1996. At December 31, 1993, $16,957,000 of these
debentures had been purchased by the Company for application to the
sinking fund requirements. Each debenture is convertible into 1.1415
shares of the Company's common stock.
Long-term debt, almost all of which is unsecured, consists of the
following:
December 31
1993(1) 1992 1991
(expressed in thousands)
7.375% notes, due in 1997, net of
unamortized discount of $310,000 $ 99,690 $ 99,604 $ -
10.125% notes, due in 1997, net of
unamortized discount of $209,000 119,791 119,738 119,685
9.625% notes, due in 1998, callable in
1995, net of unamortized discount of
$88,000 99,912 99,855 99,798
9.9% notes, due in 2000, net of
unamortized discount of $341,000 99,659 99,604 99,549
9.875% notes, due in 2001, callable in
1999 100,000 100,000 100,000
9.85% notes, due in 2002 125,000 125,000 125,000
9.45% debentures, due in 2009, net of
unamortized discount of $356,000 149,644 149,621 149,599
7% convertible subordinated debentures,
due in 2016, net of unamortized
discount of $640,000 76,308 79,986 96,375
Medium-term notes, Series A, with
interest rates averaging 9.3%,
9.5%, and 9.6%, due in varying
amounts through 2013 239,100 245,300 239,000
Revenue bonds and other indebtedness,
with interest rates averaging 7.6%,
8%, and 8.2%, due in varying
amounts annually through 2023, net of
unamortized discount of $1,459,000 219,870 187,137 230,360
American & Foreign Power Company Inc.
5% debentures, due in 2030, net of
unamortized discount of $1,405,000 24,559 25,814 30,951
Revolving credit borrowings, with
interest rates averaging 4%, 4.1%,
and 5.3% 385,000 400,000 375,000
Debt called or paid at maturity - 192,247 292,123
__________ __________ __________
1,738,533 1,923,906 1,957,440
Less current portion 145,185 243,723 41,443
__________ __________ __________
1,593,348 1,680,183 1,915,997
Guarantee of ESOP debt, due in
installments through 2004 246,856 261,695 275,058
__________ __________ __________
$1,840,204 $1,941,878 $2,191,055
(1) The amount of net unamortized discount disclosed applies to long-
term debt outstanding at December 31, 1993.
The scheduled payments of long-term debt are $145,185,000 in 1994,
$267,899,000 in 1995, $73,558,000 in 1996, $250,682,000 in 1997, and
$125,238,000 in 1998. The payments include amounts attributable to
the Company's revolving credit agreements for 1994, 1995, and 1996 of
$137,500,000, $192,500,000, and $55,000,000.
Cash payments for interest, net of interest capitalized, were
$158,963,000 in 1993, $168,090,000 in 1992, and $169,313,000 in 1991.
The estimated current market value of the Company's debt, based on
current interest rates for similar obligations with like maturities,
is approximately $82,000,000 greater than the amount of debt reported.
5. RETIREMENT AND BENEFIT PLANS
Substantially all of the Company's employees are covered by pension
plans. The plans are primarily noncontributory defined benefit plans.
The pension benefit for salaried employees is based primarily on years
of service and the highest five-year average compensation, and the
benefit for hourly employees is generally based on a fixed amount per
year of service. The Company's contributions to its pension plans vary
from year to year, but the Company has made at least the minimum
contribution required by law in each year. The assets of the pension
plans are invested primarily in common stocks, fixed-income securities,
and cash and cash equivalents.
The assumptions used by the Company's actuaries in the calculations of
pension (income) expense and plan obligations are estimates of factors
that will determine, among other things, the amount and timing of
future benefit payments. The return on assets assumption used during
the periods presented was 10%. The discount rate assumption was
decreased from 8.25% to 7.5% for the Company's U.S. pension plans
effective as of year-end 1993. The discount rate for the Company's
Canadian plans remained at 8.25%, which was the rate that had been
adopted for all of the Company's plans at December 31, 1992. Previous
to that date, an 8.5% discount rate assumption had been used. Also
effective at year-end 1993, a salary escalation assumption of 5% for
U.S. plans and 5.5% for Canadian plans was adopted. A salary
escalation of 6% had been adopted for U.S. salaried employees at
December 31, 1992, and the rate otherwise applicable during 1992 and
1991 was 6.5%. Pension income for 1993 and 1992 was primarily
attributable to earnings from plan assets in recent years.
The components of pension (income) expense are as follows:
Year Ended December 31
1993 1992 1991
(expressed in thousands)
Benefits earned by employees $ 20,253 $ 19,446 $ 20,136
Interest cost on projected
benefit obligation 76,076 73,210 71,249
Earnings from plan assets (134,679) (64,607) (229,445)
Assumed earnings from plan
assets (more) less than actual
earnings 44,338 (21,042) 150,992
Amortization of unrecognized
net initial asset (12,145) (12,233) (12,549)
Amortization of net experience
gains and losses from prior
periods 1,149 888 1,230
Amortization of unrecognized
prior service costs 3,547 3,462 3,637
__________ __________ __________
Company-sponsored plans (1,461) (876) 5,250
Multiemployer pension plans 546 625 686
__________ __________ __________
Total pension (income) expense $ (915)$ (251) $ 5,936
The following table, which includes only Company-sponsored plans,
compares the pension obligation with assets available to meet that
obligation:
Plans With Assets in Excess of the Plans With an Accumulated Benefit
Accumulated Benefit Obligation Obligation in Excess of Assets
December 31 December 31
1993 1992 1991 1993 1992 1991
(expressed in millions)
Accumulated benefit obligation
Vested $(674.5) $(652.6) $(604.8) $(255.2) $(178.9) $(170.9)
Nonvested (29.3) (27.0) (27.7) (14.7) (10.6) (10.4)
Provision for salary escalation (72.6) (84.9) (89.1) (3.0) (2.2) (1.8)
_______ _______ _______ _______ _______ _______
Projected benefit obligation (776.4) (764.5) (721.6) (272.9) (191.7) (183.1)
Plan assets at fair market value 842.9 829.1 820.5 207.1 138.6 137.8
_______ _______ _______ _______ _______ _______
Net plan assets (obligation) $ 66.5 $ 64.6 $ 98.9 $ (65.8) $ (53.1) $ (45.3)
The following table reconciles the net plan assets (obligation) to the
prepayment (obligation) recorded on the Balance Sheets:
Plans With Assets in Excess of the Plans With an Accumulated Benefit
Accumulated Benefit Obligation Obligation in Excess of Assets
December 31 December 31
1993 1992 1991 1993 1992 1991
(expressed in millions)
Net plan assets (obligation) $ 66.5 $ 64.6 $ 98.9 $ (65.8) $ (53.1) $ (45.3)
Remainder of unrecognized
initial (asset) obligation (1) (28.9) (44.8) (58.5) (2.3) 1.1 1.5
Other unrecognized items (2) 17.0 23.0 (14.1) 30.6 15.9 8.9
Adjustment to record minimum
liability - - - (25.7) (15.5) (10.5)
_______ _______ _______ _______ _______ _______
Net recorded prepayment
(obligation) $ 54.6 $ 42.8 $ 26.3 $ (63.2) $ (51.6) $ (45.4)
(1) The unrecognized initial (asset) obligation calculated at
January 1, 1986, is being amortized over a weighted average of
11 years.
(2) "Other unrecognized items" reflects changes in actuarial
assumptions, net changes in prior service costs, and net
experience gains and losses since January 1, 1986.
The Company and its retired employees currently share in the cost of
retiree health care costs. The type of benefit provided and the extent
of coverage vary based on employee classification, date of retirement,
location, and other factors. The portion of the cost of coverage paid
by the Company for U.S. salaried employees retiring in each year since
1986 has decreased, and the Company will eventually cease to share in
the cost of health care benefits for retired salaried employees. All
of the Company's postretirement health care plans are unfunded. The
Company explicitly reserves the right to amend or terminate its retiree
medical plans at any time, subject only to constraints, if any, imposed
by the terms of collective bargaining agreements. Accrual of costs
pursuant to accounting standards does not affect, or reflect, the
Company's ability to amend or terminate these plans. Amendment or
termination may significantly impact the amount of expense incurred.
Effective as of January 1, 1992, the Company adopted Financial
Accounting Standards Board requirements to accrue postretirement
benefit costs, including retiree health care costs. The cumulative
cost of these benefits attributable to employee service prior to
January 1, 1992, was $118,400,000 before taxes, or $73,450,000 after
taxes. As a result, the 1992 net loss per fully diluted common share
was increased by $1.94. Prior to 1992, retiree health care costs were
recorded at the time they were paid.
A discount rate of 7.5% was adopted effective as of December 31, 1993,
down from an 8.25% rate that had been adopted at the end of the
previous year. A discount rate of 8.5% was used at the time the new
accounting standard was adopted. The initial 1992 trend rate for
medical care costs, was 8.5%, which is assumed to decrease ratably over
the next ten years to 6%. A 1% increase in the trend rate for medical
care costs would have increased the December 31, 1993, benefit
obligation by $7,800,000 and postretirement health care expense for the
year ended December 31, 1993, by $1,400,000.
The components of postretirement health care expense are as follows:
Year Ended December 31
1993 1992
(expressed in thousands)
Benefits earned by employees $ 2,300 $ 2,080
Interest cost on accumulated postretirement
health care benefit obligation 11,700 10,920
__________ __________
Total postretirement health care expense $ 14,000 $ 13,000
The accrued postretirement health care benefit obligation is included
primarily in "Other long-term liabilities" on the Balance Sheets. The
components of the obligation are as follows:
December 31
1993 1992
(expressed in thousands)
Retirees $ 79,800 $ 84,700
Fully eligible active employees 18,700 19,900
Other active employees 33,200 35,300
__________ __________
Accumulated postretirement health care
benefit obligation 131,700 139,900
Unrecognized prior service costs 17,600 -
Unrecognized actuarial loss (6,500) (3,500)
__________ __________
Accrued postretirement health care
benefit obligation $ 142,800 $ 136,400
The Company sponsors savings and supplemental retirement programs for
its salaried and some hourly employees. The program for U.S. salaried
employees includes an employee stock ownership plan. Under that plan,
the Company's Series D ESOP convertible preferred stock (see Note 6)
is being allocated to eligible participants through 2004, as principal
and interest payments are made on the ESOP debt guaranteed by the
Company. Total expense for these plans was $13,598,000 in 1993,
compared with $12,038,000 in 1992 and $12,361,000 in 1991.
6. SHAREHOLDERS' EQUITY
PREFERRED STOCK. At December 31, 1993, 6,395,047 shares of 7.375%
Series D ESOP convertible preferred stock were outstanding. The stock
is shown on the Balance Sheets at its liquidation preference of $45 per
share. The stock was sold to the trustee of the Company's Savings and
Supplemental Retirement Plan for U.S. salaried employees (see Note 5).
Each ESOP preferred share is entitled to one vote, bears an annual
cumulative dividend of $3.31875, and is convertible at any time by the
trustee to .80357 share of common stock. The ESOP preferred shares may
not be redeemed for less than the liquidation preference.
At December 31, 1993, there were three series of preferred stock
outstanding that were represented by depositary shares. These
preferred issues are shown on the Balance Sheets at their respective
liquidation preference, net of the costs of issuance. The details of
the issues are as follows:
Series E Series F Series G
Date of issuance First quarter First quarter Third quarter
1992 1993 1993
Preferred shares outstanding 862,500 115,000 862,500
Depositary shares
outstanding 8,625,000 4,600,000 8,625,000
Cumulative annual dividend:
Per preferred share $17.90 $94.00 $15.80
Per depositary share $1.79 $2.35 $1.58
Liquidation preference:
Per preferred share $228.75 $1,000.00 $211.25
Per depositary share $22.875 $25.00 $21.125
Votes:
Per preferred share 1 Limited 1
Per depositary share 1/10 voting rights 1/10
Automatic conversion
(unless previously
redeemed or converted):
Date Jan. 1995 Not convertible Oct. 1997
Common shares issued
per depositary share 1 - 1
(see below) (see below)
On January 15, 1995, each depositary share of Series E preferred stock
will automatically convert to one share of the Company's common stock
unless the Series E preferred stock and related depositary shares have
been previously redeemed by the Company. The Company may elect to
redeem the Series E preferred stock and related depositary shares for
common stock any time prior to January 15, 1995. The total number of
common shares issuable upon redemption is determined by dividing the
call price by a defined then-current market price for the Company's
common stock and multiplying the result by the 8,625,000 depositary
shares. The initial call price is $34.45 per Series E depositary
share, which declines ratably to $31.08 on November 15, 1994, and will
be $30.88 for the period thereafter through January 14, 1995.
Redemption is not anticipated when the defined average market price of
the Company's common stock is less than the call price of the Series E
depositary shares.
The Series F preferred stock and related depositary shares may be
redeemed on or after February 15, 1998, at a price of $1,000 per
preferred share ($25 per depositary share) plus accrued but unpaid
dividends.
On October 15, 1997, each depositary share of Series G preferred stock
will automatically convert to one share of the Company's common stock
unless the Series G preferred stock and related depositary shares have
been previously redeemed by the Company or converted by the
shareholders. The Company may elect to redeem the Series G preferred
stock and related depositary shares for common stock on or after
July 15, 1997, until October 15, 1997. The total number of common
shares issuable upon redemption between July 15, 1997, and
September 15, 1997, is determined by dividing $21.225 by a defined
then-current average market price for the Company's common stock and
multiplying the result by the 8,625,000 depositary shares. For the
period on or after September 15, 1997, through October 14, 1997, the
numerator in the preceding calculation is reduced from $21.225 to
$21.125. In the event the market price of the Company's common stock
exceeds $26.375 upon an announced redemption, it is anticipated that
the holders of the Series G depositary shares would elect to convert
their depositary shares to common stock. Upon conversion, which is
permitted at any time prior to redemption, .801 share of common stock
(subject to adjustment in certain events) would be issuable for each
Series G depositary share so converted.
Examples of common stock issuances upon redemptions of the Series E
and G preferred stock are as follows:
Series E Preferred Stock Series G Preferred Stock
(Subsequent to November 15, 1994) (Subsequent to September 15, 1997)
Common Stock Common Shares Common Stock Common Shares
Market Price Expected to be Market Price Expected to be
at Time of Issued Upon at Time of Issued Upon
Redemption Redemption Redemption Redemption
$0-$30.88 (1) 8,625,000 $0-$21.125 (1) 8,625,000
$32.50 8,195,076 $22.50 8,097,916
$35.00 7,609,714 $25.00 7,288,125
$37.50 7,102,400 $26.375 (2) 6,908,175
$40.00 (2) 6,658,500
(1) Call price. (1) Call price.
(2) The total number of common (2) The total number of common
shares issuable will continue shares issuable at this
to decline at common stock market price are equal to
market prices above $40. shares issuable upon exercise
of the Series G preferred
stock conversion rights.
The remaining authorized but unissued preferred shares may be issued
with such voting rights, dividend rates, conversion privileges, sinking
fund requirements, and redemption prices as the board of directors may
determine, without action by the shareholders.
COMMON STOCK. The Company is authorized to issue 200,000,000 shares
of common stock, of which 37,987,529 shares were issued and outstanding
at December 31, 1993. Of the unissued shares, a total of 30,628,175
shares were reserved for the following:
Conversion of Series D ESOP preferred stock 5,138,868
Conversion of Series E preferred stock 8,625,000
Conversion of Series G preferred stock 8,625,000
Conversion of 7% convertible subordinated debentures 1,756,716
Issuance under Key Executive Stock Option Plan 6,382,591
Issuance under Director Stock Option Plan 100,000
Pursuant to the shareholder rights plan adopted in December 1988 and
as amended in September 1990, holders of common stock received a
distribution of one right for each common share held. The rights
become exercisable ten days after a person or group acquires 15% of
the Company's outstanding voting securities or ten business days after
a person or group commences or announces an intention to commence a
tender or exchange offer that could result in the acquisition of 15%
of these securities. If a person acquires 15% or more of the Company's
outstanding voting securities, on the tenth day thereafter, unless this
time period is extended by the board of directors, each right would,
subject to certain adjustments and alternatives, entitle the
rightholder to purchase common stock of the Company or the acquiring
company having a market value of twice the $175 exercise price of the
right (except that the acquiring person or group and other related
holders would not be able to purchase common stock of the Company on
these terms). The rights are nonvoting, may be redeemed by the Company
at a price of 1 cent per right at any time prior to the tenth day after
an individual or group acquires 15% of the Company's voting stock,
unless extended, and expire in 1998. Additional details are set forth
in the Amended and Restated Rights Agreement filed with the Securities
and Exchange Commission on September 26, 1990.
The Key Executive Stock Option Plan provides for the granting of
options to purchase shares of the Company's common stock. The exercise
price is equal to the fair market value of the Company's common stock
on the date the options were granted.
Additional information relating to the Key Executive Stock Option Plan
is as follows:
Year Ended December 31
1993 1992 1991
Balance at beginning
of the year 4,131,952 3,692,357 2,806,502
Options granted 919,200 622,600 1,016,050
Options exercised (50,067) - -
Options canceled (292,703) (183,005) (130,195)
_________ _________ _________
Balance at end of the year 4,708,382(1) 4,131,952 3,692,357
Price range of:
Options granted $21 $18-$21 $20-$27
Options exercised $18-$25 - -
Options outstanding $18-$47 $18-$47 $20-$47
(1) At December 31, 1993, options for 3,795,482 shares were
exercisable.
The Director Stock Option Plan, which is only available to nonemployee
directors, provides for granting options to purchase shares of the
Company's common stock. The difference between the $2.50 per share
exercise price and the market value of the common stock subject to
option is intended to offset certain compensation that participating
directors have elected not to receive in cash. A total of 10,194
options were granted with respect to cash compensation not taken and
dividends accrued during 1993, compared with 6,322 options granted for
cash compensation not taken in 1992. All of these options were
outstanding at December 31, 1993.
During 1993, the Company purchased 2,850 shares of its common stock
under a program approved by the board of directors and, at December 31,
1993, was authorized to purchase up to 5,424,845 additional shares.
In 1992 and 1991, 4,413 and 3,786 shares were purchased.
7. LITIGATION AND LEGAL MATTERS
The Company is involved in litigation and administrative proceedings
primarily arising in the normal course of its business. In the opinion
of management, the Company's recovery, if any, or the Company's
liability, if any, under any pending litigation or administrative
proceeding would not materially affect its financial condition or
operations.
8. SEGMENT INFORMATION
Boise Cascade Corporation is an integrated paper and forest products
company headquartered in Boise, Idaho, with operations located in the
United States and Canada. The Company manufactures and distributes
paper and paper products, office products, and building products and
owns and manages timberland to support these operations.
No single customer accounts for 10% of consolidated trade sales.
Export sales to foreign unaffiliated customers are immaterial. During
1993, the Company's Canadian paper operations made sales of $37,292,000
to Company paper operations in the U.S., and similar sales in 1992 and
1991 were $40,643,000 and $32,788,000.
SUMMARY OF SIGNIFICANT SEGMENT ACCOUNTING POLICIES. Intersegment sales
are recorded primarily at market prices. Corporate assets are
primarily cash and short-term investments, deferred income tax
benefits, prepaid expenses, certain receivables, and property and
equipment.
The Company's segments exclude timber-related assets and capital expen-
ditures, because any allocation of these assets would be arbitrary.
Company timber harvested is included in segment results at cost.
An analysis of the Company's operations by segment and by geographic area is as follows:
Depreciation
and Cost of
Sales Operating Company Capital
Inter- Income Timber Expendi-
Trade segment Total (Loss)(1) Harvested tures Assets
Year Ended December 31, 1993 (expressed in thousands)
Paper and paper products
United States $1,548,788 $ 125,007 $1,673,795 $ (124,865) $ 181,060 $ 144,062 $2,700,246
Canada 246,855 3 246,858 (12,905) 29,095 34,962 452,739
__________ __________ __________ __________ __________ __________ __________
1,795,643 125,010 1,920,653 (137,770) 210,155 179,024 3,152,985
Office products 681,654 1,165 682,819 35,631 10,100 2,907 234,751
Building products 1,468,724 62,100 1,530,824 158,773 38,477 28,534 447,831
Other operations 12,279 57,524 69,803 3,136 5,618 5,301 71,994
__________ __________ __________ __________ __________ __________ __________
Total 3,958,300 245,799 4,204,099 59,770 264,350 215,766 3,907,561
__________ __________ __________ __________ __________ __________ __________
Intersegment eliminations - (245,799) (245,799) (935) - - (24,144)
Timber, timberlands, and
timber deposits - - - - - 4,663 366,054
Corporate and other - - - (38,193) 3,360 1,052 263,502
__________ __________ __________ __________ __________ __________ __________
Consolidated totals $3,958,300 $ - $3,958,300 $ 20,642 $ 267,710 $ 221,481 $4,512,973
Year Ended December 31, 1992
Paper and paper products
United States $1,575,837 $ 105,394 $1,681,231 $ (157,651) $ 178,569 $ 210,262 $2,733,037
Canada 249,009 3 249,012 (28,886) 27,832 28,420 451,835
__________ __________ __________ __________ __________ __________ __________
1,824,846 105,397 1,930,243 (186,537) 206,401 238,682 3,184,872
Office products 671,164 1,056 672,220 18,847 11,989 5,537 245,483
Building products 1,207,799 61,666 1,269,465 114,891 37,462 27,239 415,287
Other operations 11,781 54,278 66,059 1,989 6,385 3,079 68,535
__________ __________ __________ __________ __________ __________ __________
Total 3,715,590 222,397 3,937,987 (50,810) 262,237 274,537 3,914,177
__________ __________ __________ __________ __________ __________ __________
Intersegment eliminations - (222,397) (222,397) (742) - - (22,350)
Timber, timberlands, and
timber deposits - - - - - 7,537 385,955
Corporate and other - - - (41,669) 3,553 877 281,924
__________ __________ __________ __________ __________ __________ __________
Consolidated totals $3,715,590 $ - $3,715,590 $ (93,221) $ 265,790 $ 282,951 $4,559,706
Year Ended December 31, 1991
Paper and paper products
United States $1,663,639 $ 113,649 $1,777,288 $ (102,295) $ 159,565 $ 222,874 $2,802,981
Canada 293,265 2 293,267 10,374 25,810 31,797 454,842
__________ __________ __________ __________ __________ __________ __________
1,956,904 113,651 2,070,555 (91,921) 185,375 254,671 3,257,823
Office products 1,037,484 1,320 1,038,804 34,608 16,030 4,324 384,456
Building products 943,337 57,482 1,000,819 103,866 33,277 29,389 379,602
Other operations 12,765 53,282 66,047 5,163 6,951 4,602 89,620
__________ __________ __________ __________ __________ __________ __________
Total 3,950,490 225,735 4,176,225 51,716 241,633 292,986 4,111,501
__________ __________ __________ __________ __________ __________ __________
Intersegment eliminations - (225,735) (225,735) 67 - - (20,381)
Timber, timberlands, and
timber deposits - - - - - 5,065 389,454
Corporate and other - - - (5,975) 3,637 623 248,592
__________ __________ __________ __________ __________ __________ __________
Consolidated totals $3,950,490 $ - $3,950,490 $ 45,808 $ 245,270 $ 298,674 $4,729,166
(1) Operating income (loss) includes gains from sales and dispositions (see Note 1). In addition, interest income has been
allocated to the Company's segments in the amounts of $862,000 for 1993, $1,259,000 for 1992, and $3,618,000 for 1991.
Quarterly Results of Operations (unaudited)
1993 1992(5)
4th Qtr.(1) 3rd Qtr.(2) 2nd Qtr.(3) 1st Qtr.(4) 4th Qtr. 3rd Qtr. 2nd Qtr.(6) 1st Qtr.
(expressed in millions, except per-common-share amounts)
Net sales $ 997 $1,003 $ 974 $ 984 $ 905 $ 935 $ 922 $ 954
Gross profit 76 76 77 88 74 52 41 59
Loss before income taxes $ (40) $ (30) $ (36) $ (19) $ (49) $ (59) $ (75) $ (70)
Income tax benefit (16) (6) (19) (7) (19) (23) (30) (27)
______ ______ ______ ______ ______ ______ ______ ______
Loss before accounting
change (24) (24) (17) (12) (30) (36) (45) (43)
Cumulative effect of
accounting change, net - - - - - - - (73)
______ ______ ______ ______ ______ ______ ______ ______
Net loss $ (24) $ (24) $ (17) $ (12) $ (30) $ (36) $ (45) $ (116)
Net loss per share
Primary and fully diluted(7)
Loss before accounting
change $ (.98) $ (.91) $ (.72) $ (.56) $ (.97) $(1.13) $(1.39) $(1.30)
Cumulative effect of
accounting change, net - - - - - - - (1.94)
______ ______ ______ ______ ______ ______ ______ ______
Net loss per share $ (.98) $ (.91) $ (.72) $ (.56) $ (.97) $(1.13) $(1.39) $(3.24)
(1)In the fourth quarter of 1993, the Company adopted Financial Accounting Standards Board requirements to accrue certain
severance, disability, and other benefits provided to former or inactive employees. Adoption of these requirements did
not have a material effect on the fourth-quarter loss.
(2)In the third quarter of 1993, the U.S. federal government increased the statutory tax rate from 34% to 35%, effective as
of the beginning of 1993. Income tax benefits reported for the quarter have been decreased by $7,120,000, or 19 cents per
fully diluted common share, as a result of adjusting net deferred tax liabilities for the change in rates. Also included
in the third quarter of 1993 was a net pretax gain of $5,300,000, or 9 cents per fully diluted common share after tax,
which was primarily attributable to an asset sale.
(3)In the second quarter of 1993, the Canadian federal government reduced the statutory tax rate applicable to the Company.
Effective as of the beginning of 1993, the rate decreased from 23.8% to 22.8%, and a further reduction to 21.8% was
effective at the beginning of 1994. Income tax benefits reported for the quarter have been increased by $5,020,000, or
13 cents per fully diluted common share, as a result of adjusting net Canadian deferred tax liabilities for the changes in
rates.
(4)During the first quarter of 1993, the Company sold its interest in a specialty paper producer at a pretax gain of
$8,644,000, or 14 cents per fully diluted common share after taxes.
(5)The Company adopted Financial Accounting Standards Board requirements applicable to accounting for postretirement benefits
other than pensions effective as of January 1, 1992. The "Cumulative effect of accounting change, net" represents the
cumulative present value of postretirement health care costs payable in the future that were attributable to employee
service prior to January 1, 1992. The Company's 1992 retiree health care costs increased by $3,000,000 before taxes, or
5 cents per fully diluted common share after taxes, as a result of adoption of the new requirements. Net loss reported for
each of the first three quarters of 1992 has been restated to include a proportionate share of these costs.
(6)At the end of the second quarter of 1992, the Company completed the sale of 11 corrugated container plants. The pretax
gain of $25,020,000, or 41 cents per fully diluted common share after taxes, from that sale was largely offset by the write-
off of certain pulp and paper mill start-up costs that had been capitalized prior to 1987.
(7)The computation of fully diluted net loss per common share was antidilutive in the periods shown; therefore, primary and
fully diluted net loss per share are the same.
See Notes to Financial Statements for additional information.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of Boise Cascade Corporation:
We have audited the accompanying balance sheets of Boise Cascade Corporation
(a Delaware corporation) and subsidiaries as of December 31, 1993, 1992 and
1991, and the related statements of income (loss), cash flows, and
shareholders' equity for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and signifi-
cant estimates made by management, as well as evaluating the overall finan-
cial statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Boise Cascade Corporation
and subsidiaries as of December 31, 1993, 1992 and 1991, and the results of
their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.
As explained in Note 5 to the financial statements, effective January 1,
1992, the Company changed its method of accounting for postretirement
benefits other than pensions in accordance with Standard No. 106 of the
Financial Accounting Standards Board.
Boise, Idaho
January 26, 1994
Arthur Andersen & Co.
REPORT OF MANAGEMENT
The management of Boise Cascade Corporation is primarily responsible for the
information and representations contained in this annual report. The finan-
cial statements and related notes were prepared in conformity with generally
accepted accounting principles appropriate in the circumstances. In prepar-
ing the financial statements, management has, when necessary, made judgments
and estimates based on currently available information.
Management maintains a comprehensive system of internal controls based on
written policies and procedures and the careful selection and training of
employees. The system is designed to provide reasonable assurance that
assets are safeguarded against loss or unauthorized use and that transac-
tions are executed in accordance with management's authorization. The
concept of reasonable assurance is based on recognition that the cost of a
particular accounting control should not exceed the benefit expected to be
derived.
The Company's Internal Audit staff monitors the Company's financial report-
ing system and the related internal accounting controls, which are also
selectively tested by Arthur Andersen & Co., Boise Cascade's independent
public accountants, for purposes of planning and performing their audit of
the Company's financial statements.
The Audit Committee of the board of directors, which is composed solely of
nonemployee directors, meets periodically with management, representatives
of the Company's Internal Audit Department, and Arthur Andersen & Co.
representatives to assure that each group is carrying out its
responsibilities. The Internal Audit staff and the independent public
accountants have access to the Audit Committee, without the presence of
management, to discuss the results of their audits, recommendations
concerning the system of internal accounting controls, and the quality of
financial reporting.
Discussion and Analysis
The following discussion and analysis of operations for 1992, compared with
1991 and 1990, should be read in conjunction with the discussion and analysis
of operations for 1993, compared with 1992, contained in the "Financial
Review" section of this annual report and with the financial statements and
accompanying notes.
Boise Cascade reported a net loss of $227 million, or $6.73 per fully diluted
share, in 1992. This compares with a net loss of $79 million, or $2.46 per
fully diluted common share, in 1991 and net income of $75 million, or $1.62
per fully diluted share, in 1990.
The 1992 loss includes a charge of $73 million after tax, or $1.94 per share,
for the adoption of Financial Accounting Standards Board requirements to
accrue the cost of postretirement benefits other than pensions. In addition,
the Company reported a pretax gain of approximately $25 million on the sale
of 11 corrugated container plants, which was largely offset by the write-
off of certain pulp and paper mill start-up costs that had been capitalized
prior to 1987. In 1991, the Company sold its 50 percent interest in a
European corrugated container joint venture for $50 million.
Sales in 1992 were $3.7 billion, compared with $4.0 billion in 1991 and
$4.2 billion in 1990. Sales declined because of the divestiture of the
Company's wholesale office products distribution operations, the sale of
certain nonstrategic corrugated container facilities, and falling paper
prices.
Our paper and paper products segment had an operating loss of $187 million
in 1992, compared with a loss of $92 million in 1991 and income of
$187 million in 1990. The decline was due to progressively weakening prices
for most grades of pulp and paper that we manufacture. For example, the
weighted average price per ton for all of Boise Cascade's tons of paper sold
in 1992 was down nearly 10 percent from 1991 levels, after declining
14 percent in 1991 and 6 percent in 1990. Additionally, new uncoated free
sheet and newsprint capacity came on stream over the three-year period in the
face of a U.S. recession, causing a sharp imbalance between supply and
demand.
Offsetting the effect of weakening prices was the impact of the Company's
cost-reduction efforts. Through process improvement, process elimination,
and previous capital investment, the Company's pulp and paper manufacturing
costs per ton, excluding depreciation, have declined. Additionally, unit
sales volume grew to 3.5 million tons in 1992 from 3.4 million tons in 1991
and from 3.3 million tons in 1990. The increase is primarily because of
tonnage from the new business and printing paper machine in International
Falls, Minnesota.
Operating income for Boise Cascade's office products segment was $19 million
in 1992, compared with $35 million in 1991 and $58 million in 1990. Sales
volume and profitability declined due to the divestiture of the wholesale
portion of that business early in 1992, as the Company prepared for
accelerated growth in the commercial distribution channel. The decline in
profitability over the three-year period was also a reflection of a generally
weak economy as well as increased competition.
Income for the Company's building products segment was $115 million in 1992,
compared with $104 million in 1991, which included a pretax gain of
$63 million from the sale of nonstrategic western Oregon timberland. After
adjusting for that sale and for reserves taken during 1991, income in 1992
was sharply higher than in 1991 on a 27 percent increase in sales. Income
for 1991, as adjusted, was up from $42 million in 1990. The improvement in
operating income over the periods reflected rising lumber and plywood prices.
Higher prices resulted from moderately stronger demand, the constrained
supply of timber available for commercial harvest in the Pacific Northwest,
and unusual events, such as hurricanes in the South and in Hawaii, which
exacerbated an already tight supply-demand balance. The cost of logs
delivered to our wood products operations in the Pacific Northwest continued
to increase, as preservationist-inspired efforts led to constraints on
available timber supply.
STATEMENTS OF INCOME (LOSS) (UNAUDITED) Boise Cascade Corporation and Subsidiaries
THREE MONTHS ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
1993 1992 1993 1992
(EXPRESSED IN THOUSANDS)
REVENUES
Sales $ 996,900 $ 904,960 $ 3,958,300 $ 3,715,590
Other income (expense), net (410) (3,470) 24,140 14,800
996,490 901,490 3,982,440 3,730,390
COSTS AND EXPENSES
Materials, labor, and other operating expenses 853,800 761,370 3,373,300 3,223,910
Depreciation and cost of company timber harvested 67,190 69,340 267,710 265,790
Selling and administrative expenses 79,810 80,560 321,650 335,170
1,000,800 911,270 3,962,660 3,824,870
INCOME (LOSS) FROM OPERATIONS (4,310) (9,780) 19,780 (94,480)
Interest expense (35,590) (40,600) (148,310) (166,450)
Interest income 330 370 1,330 1,830
Foreign exchange gain (loss) (420) 1,490 1,610 6,590
(35,680) (38,740) (145,370) (158,030)
LOSS BEFORE INCOME TAXES (39,990) (48,520) (125,590) (252,510)
Income tax benefit (16,310) (18,920) (48,450) (98,480)
LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE (23,680) (29,600) (77,140) (154,030)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, NET OF TAX -- -- -- (73,450)
NET LOSS $ (23,680) $ (29,600) $ (77,140) $ (227,480)
NET LOSS PER COMMON SHARE
Primary
Loss before cumulative effect of accounting change $ (.98) $ (.97) $ (3.17) $ (4.79)
Cumulative effect of accounting change, net of tax -- -- -- (1.94)
Net loss per share $ (.98) $ (.97) $ (3.17) $ (6.73)
Fully diluted
Loss before cumulative effect of accounting change $ (.98) $ (.97) $ (3.17) $ (4.79)
Cumulative effect of accounting change, net of tax -- -- -- (1.94)
Net loss per share $ (.98) $ (.97) $ (3.17) $ (6.73)
SEGMENT INFORMATION
SEGMENT SALES
Paper and paper products $ 476,323 $ 463,397 $ 1,920,653 $ 1,930,243
Office products 179,888 162,077 682,819 672,220
Building products 388,278 316,076 1,530,824 1,269,465
Intersegment eliminations and other (47,589) (36,590) (175,996) (156,338)
$ 996,900 $ 904,960 $ 3,958,300 $ 3,715,590
SEGMENT OPERATING INCOME (LOSS)
Paper and paper products $ (34,169) $ (33,722) $ (137,770) $ (186,537)
Office products 7,710 4,562 35,631 18,847
Building products 32,540 30,821 158,773 114,891
Joint ventures, corporate, and other (10,391) (11,441) (36,854) (41,681)
INCOME (LOSS) FROM OPERATIONS $ (4,310) $ (9,780) $ 19,780 $ (94,480)
BALANCE SHEETS (Unaudited) Boise Cascade Corporation and Subsidiaries
DECEMBER 31
ASSETS 1993 1992
(EXPRESSED IN THOUSANDS)
CURRENT
Cash and cash items $ 14,860 $ 12,588
Short-term investments at cost,
which approximates market 7,569 7,744
22,429 20,332
Receivables, less allowances of
$1,264,000 and $1,757,000 366,187 366,891
Inventories 446,609 415,930
Deferred income tax benefits 38,831 49,518
Other 13,397 12,993
887,453 865,664
PROPERTY
Property and equipment
Land and land improvements 56,871 56,601
Buildings and improvements 571,712 556,266
Machinery and equipment 4,642,434 4,498,287
5,271,017 5,111,154
Accumulated depreciation (2,261,360) (2,044,189)
3,009,657 3,066,965
Timber, timberlands, and timber
deposits 366,054 385,955
3,375,711 3,452,920
OTHER ASSETS 249,809 241,122
TOTAL ASSETS $ 4,512,973 $ 4,559,706
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Notes payable $ 31,000 $ 4,000
Current portion of long-term debt 145,185 243,723
Accounts payable 288,300 268,962
Accrued liabilities
Compensation and benefits 103,188 107,007
Interest payable 32,194 42,847
Other 88,568 83,192
688,435 749,731
DEBT
Long-term debt, less current portion 1,593,348 1,680,183
Guarantee of ESOP debt 246,856 261,695
1,840,204 1,941,878
OTHER
Deferred income taxes 222,464 279,011
Other long-term liabilities 257,346 231,490
479,810 510,501
SHAREHOLDERS' EQUITY
Preferred stock -- no par value;
10,000,000 shares authorized;
Series D ESOP: $.01 stated
value; 6,395,047 and
6,475,198 shares outstanding 287,777 291,384
Deferred ESOP benefit (246,856) (261,695)
Series E: $.01 stated value;
862,500 shares outstanding in
each period 191,466 191,471
Series F: $.01 stated value;
115,000 shares outstanding in
1993 111,043 --
Series G: $.01 stated value;
862,500 shares outstanding in
1993 176,404 --
Common stock -- $2.50 par value;
200,000,000 shares authorized;
37,987,529 and 37,940,312 shares
outstanding 94,969 94,851
Retained earnings 889,721 1,041,585
Total shareholders' equity 1,504,524 1,357,596
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 4,512,973 $ 4,559,706
SHAREHOLDERS' EQUITY PER COMMON SHARE $25.92 $29.95
STATEMENTS OF CASH FLOWS (Unaudited) Boise Cascade Corporation and
Subsidiaries
YEAR ENDED DECEMBER 31
1993 1992
(EXPRESSED IN THOUSANDS)
CASH PROVIDED BY (USED FOR) OPERATIONS
Net loss $ (77,140) $ (227,480)
Items in loss not using (providing) cash
Cumulative effect of accounting change,
net of tax -- 73,450
Depreciation and cost of company timber
harvested 267,710 265,790
Deferred income tax benefit (46,243) (59,815)
Amortization and other 11,547 28,549
Gain on sales of operating assets (8,300) (25,020)
Receivables (116) (46,322)
Inventories (30,679) (3,319)
Accounts payable and accrued liabilities 15,696 9,216
Current and deferred income taxes 13,137 53,572
Other (14,391) (1,947)
Cash provided by operations 131,221 66,674
CASH PROVIDED BY (USED FOR) INVESTMENT
Expenditures for property and equipment (216,818) (275,414)
Expenditures for timber and timberlands (4,663) (7,537)
Sales of operating assets 23,992 202,156
Other 8,867 (31,387)
Cash used for investment (188,622) (112,182)
CASH PROVIDED BY (USED FOR) FINANCING
Cash dividends paid
Common stock (22,772) (22,765)
Preferred stock (44,731) (32,712)
(67,503) (55,477)
Notes payable 27,000 (54,000)
Additions to long-term debt 83,807 130,937
Payments of long-term debt (269,180) (164,380)
Issuance of preferred stock 287,442 191,471
Other (2,068) (4,722)
Cash provided by financing 59,498 43,829
INCREASE (DECREASE) IN CASH AND
SHORT-TERM INVESTMENTS 2,097 (1,679)
BALANCE AT BEGINNING OF YEAR 20,332 22,011
BALANCE AT END OF YEAR $ 22,429 $ 20,332
NOTES TO QUARTERLY FINANCIAL STATEMENTS Boise Cascade Corporation
and Subsidiaries
Operating Highlights. These statements are unaudited statements
which do not include all Notes to Financial Statements and should
be read in conjunction with the 1993 Annual Report of the
Company. The 1993 Annual Report will be available in March 1994.
The net loss for the three months ended December 31, 1993 and
1992, was subject to seasonal variations and necessarily involved
adjustments to estimates made at interim periods for accruals and
allocations.
In the fourth quarter of 1993, the Company adopted Financial
Accounting Standards Board requirements to accrue certain
severance, disability, and other benefits provided to former or
inactive employees. Adoption of these requirements did not have
a material effect on the Company's fourth-quarter loss.
Results for the third quarter of 1993 included a net pretax
gain of $5,300,000, or 9 cents per fully diluted common share
after tax, which was primarily attributable to an asset sale.
Late in the third quarter of 1993, the Company issued
862,500 Series G conversion preferred shares for $176,404,000,
net of issuance costs. Unless previously redeemed or converted,
these shares will automatically convert to 8,625,000 shares of
the Company's common stock in 1997.
Early in the first quarter of 1993, the Company issued
$111,043,000, net of issuance costs, of 9.4% nonconvertible
Series F preferred stock.
During the first quarter of 1993, the Company sold its interest
in a specialty paper producer at a pretax gain of $8,644,000, or
14 cents per fully diluted common share after taxes.
Effective as of January 1, 1993, the Company adopted new
Financial Accounting Standards Board requirements that govern the
way deferred taxes are calculated and reported. Adoption of
these requirements entailed a one-time adjustment that had no
effect on the Company's first quarter 1993 net loss. Financial
statements for prior periods have not been restated.
In the second quarter of 1993, the Canadian federal government
reduced the statutory tax rate applicable to the Company.
Effective as of the beginning of 1993, the rate decreased from
23.8% to 22.8%, and a further reduction to 21.8% was effective at
the beginning of 1994. In the third quarter of 1993, the U.S.
federal government increased the statutory tax rate from 34% to
35%, effective as of the beginning of 1993. In accordance with
the provisions of the newly adopted accounting standard, net
deferred tax liabilities are adjusted when rate changes are
adopted. The one-time second-quarter adjustment resulted in a
benefit of $5,020,000, or 13 cents per fully diluted common
share, and the third-quarter adjustment resulted in a charge of
$7,120,000, or 19 cents per fully diluted common share.
The effective tax rate for 1993, exclusive of the impact of the
adjustments to deferred taxes, was 40.3%, compared with a rate of
39% in 1992.
During the fourth quarter of 1992, the Company adopted,
effective as of January 1, 1992, the Financial Accounting
Standards Board requirements applicable to accounting for
postretirement benefits other than pensions. The Company's
retiree health care costs that had previously been recorded when
paid are now accrued. The cumulative present value of costs
payable in the future that are attributable to employee service
prior to January 1, 1992, is shown on the Company's Statements of
Income (Loss) under the caption "Cumulative effect of accounting
change, net of tax." The Company's 1992 retiree health care
costs increased by $3,000,000 before taxes, or 5 cents per fully
diluted common share after taxes, as a result of adoption of the
new requirements. Net loss reported for each of the first three
quarters of 1992 has been restated to include a proportionate
share of these costs.
At the end of the second quarter of 1992, the Company completed
the sale of 11 corrugated container plants. The pretax gain of
$25,020,000, or 41 cents per fully diluted common share after
taxes, from that sale was largely offset by the write-off of
certain pulp and paper mill start-up costs that had been
capitalized prior to 1987. The write-off reflects a change in
the estimated period benefited by such expenditures.
Early in the first quarter of 1992, the Company completed the
sale of essentially all of its wholesale office products
distribution operations.
Net Loss Per Common Share. Net loss per common share was
determined by dividing net loss, as adjusted below, by applicable
shares outstanding.
YEAR ENDED DECEMBER 31
1993 1992
(EXPRESSED IN THOUSANDS)
Net loss as reported $ (77,140) $ (227,480)
Preferred dividends (43,076) (27,711)
Primary loss (120,216) (255,191)
Assumed conversions:
Preferred dividends eliminated 33,407 27,711
Interest on 7% debentures eliminated 3,644 4,108
Supplemental ESOP contribution (12,381) (10,285)
Fully diluted loss $ (95,546) $ (233,657)
Average number of common shares
Primary 37,958 37,942
Fully diluted 55,825 53,283
NOTES TO QUARTERLY FINANCIAL STATEMENTS Boise Cascade Corporation
and Subsidiaries
The computation of fully diluted net loss per share was
antidilutive in each of the periods presented; therefore, the
amounts reported for primary and fully diluted loss are the same.
For 1993 and 1992, primary average shares include only common
shares outstanding. For these years, common stock equivalents
attributable to stock options, Series E conversion preferred
stock subsequent to issuance in January 1992, and Series G
conversion preferred stock subsequent to issuance in September
1993 were excluded because they were antidilutive. Excluded
common equivalent shares were 10,840,000 at December 31, 1993,
compared with 7,998,000 shares at the same date in the prior
year. In addition to common and common equivalent shares, fully
diluted average shares include common shares that would be
issuable upon conversion of the Company's other convertible
securities.
Primary loss includes the aggregate amount of dividends on the
Company's preferred stock. The dividend attributable to the
Company's Series D convertible preferred stock held by the
Company's ESOP (employee stock ownership plan) is net of a tax
benefit. To determine the fully diluted loss, dividends and
interest, net of any applicable taxes, have been added back to
primary loss to reflect assumed conversions. The fully diluted
loss was increased by the after-tax amount of additional
contributions that the Company would be required to make to its
ESOP if the Series D ESOP preferred shares were converted to
common stock.
The pages of this report are printed on 60 lb Cascade [register
mark] Offset, produced by Boise Cascade's papermakers in Wallula,
Washington.
The significant subsidiaries of the Company are as follows:
State or Other
Jurisdiction Percentage of
of Incorporation Voting Securities
or Organization Owned
Boise Cascade Canada Ltd. Canada 100.00
Oxford Paper Company Delaware 100.00
