UNITED STATES 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
For the fiscal year ended December 31, 1999
Commission file number 1-5057
A Delaware BOISE CASCADE CORPORATION I.R.S. Employer
Corporation 1111 West Jefferson Street 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 and Chicago
Stock Exchanges
American & Foreign Power Company Inc.
Debentures, 5% Series due 2030 New York Stock Exchange
Common Stock Purchase Rights New York and Chicago
Stock Exchanges
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 January 31, 2000: $2,024,081,833
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 January 31, 2000
Common Stock, $2.50 par value 57,217,861
Documents incorporated by reference
1. The registrant's annual report for the fiscal year ended December 31,
1999, portions of which are incorporated by reference into Parts I, II,
and IV of this Form 10-K, and
2. Portions of the registrant's proxy statement relating to its 2000 annual
meeting of shareholders to be held on April 20, 2000 ("Boise Cascade's
proxy statement"), are incorporated by reference into Part III of this
Form 10-K, and
3. The registrant's Income Statement from the fourth quarter fact book for
the three months ended December 31, 1999, is incorporated by reference
into Parts II and IV of this Form 10-K.
TABLE OF CONTENTS
PART I
Item Page
1. Business
2. Properties
3. Legal Proceedings
4. Submission of Matters to a Vote of Security Holders
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters
6. Selected Financial Data
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
7A. Quantitative and Qualitative Disclosures About Market Risk
8. Financial Statements and Supplementary Data
9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
PART III
10. Directors and Executive Officers of the Registrant
11. Executive Compensation
12. Security Ownership of Certain Beneficial Owners and Management
13. Certain Relationships and Related Transactions
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
PART I
ITEM 1. BUSINESS
As used in this annual report, the terms "Boise Cascade" and "we" include Boise
Cascade Corporation and its consolidated subsidiaries and predecessors.
Boise Cascade Corporation is a major distributor of office products and
building materials and an integrated manufacturer and distributor of paper and
wood products. We are headquartered in Boise, Idaho, with domestic and
international operations. We own and manage over 2 million acres of timberland
in the United States. We were 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, our name was changed to its present
form.
Financial information pertaining to each of our industry segments and to each
of our geographic areas for the years 1999, 1998, and 1997 is presented in Note
10, "Segment Information," of the Notes to Financial Statements of our 1999
Annual Report and is incorporated by reference.
Our sales and income are affected by the industry supply of product relative to
the level of demand and by changing economic conditions in the markets we
serve. 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. Our 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 our building products businesses. In addition, energy and some
operating costs may increase at facilities affected by cold weather. Seasonal
influences, however, are generally not significant.
We have no unusual working capital practices. We believe the management
practices followed by Boise Cascade and Boise Cascade Office Products with
respect to working capital conform to common business practices in the United
States.
We engage in acquisition and divestiture discussions with other companies and
make acquisitions and divestitures from time to time. It is our policy to
review our operations periodically and to dispose of assets which fail to meet
our criteria for return on investment or which cease to warrant retention for
other reasons. (See Notes 1, 6, 8, and 9 of the Notes to Financial Statements
of our 1999 Annual Report. This information is incorporated by reference.)
OFFICE PRODUCTS
In April 1995, our then wholly owned subsidiary, Boise Cascade Office Products
Corporation ("BCOP"), completed an initial public offering of 10,637,500 shares
of common stock at a price of $12.50 per share after giving effect to a two-
for-one stock split in the form of a dividend in May 1996. After the offering,
Boise Cascade owned 82.7% of BCOP's outstanding common stock. At December 31,
1999, we owned 81.1% of BCOP's outstanding common stock. In December 1999, we
announced a proposal to acquire the minority public shares of BCOP. We believe
the reintegration of BCOP with Boise Cascade would enhance BCOP's operating
flexibility and allow management to concentrate fully on its aggressive
internal growth initiatives. (See Note 6 of the Notes to Financial Statements
of our 1999 Annual Report. This information is incorporated by reference.)
BCOP distributes a broad line of items for the office, including office and
computer supplies, paper, office furniture, and promotional products. All of
the products sold by this segment are purchased from manufacturers or from
industry wholesalers, except office papers which are sourced primarily from our
paper operations. BCOP sells these office products directly to corporate,
government, and small- and medium-sized offices in Australia, Belgium, Canada,
France, Spain, the United Kingdom, and the United States.
Customers with more than one location are sold to under the terms of one
contract (national contract). These national contracts provide consistent
pricing and product offerings to multiple locations. If the customer desires,
we also provide summary billings, usage reporting, and other special services.
At January 31, 2000, BCOP operated 64 distribution centers. BCOP also operates
four retail office supply stores in Hawaii and approximately 70 retail stores
in Canada. During 1999, BCOP completed acquisitions of two businesses.
BCOP sales for 1999, 1998, 1997, 1996, and 1995 were $3,382 million,
$3,067 million, $2,597 million, $1,986 million, and $1,316 million.
BUILDING PRODUCTS
Boise Cascade is a major producer of lumber, plywood, and particleboard,
together with a variety of specialty wood products. We also manufacture
engineered wood products consisting of laminated veneer lumber (LVL), which is
a high-strength engineered structural lumber product, and wood I-joists that
incorporate the LVL technology. Most of our production is sold to independent
wholesalers and dealers and through our own wholesale building materials
distribution outlets. Our wood products are used primarily in housing,
industrial construction, and a variety of manufactured products. Wood products
manufacturing sales for 1999, 1998, 1997, 1996, and 1995 were $910 million,
$861 million, $913 million, $867 million, and $977 million.
The following table sets forth annual practical capacities of our wood products
facilities as of December 31, 1999, and 1999 production:
<TABLE>
<CAPTION>
Number Capacity
of at
Mills December 31, 1999(1) Production
______ __________________ __________
(millions)
<S> <C> <C> <C>
Plywood and veneer (sq. ft.) (3/8" basis) 12 1,810 1,544
Lumber (board feet) 8 530 518
Particleboard (sq. ft.) (3/4" basis) 1 200 187
Oriented strand board (sq. ft.)(2) 1 400 371
Laminated veneer lumber (LVL) (cubic feet)(3) 2 18 11.2
</TABLE>
(1) Capacity is production assuming normal operating shift
configurations.
(2) In 1995, we formed a joint venture to build an oriented strand board
(OSB) plant in Barwick, Ontario, Canada. We own 47% of the joint
venture and account for it on the equity method. The 400 million
square feet of annual capacity represents 100% of the production
volume. The plant began production in 1997.
(3) A portion of LVL production is used in the manufacture of I-joists.
Boise Cascade operates 28 wholesale building materials distribution
facilities. In January 1999, we started up a facility in Chicago,
Illinois. In September 1999, we acquired Furman Lumber, Inc., a U.S.
building materials distributor headquartered in Billerica, Massachusetts,
with 12 locations in the East, Midwest, and South. These operations
market a wide range of building materials, including lumber, plywood,
particleboard, engineered wood products, roofing, insulation, 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 22% in 1999)
of the wood products required by our building materials distribution
facilities is provided by our manufacturing facilities, and the balance is
purchased from outside sources.
The following table sets forth sales volumes of our manufactured wood
products and sales dollars for our building materials distribution
business for the years indicated:
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
______ ______ ______ ______ ______
(millions)
<S> <C> <C> <C> <C> <C>
Plywood (square feet -
3/8" basis) 1,529 1,815 1,836 1,873 1,865
Lumber (board feet) 517 572 657 692 711
Particleboard (square feet -
3/4" basis) 187 190 195 195 196
Oriented strand board (square
Feet-3/8" basis)(1) 374 347 151 - -
Laminated veneer lumber
(cubic feet) 5.5 3.8 2.7 2.2 1.8
I-joists (eq. lineal feet) 135 106 82 74 61
Building materials distribution
(sales dollars) $1,273 $ 861 $ 732 $ 690 $ 598
</TABLE>
(1) Includes 100% of the sales volume from our joint venture, of which we
own 47%.
TIMBER RESOURCES
Boise Cascade owns or controls approximately 2.3 million acres of
timberland in the U.S. The amount of timber we harvest each year from our
timber resources, compared with the amount we purchase from outside
sources, varies according to the price and supply of timber for sale on
the open market and according to what we deem to be in the interest of
sound management of our timberlands. During 1999, 50% of our timber needs
were received from private sources, 10% were received from governmental
sources, and 40% were provided from internal sources. During 1998, these
percentages were 50%, 11%, and 39% and in 1997 were 54%, 12%, and 34%.
Long-term leases generally provide Boise Cascade with timber harvesting
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 40 years. In addition, we have an option to purchase
approximately 205,000 acres of timberland under lease and/or contract in
the South. We seek to maximize the utilization of our timberlands through
efficient management so that the timberlands will provide a continuous
supply of wood for future needs. Site preparation, planting, fertilizing,
thinning, and logging techniques are being improved through a variety of
methods, including genetic research and computerization. During 1999, our
mills processed approximately 0.9 billion board feet of sawtimber (timber
used to make lumber and veneer) and 1.6 million cords of pulpwood (timber
used in paper making); 45% of the sawtimber and 46% of the pulpwood were
harvested from our timber resources, and the balance was acquired from
various private and government sources. Approximately 62% of the
1.0 million bone-dry units (a bone-dry unit is 2,400 dry pounds) of
hardwood and softwood chips consumed by our Northwest pulp and paper mills
in 1999 were provided from a whole-log chipping facility, our cottonwood
fiber farm, and our Northwest wood products manufacturing facilities as
residuals from the processing of solid wood products. Of the 519,000
bone-dry units of residual chips used in the South, 42% were provided by
our Southern wood products manufacturing facilities. Our timberlands are
managed as part of our building products and paper and paper products
segments. The impact of our timberlands on our results of operations is
included in these segments.
At December 31, 1999, 1998, and 1997, the acreages of owned or controlled
timber resources by geographic area and the approximate percentages of
total fiber requirements available from our respective timber resources in
these areas and from the residuals from processed purchased logs are shown
in the following table:
<TABLE>
<CAPTION>
Northwest(1) Midwest(2) South(3) Total(4)
___________________ ___________________ ___________________ ___________________
1999 1998 1997 1999 1998 1997 1999 1998 1997 1999 1998 1997
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____
(thousands of acres)
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fee 1,277 1,333 1,331 308 308 308 418 418 418 2,003 2,059 2,057
Leases and contracts 30 44 51 - - - 287 285 284 317 329 335
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____
1,307 1,377 1,382 308 308 308 705 703 702 2,320 2,388 2,392
Approximate % of
total fiber
requirements
available from:(5)
Owned and controlled
timber resources 29% 29% 25% 23% 23% 23% 37% 39% 25% 31% 32% 25%
Residuals from
processed purchased
logs 11 11 13 - - - 4 4 6 8 7 9
_____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____ _____
Total 40% 40% 38% 23% 23% 23% 41% 43% 31% 39% 39% 34%
</TABLE>
(1) Principally sawtimber.
(2) Principally pulpwood.
(3) Sawtimber and pulpwood.
(4) On December 31, 1999, our inventory of merchantable sawtimber was
approximately 6.8 billion board feet, and our inventory of pulpwood
was approximately 11.1 million cords. At December 31, 1998, these
inventories were approximately 7.7 billion board feet and
approximately 8.0 million cords, and at December 31, 1997, these
inventories were approximately 7.7 billion board feet and
approximately 7.8 million cords.
(5) Assumes harvesting of company-owned and controlled timber resources
on a sustained timber yield basis and operation of our paper and
wood products manufacturing facilities at practical capacity.
Percentages shown represent weighted average consumption on a cubic
volume basis.
We assume substantially all risks of loss from fire and other casualties
on all the standing timber we own, as do most owners of timber tracts in
the U.S.
Additional information pertaining to our timber resources is presented
under the caption "Timber Supply and Environmental Issues" of the
Financial Review of our 1999 Annual Report. This information is
incorporated by reference.
PAPER AND PAPER PRODUCTS
Boise Cascade is a major North American pulp and paper producer with five
paper mills. The total annual practical capacity of the mills was
approximately 2.9 million tons at December 31, 1999. Our products are
sold to distributors and industrial customers primarily by our own sales
personnel.
The products manufactured by Boise Cascade, made both from virgin and
recycled fibers, include uncoated business, printing, forms, and
converting papers; newsprint; containerboard; and market pulp. These
products are available for sale to the related paper markets, and a number
of these products are sold through our office products distribution
operations. In addition, containerboard is used by Boise Cascade in the
manufacture of corrugated containers.
Our paper mills are supplied with pulp principally from our own integrated
pulp mills. Pulp mills in the Northwest manufacture chemical pulp
primarily from wood waste produced as a by-product of wood products
manufacturing. Pulp mills in the Midwest and South manufacture chemical,
thermomechanical, and groundwood pulp mainly from pulpwood logs and, to
some extent, from purchased wood waste and pulp from deinked recycled
fiber. Wood waste is provided by our sawmills and plywood mills in the
Northwest and, to a lesser extent, in the South, and the remainder is
purchased from outside sources. Boise Cascade currently manufactures
corrugated containers at seven plants, which have annual practical
capacity of approximately 5.0 billion square feet. The containers
produced at our plants are used to package fresh fruit and vegetables,
processed food, beverages, and many other industrial and consumer
products. We sell our corrugated containers primarily through our own
sales personnel.
The following table sets forth annual practical capacities of our paper
manufacturing locations as of December 31, 1999, and 1999 production:
<TABLE>
<CAPTION>
Number Capacity
of at
Machines December 31, 1999 (1) Production
________ __________________ __________
(tons)
<S> <C> <C> <C>
PULP AND PAPER MILLS
Jackson, Alabama
Uncoated free sheet 2 505,000 443,131
DeRidder, Louisiana
Containerboard 1 540,000 539,341
Newsprint 2 435,000 420,102
International Falls, Minnesota
Uncoated free sheet 4 550,000 518,766
St. Helens, Oregon
Uncoated free sheet 3 255,000 239,391
Market pulp - 105,000 80,296
Wallula, Washington
Uncoated free sheet 1 235,000 225,704
Market pulp 1 135,000 119,771
Containerboard 1 120,000 118,660
________ _________ __________
Total 15 2,880,000 2,705,162
======== ========= ==========
ANNUAL CAPACITY BY PRODUCT
Uncoated free sheet 1,545,000
Containerboard 660,000
Newsprint 435,000
Market pulp 240,000
_________
Total 2,880,000
=========
</TABLE>
(1) Capacity assumes 24-hour days, 365 days per year, except for days
allotted for planned maintenance.
The following table sets forth sales volumes of paper and paper products
for the years indicated:
1999 1998 1997 1996 1995
______ ______ ______ ______ ______
(thousands of tons)
Paper
Uncoated free sheet 1,426 1,403 1,314 1,167 1,177
Containerboard 655 624 604 563 602
Newsprint 422 431 440 411 416
Market pulp 149 129 161 230 217
Discontinued grades - - - 260 428
______ ______ ______ ______ ______
2,652 2,587 2,519 2,631 2,840
(millions of square feet)
Corrugated Containers 4,681 4,182 3,568 3,201 3,114
In November 1996, we completed the sale of our coated publication paper
business, consisting primarily of our pulp and paper mill in Rumford,
Maine, and 667,000 acres of timberlands, to The Mead Corporation.
We announced in December 1999 that we are reviewing strategic alternatives
for our paper mill in DeRidder, Louisiana, and seven corrugated container
plants. The alternatives could include the sale of all or part of these
assets. If there is a transaction, our intent is to use the capital from
these facilities to expand our growing distribution businesses, reduce
debt, and/or return cash directly to shareholders. The newsprint and
packaging businesses have been an important but increasingly smaller part
of our production mix for many years. Over the past five years, we've
focused our paper business on uncoated free sheet and value-added papers
and the distribution of these grades through BCOP. Reducing or
eliminating our newsprint and containerboard production will enable us to
move further in this strategic direction.
COMPETITION
The markets we serve are highly competitive, with a number of substantial
companies operating in each. We compete in our markets principally
through price, service, quality, and value-added products and services.
ENVIRONMENTAL ISSUES
Our discussion of environmental issues is presented under the caption
"Timber Supply and Environmental Issues" of the Financial Review of our
1999 Annual Report. This information is incorporated by reference. In
addition, environmental issues are discussed under "Item 3. Legal
Proceedings," of this Form 10-K.
EMPLOYEES
As of December 31, 1999, we had 23,726 employees, 6,310 of whom were
covered under collective bargaining agreements. In 1999, we obtained a
labor contract extension effective until 2004 covering our International
Falls, Minnesota, pulp and paper mill. We also obtained labor contract
extensions at our DeRidder, Louisiana, and Jackson, Alabama, paper
locations. These extensions are effective until 2005 and 2006. In June
2000, contracts covering approximately 1,800 workers in our Northwest
building products manufacturing facilities are scheduled to expire.
IDENTIFICATION OF EXECUTIVE OFFICERS
Information with respect to our executive officers is set forth in "Item
10. Directors and Executive Officers of the Registrant" of this Form 10-K
and is incorporated into this Part I by reference.
CAPITAL INVESTMENT
Information concerning our capital expenditures is presented under the
caption "Investing Activities" and in the table titled "1999 Capital
Investment by Business" of the Financial Review section of our 1999 Annual
Report. This information is incorporated by reference.
ENERGY
The paper and paper products segment is our primary energy user. Self-
generated energy sources in this segment, such as wood wastes, pulping
liquors, and hydroelectric power, provided 58% of total 1999 energy
requirements, compared with 59% in 1998 and 57% in 1997. The energy
requirements fulfilled by purchased sources in 1999 were as follows:
natural gas, 68%; electricity, 28%; and residual fuel oil, 4%.
ITEM 2. PROPERTIES
We own substantially all of our facilities other than those in our office
products subsidiary. The majority of the office products facilities are
rented under operating leases. Regular maintenance, renewal, and new
construction programs have preserved the operating suitability and
adequacy of our properties. Our properties are in good operating
condition and are suitable and adequate for the operations for which they
are used. We own substantially all equipment used in our facilities.
Information concerning productive capacity and the utilization of our
manufacturing facilities is presented in Item 1 of this Form 10-K.
Following is a list of our facilities by segment as of January 31, 2000.
Information concerning timber resources is presented in Item 1 of this
Form 10-K.
OFFICE PRODUCTS
64 distribution centers located in Arizona, California (2), Colorado,
Connecticut, Delaware, District of Columbia, Florida (2), Georgia, Hawaii,
Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan,
Minnesota, Missouri (2), Nevada (2), New Mexico, New York (2), North
Carolina, Ohio (3), Oklahoma, Oregon (2), Pennsylvania (2), Tennessee (2),
Texas (2), Utah, Vermont, Virginia, Washington (2), Wisconsin, Australia
(7), Canada (7), France (2), Spain, and the United Kingdom (2).
Approximately 74 retail outlets located in Canada and Hawaii.
BUILDING PRODUCTS
8 sawmills located in Alabama, Idaho, Oregon (3), and Washington (3).
12 plywood and veneer plants located in Idaho, Louisiana (2), Oregon (7),
and Washington (2).
1 particleboard plant located in Oregon.
2 laminated veneer lumber/wood I-joists plants located in Oregon and
Louisiana.
1 wood beam plant located in Idaho.
47% owned oriented strand board joint venture located in Barwick, Ontario,
Canada.
28 wholesale building materials units located in Arizona, Colorado (2),
Florida, Georgia, Idaho (2), Illinois, Maryland, Massachusetts, Michigan,
Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, North
Carolina, Oklahoma, Tennessee, Texas (3), Utah, and Washington (4).
PAPER AND PAPER PRODUCTS
5 pulp and paper mills located in Alabama, Louisiana, Minnesota, Oregon,
and Washington.
6 regional service centers located in California, Georgia, Illinois, New
Jersey, Oregon, and Texas.
2 converting facilities located in Oregon and Washington.
7 corrugated container plants located in Idaho (2), Nevada, Oregon, Utah,
and Washington (2).
ITEM 3. LEGAL PROCEEDINGS
A number of lawsuits have been filed against the company arising out of
its former manufacture and sale of hardboard siding products. These
lawsuits allege that siding manufactured by the company was inherently
defective when used as exterior cladding for buildings. Five of these
lawsuits seek certification as class actions. The litigants in these
actions are owners of structures bearing hardboard siding manufactured by
the company. Four of these five cases seek certification of statewide
classes of plaintiffs (Illinois, Oregon, and Texas), while the fifth case
seeks certification of a nationwide class of mobile home owners. To date,
no court has granted class certification. The lawsuits seek to declare
the company financially responsible for the repair and replacement of the
siding, to make restitution to the class members, and to award each class
member compensatory and enhanced damages. The company discontinued
manufacturing the hardboard siding product that is the subject of these
lawsuits in 1984. We believe there are valid factual and legal defenses
to these cases and will resist the certification of any class and
vigorously defend all claims alleged by the plaintiffs.
We have been 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 34 active sites
where hazardous substances or other contaminants are located. We cannot
predict with certainty the total response and remedial costs, our share of
the total costs, the extent to which contributions will be available from
other parties, or the amount of time necessary to complete the cleanups.
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, we do not presently believe that the
known actual and potential response costs will, in the aggregate,
materially affect our financial condition or operations.
In December 1998, the Maine Department of Environmental Protection issued
Notices of Violation for alleged air and water permit exceedances at the
Rumford, Maine, pulp and paper mill for the period 1994 until the mill was
sold in 1996. In November 1999, the company entered into an
Administrative Consent Agreement with the state of Maine, paying $115,950
in full settlement of these allegations.
In December 1999, nine lawsuits were filed against the company, Boise
Cascade Office Products Corporation, and BCOP's directors arising out of
our proposal to acquire BCOP's outstanding minority public shares. All
nine cases were filed in New Castle County, Delaware. The lawsuits
allege, among other things, that our proposal was wrongful, unfair, and
harmful to BCOP public stockholders. On January 19, 2000, the court, upon
stipulation of the parties, signed a consolidation order that combined the
nine cases into one matter. We believe there are valid factual and legal
defenses to these lawsuits and will vigorously defend all claims alleged
by the plaintiffs.
We are also involved in other litigation and administrative proceedings
arising in the normal course of our business. In the opinion of
management, our recovery, if any, or our liability, if any, under pending
litigation or administrative proceedings, including those described in the
preceding paragraphs, would not materially affect our 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
Our common stock is listed on the New York and Chicago Stock Exchanges.
In January 1999, we voluntarily delisted our common stock and other
securities from the Pacific Exchange due to the lack of trading activity.
The high and low sales prices for our common stock, as well as the
frequency and amount of dividends paid on such stock, is included in Note
12, "Quarterly Results of Operations," of the Notes to Financial
Statements in our 1999 Annual Report. Additional information concerning
dividends on common stock is presented under the caption "Financing
Activities" of the Financial Review section of our 1999 Annual Report, and
information concerning restrictions on the payments of dividends is
included in Note 4, "Debt," of the Notes to Financial Statements in our
1999 Annual Report. The information under these captions is incorporated
by reference. The approximate number of common shareholders, based upon
actual record holders at year-end, was 16,991, 17,842, 19,045 at
December 31, 1999, 1998, and 1997.
SHAREHOLDER RIGHTS PLAN
The company has had a shareholder rights plan since January 1986. The
current plan took effect in December 1998. At that time, the rights under
the previous plan expired and we distributed to our common stockholders
one new right for each common share held. The rights become exercisable
ten days after a person or group acquires 15% of our 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. Each full right, if
it becomes exercisable, entitles the holder to purchase one share of
common stock at a purchase price of $175 per share, subject to adjustment.
In addition, upon the occurrence of certain events, and upon payment of
the then-current purchase price, the rights may "flip in" and entitle
holders to buy common stock or "flip over" and entitle holders to buy
common stock in an acquiring entity in such amount that the market value
is equal to twice the purchase price. The rights are nonvoting and may be
redeemed by the company for one cent per right at any time prior to the
tenth day after an individual or group acquires 15% of our voting stock,
unless extended. The rights expire in 2008. Additional details are set
forth in the Renewed Rights Agreement filed with the Securities and
Exchange Commission as Exhibit 4.2 in our Form 10-Q dated September 30,
1997.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth our selected financial data for the years
indicated and should be read in conjunction with the disclosures in Items
7 and 8 of this Form 10-K:
1999(1) 1998(2) 1997 1996(3) 1995(4)
______ ______ ______ ______ ______
(expressed in millions, except
per-common-share amounts)
Assets
Current assets $1,531 $1,368 $1,354 $1,355 $1,313
Property and equipment, net 2,557 2,571 2,630 2,554 2,604
Other 1,050 1,032 986 802 739
______ ______ ______ ______ ______
$5,138 $4,971 $4,970 $4,711 $4,656
Liabilities and
Shareholders' Equity
Current liabilities $1,125 $1,130 $ 894 $ 933 $ 770
Long-term debt, less
current portion 1,585 1,578 1,726 1,330 1,365
Guarantee of ESOP debt 133 156 177 196 214
Minority interest 131 117 105 82 68
Other 550 559 455 490 545
Shareholders' equity 1,614 1,431 1,613 1,680 1,694
______ ______ ______ ______ ______
$5,138 $4,971 $4,970 $4,711 $4,656
Net sales $6,953 $6,162 $5,494 $5,108 $5,074
Net income (loss) before
cumulative effect of
accounting change $ 200 $ (26) $ (30) $ 9 $ 352
Cumulative effect of
accounting change, net - (8) - - -
______ ______ ______ ______ ______
Net income (loss) $ 200 $ (34) $ (30) $ 9 $ 352
Net income (loss) per
common share
Basic before cumulative
effect of accounting
change $ 3.27 $ (.81) $(1.19) $ (.63) $ 6.62
Cumulative effect of
accounting change - (.15) - - -
______ ______ ______ ______ ______
Basic (5) $ 3.27 $ (.96) $(1.19) $ (.63) $ 6.62
Net income (loss) per
common share
Diluted before cumulative
effect of accounting
change $ 3.06 $ (.81) $(1.19) $ (.63) $ 5.39
Cumulative effect of
accounting change - (.15) - - -
______ ______ ______ ______ ______
Diluted(5) $ 3.06 $ (.96) $(1.19) $ (.63) $ 5.39
Cash dividends declared
per common share $ .60 $ .60 $ .60 $ .60 $ .60
(1) 1999 includes a pretax gain of $47,000,000 for the sale of
56,000 acres of timberland in central Washington.
1999 includes pretax gains of $35,500,000, $4,000,000, $2,300,000,
and $400,000 for the reversal of previously recorded restructuring
charges in our building products, office products, paper and paper
products, and corporate and other segments.
1999 includes a pretax loss of $4,400,000 related to early
retirements in our corporate and other segment.
(2) 1998 includes a pretax charge of $37,982,000 for a company wide cost-
reduction initiative and the restructuring of certain operations.
1998 includes a pretax gain of $45,000,000 related to an insurance
settlement for our Medford, Oregon, plywood plant which was severely
damaged by fire.
1998 includes a pretax charge of $61,900,000 for the restructuring of
our wood products manufacturing business and a pretax charge of
$19,000,000 for the revaluation of paper-related assets.
1998 includes a net of tax charge of $8,590,000 for the adoption of
AICPA Statement of position 98-5, "Reporting on the Costs of Start-Up
Activities."
1998 net loss per common share includes a negative seven cents
related to the redemption of our Series F Preferred Stock.
(3) 1996 includes a pretax gain of approximately $40,395,000 as a result
of the sale of our coated publication paper business. In addition,
approximately $15,341,000 of pretax expense arising from related tax
indemnification requirements was recorded. Assets were reduced by
$632,246,000 as a result of the sale.
1996 includes $9,955,000 before taxes for the write-down of paper
assets.
1996 includes a gain of $2,880,000 as a result of shares issued by
BCOP for stock options and to effect various acquisitions.
(4) 1995 includes a charge of $74,900,000 before taxes related primarily
to the write-down of paper assets under the provisions of Financial
Accounting Standards Board Statement 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of."
1995 includes a pretax gain of $68,900,000 as a result of the sale of
our remaining interest in Rainy River.
1995 includes a gain of $6,160,000 as a result of shares issued by
BCOP to effect various acquisitions. 1995 includes a gain of
$60,000,000 from the BCOP initial public offering.
1995 includes $32,500,000 of income taxes for the tax effect of the
difference in the book and tax bases of our stock ownership in Rainy
River.
1995 includes a pretax charge of $19,000,000 for the establishment of
reserves for the write-down of paper assets. Also included is our
addition to existing reserves of $5,000,000 before taxes for
environmental and other contingencies.
(5) The computation of diluted net loss per common share was antidilutive
in the years 1998, 1997, and 1996; therefore, the amounts reported
for basic and diluted loss per share are the same. In 1997, we
adopted SFAS No. 128, "Earnings Per Share," effective December 15,
1997. As a result, our basic earnings per share for 1995 increased
69 cents to $6.62 over the previously reported primary income per
common share. The accounting change had no effect on any of the
other reported amounts.
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 caption "Financial Review" of our 1999
Annual Report and are incorporated by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information concerning quantitative and qualitative disclosures about
market risk is included under the caption, "Disclosures of Certain
Financial Market Risks," in the Financial Review section of our 1999
Annual Report and is incorporated by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and related notes, together with the
report of the independent public accountants, are presented in our 1999
Annual Report and are incorporated by reference.
The consolidated income statement for the three months ended December 31,
1999, is presented in our Fact Book for the fourth quarter of 1999 and is
incorporated by reference.
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
(change of control), as defined, and a rating decline, as defined, the
holders of these securities may require Boise Cascade 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
The directors and nominees for directors are presented under the caption
"Board of Directors" in our proxy statement. This information is
incorporated by reference.
Executive Officers as of January 31, 2000
Date First
Elected as
Name Age Position or Office an Officer
________________________ ___ ____________________________ __________
George J. Harad(1) 55 Chairman of the Board and
Chief Executive Officer 5/11/82
John C. Bender 60 Senior Vice President 2/13/90
Theodore Crumley 54 Senior Vice President and
Chief Financial Officer 5/10/90
A. Ben Groce 58 Senior Vice President 2/8/91
John W. Holleran 45 Senior Vice President and
General Counsel 7/30/91
Christopher C. Milliken(2) 54 Senior Vice President 2/3/95
N. David Spence 64 Senior Vice President 12/8/87
A. James Balkins III(3) 47 Vice President 9/5/91
Stanley R. Bell 53 Vice President 9/25/90
Charles D. Blencke 56 Vice President 12/11/92
Thomas E. Carlile 48 Vice President and Controller 2/4/94
Graham L. Covington 57 Vice President 9/24/98
Karen E. Gowland 41 Vice President and
Corporate Secretary 9/25/97
Vincent T. Hannity 55 Vice President 7/26/96
Guy G. Hurlbutt 57 Vice President 7/31/98
Irving Littman 59 Vice President and Treasurer 11/1/84
Richard W. Merson 57 Vice President 12/12/97
Carol B. Moerdyk(4) 49 Vice President 5/10/90
David A. New 49 Vice President 4/30/97
(1) Chairman of the Board, Boise Cascade Office Products Corporation
(2) President and Chief Executive Officer, Boise Cascade Office Products
Corporation
(3) Senior Vice President, Chief Financial Officer, and Treasurer, Boise
Cascade Office Products Corporation
(4) Senior Vice President, North American and Australian Contract
Operations, Boise Cascade Office Products Corporation
All of the officers named above except for David A. New, who joined the
company in 1997, have been employees of Boise Cascade or one of its
subsidiaries for at least five years. From 1995-1997, Mr. New was the
Technical Manager of the Forestry, Pulp, and Paper, Southeast Asia Group
for Fletcher Challenge Ltd.
Jeffrey G. Lowe, vice president, retired from his position with Boise
Cascade effective January 1, 2000. Richard B. Parrish, senior vice
president, retired from his position with Boise Cascade effective August
1, 1999. Terry R. Lock, senior vice president, and J. Michael Gwartney,
vice president, retired from their positions with Boise Cascade on March
31, 1999.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning compensation of Boise Cascade's executive officers
for the year ended December 31, 1999, is presented under the caption
"Compensation Tables" in our proxy statement. This information is
incorporated by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Information concerning the security ownership of certain beneficial
owners as of December 31, 1999, is set forth under the caption
"Ownership of More Than 5% of Boise Cascade Stock" in Boise
Cascade's proxy statement and is incorporated by reference.
(b) Information concerning security ownership of management as of
December 31, 1999, is set forth under the caption "Stock Ownership -
Directors and Executive Officers" in Boise Cascade's proxy statement
and is incorporated by reference.
(c) Information concerning compliance with Section 16 of the Securities
Exchange Act of 1934 is set forth under the caption "Section 16(a)
Beneficial Ownership Reporting Compliance" in Boise Cascade's proxy
statement and is incorporated by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions
during 1999 is set forth under the caption "Business Relationships with
Directors" in Boise Cascade's proxy statement and is incorporated by
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 Form 10-K
for Boise Cascade:
(1) Financial Statements
(i) The Income Statement for the three months ended
December 31, 1999, is incorporated by reference
from Boise Cascade's Fact Book for the fourth
quarter of 1999.
(ii) The Financial Statements, the Notes to Financial
Statements, and the Report of Independent Public
Accountants and the Report of Management are
incorporated by reference from Boise Cascade's
1999 Annual Report.
- Balance Sheets as of December 31, 1999 and
1998.
- Statements of Income (Loss) for the years
ended December 31, 1999, 1998, and 1997.
- Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997.
- Statements of Shareholders' Equity for the
years ended December 31, 1999, 1998, and
1997.
- Notes to Financial Statements.
- Report of Independent Public Accountants.
- Report of Management.
(2) Financial Statement Schedules.
None required.
(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
immediately precedes such exhibits, and is incorporated
by reference.
(b) Reports on Form 8-K.
No Form 8-K's were filed during the fourth quarter of 1999.
(c) Exhibits.
See Index to Exhibits.
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 /s/ George J. Harad
_______________________________
George J. Harad
Chairman of the Board and
Chief Executive Officer
Dated: February 29, 2000
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 February 29, 2000.
Signature Capacity
(i) Principal Executive Officer:
George J. Harad Chairman of the Board and
______________________________ Chief Executive Officer
George J. Harad
(ii) Principal Financial Officer:
Theodore Crumley Senior Vice President and
______________________________ Chief Financial Officer
Theodore Crumley
(iii) Principal Accounting Officer
Thomas E. Carlile Vice President
______________________________ and Controller
Thomas E. Carlile
(iv) Directors:
George J. Harad Gary G. Michael
______________________________ ___________________________
George J. Harad Gary G. Michael
Philip J. Carroll A. William Reynolds
______________________________ ___________________________
Philip J. Carroll A. William Reynolds
Rakesh Gangwal Jane E. Shaw
______________________________ ___________________________
Rakesh Gangwal Jane E. Shaw
Edward E. Hagenlocker Frank A. Shrontz
______________________________ ___________________________
Edward E. Hagenlocker Frank A. Shrontz
Robert K. Jaedicke
______________________________ ___________________________
Robert K. Jaedicke Carolyn M. Ticknor
Francesca Ruiz de Luzuriaga Ward W. Woods, Jr.
______________________________ ___________________________
Francesca Ruiz de Luzuriaga Ward W. Woods, Jr.
Donald S. Macdonald
______________________________
Donald S. Macdonald
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report dated January 28, 2000, incorporated by reference in this
Form 10-K for the year ended December 31, 1999, into Boise Cascade
Corporation's previously filed post-effective amendment No. 1 to Form S-8
registration statement (File No. 33-28595); 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-8 (File
No. 33-62263); the registration statement on Form S-8 (File No.
333-59273); the pre-effective amendment No. 1 to Form S-3 registration
statement (File No. 333-41033); the registration statement on Form S-3
(File No. 33-55396); the registration statement on Form S-8 (File No.
333-86425); and the registration statement on Form S-8 (File No.
333-86427).
/s/ ARTHUR ANDERSEN LLP
Boise, Idaho
February 29, 2000
BOISE CASCADE CORPORATION
INDEX TO EXHIBITS
Filed with the Annual Report
on Form 10-K for the
Year Ended December 31, 1999
<TABLE>
<CAPTION>
Number Description Page
Number
<S> <S> <S> <S>
2 (1) Acquisition Agreement Among Boise Cascade Corporation,
Oxford Paper Company, Mead Oxford Corporation, and
The Mead Corporation, dated September 28, 1996 -
3.1 (2) Restated Certificate of Incorporation, as restated
to date -
3.2 (3) Bylaws, as amended, December 11, 1998 -
4.1 (4) Trust Indenture between Boise Cascade Corporation and
Morgan Guaranty Trust Company of New York, Trustee,
dated October 1, 1985, as amended -
4.2 (5) 1997 Revolving Loan Agreement -- $600,000,000, dated
as of March 11, 1997, as amended September 25, 1997 -
4.3 (6) Renewed Rights Agreement dated as of September 25, 1997 -
9 Inapplicable -
10.1 Key Executive Performance Plan for Executive Officers,
as amended through July 29, 1999
10.2 1986 Executive Officer Deferred Compensation Plan,
as amended through July 29, 1999
10.3 1983 Board of Directors Deferred Compensation Plan,
as amended through July 29, 1999
10.4 1982 Executive Officer Deferred Compensation Plan,
as amended through July 29, 1999
10.5 (7) Executive Officer Severance Pay Policy -
10.6 Supplemental Early Retirement Plan for Executive
Officers, as amended through July 29, 1999
10.7 Boise Cascade Corporation Supplemental Pension Plan,
as amended through July 29, 1999
10.8 1987 Board of Directors Deferred Compensation Plan,
as amended through July 29, 1999
10.9 1984 Key Executive Stock Option Plan, as amended through
February 10, 2000
10.10 (7) Executive Officer Group Life Insurance Plan description -
10.11 1980 Split-Dollar Life Insurance Plan, as amended
through July 29, 1999
10.12 Form of Agreement with Executive Officers, as amended
through July 29, 1999
10.13 (8) Supplemental Health Care Plan for Executive Officers,
as revised July 31, 1996 -
10.14 (7) Nonbusiness Use of Corporate Aircraft Policy, as amended -
10.15 (9) Executive Officer Financial Counseling Program
description, as amended through July 30, 1998 -
10.16 (7) Family Travel Program description -
10.17 Form of Directors' Indemnification Agreement, as revised
July 29, 1999
10.18 (10) Deferred Compensation and Benefits Trust, as amended by
the Form of Fourth Amendment dated July 29, 1999
10.19 Director Stock Compensation Plan, as amended through
July 29, 1999
10.20 Director Stock Option Plan, as amended through
December 9, 1999
10.21 1995 Executive Officer Deferred Compensation Plan,
as amended through July 29, 1999
10.22 1995 Board of Directors Deferred Compensation Plan,
as amended through July 29, 1999
10.23 1995 Split-Dollar Life Insurance Plan, as amended
through July 29, 1999
10.24 1999 and 2000 Performance Criteria for the Key Executive
Performance Plan for Executive Officers
11 Computation of Per Share Earnings
12.1 Ratio of Earnings to Fixed Charges
12.2 Ratio of Earnings to Combined Fixed Charges and Preferred
Dividend Requirements
13.1 Incorporated sections of the Boise Cascade Corporation
1999 Annual Report
13.2 Incorporated sections of the Boise Cascade Corporation
Fact Book for the fourth quarter of 1999
16 Inapplicable -
18 Inapplicable -
21 Significant subsidiaries of the registrant
22 Inapplicable -
23 Consent of Arthur Andersen LLP (see page 21) -
24 Inapplicable -
27 Financial Data Schedule
28 Inapplicable -
99 Inapplicable -
</TABLE>
(1) Exhibit 2 was filed under the same exhibit number in Boise Cascade's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996, and is incorporated by reference.
(2) The Restated Certificate of Incorporation was filed as Exhibit 3 in
Boise Cascade's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, and is incorporated by reference.
(3) Exhibit 3.2 was filed under the same exhibit number in Boise
Cascade's 1998 Annual Report on Form 10-K and is incorporated by
reference.
(4) 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 Boise Cascade's Current Report on Form
8-K filed on August 10, 1990. Each of the documents referenced in
this footnote is incorporated by reference.
(5) Exhibit 4.2 was filed under the same exhibit number in Boise
Cascade's 1996 Annual Report on Form 10-K. The Form of First
Amendment to 1997 Revolving Credit Agreement dated as of
September 25, 1997, was filed as Exhibit 4.1 in Boise Cascade's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1997. Each of the documents referenced in this footnote is
incorporated by reference.
(6) The Renewed Rights Agreement dated as of September 25, 1997, was
filed as Exhibit 4.2 in Boise Cascade's Quarterly Report on Form
10-Q for the quarter ended September 30, 1997, and is incorporated
by reference.
(7) Exhibits 10.5, 10.10, 10.14, and 10.16 were filed under the same
exhibit numbers in Boise Cascade's 1993 Annual Report on Form 10-K
and are incorporated by reference.
(8) Exhibit 10.13 was filed under the same exhibit number in Boise
Cascade's 1996 Annual Report on Form 10-K and is incorporated by
reference.
(9) The Executive Officer Financial Counseling Program description was
filed as Exhibit 10.3 in Boise Cascade's Quarterly Report on Form
10-Q for the quarter ended September 30, 1998, and is incorporated
by reference.
(10) The Deferred Compensation and Benefits Trust, as amended and
restated as of December 13, 1996, was filed under the same exhibit
number in Boise Cascade's 1996 Annual Report on Form 10-K and is
incorporated by reference.
EXHIBIT 10.1
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN FOR EXECUTIVE OFFICERS
(As Amended Through July 29, 1999)
1. PURPOSE OF THE PLAN. The Boise Cascade Corporation Key Executive
Performance Plan for Executive Officers (the "Plan") is designed to
recognize the contribution made by Executive Officers in optimizing the
long-term value to the shareholders of Boise Cascade Corporation (the
"Company") and to provide Plan participants with an opportunity to
supplement their retirement income through deferrals of awards made under
the Plan. The Plan is intended to be subject to and comply with the
requirements of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), and is an unfunded plan providing deferred compensation
for a select group of senior management or highly compensated employees.
2. DEFINITIONS. For purposes of this Plan, the following terms shall
have the meanings set forth below:
2.1 "Award" or "Corporate Performance Award" means a payment
made under the Plan, or a payment earned but deferred according to the
terms of a Participant's deferral election under Section 8 of this Plan,
based on the Corporate Performance Award Criteria ("Criteria") and/or the
Division or Location Performance Measures ("Measures") applicable to the
Award Period for which the Award is made. Within 90 days of the beginning
of each Award Period, the Committee shall establish the specific Criteria
and/or Measures to be achieved by the Company in order for Participants to
earn a Corporate Performance Award. The Committee shall establish a
mathematical formula pursuant to which an Award, equal to a specified
percentage of a Participant's salary, shall be earned upon the attainment
of specific levels of the applicable Criteria and/or Measures. This
formula may take into account Criteria and/or Measures achieved in prior
Award Periods. The Criteria and/or Measures and formula, once established,
shall continue for subsequent Award Periods unless modified by the
Committee. The Criteria and/or Measures applicable to an Award Period, and
the formula pursuant to which Award amounts shall be determined, shall be
selected and published within 90 days from the beginning of the Award
Period. No Award may be paid to a Participant in excess of $2.5 million
for any single Award Period. In the event an Award is earned under the
Criteria and/or Measures in effect for an Award Period in excess of
$2.5 million, the amount of the Award in excess of this amount shall be
deferred in accordance with Section 8 of this Plan.
2.2 "Award Period" means a period of one year, commencing each
January 1 and ending on the following December 31.
2.3 "Base Salary" means a Participant's 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.
operations of the Company, adjusted for LIFO inventory, present value of
operating leases, goodwill amortization, major capital projects, and major
nonrecurring adjustments.
2.5 "Capital Charge" means the deemed opportunity cost of
employing Capital for the Company calculated as follows: Capital Charge =
average Capital x Pretax Required Rate of Return.
2.6 A "Change in Control of the Company" shall be deemed to have
occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities; and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.6(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment, election, or nomination
for election was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation of
the Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities; and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.6(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.18,
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.18,
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) 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.
2.7 "Committee" means the Executive Compensation Committee
of the Company's Board of Directors (the "Board") or any successor to the
Committee.
2.8 "Corporate Performance Award Criteria" means the
attainment of specified levels of Return on Equity ("ROE"), Return on Total
Capital ("ROTC"), Economic Value Added ("EVA"), Earnings Per Share ("EPS"),
and/or Net Income ("NI") selected by the Committee.
2.9 "Deferred Compensation and Benefits Trust" (the "DCB
Trust") means the irrevocable trust established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.10 "Division or Location Performance Measures" means the
attainment by division(s) and/or location(s) (at the division and/or
location level) of specified levels of Pretax Return on Total Capital
("PROTC"), EVA, safety, quality, costs, operating efficiency, sales,
production, and/or product mix as determined by the Committee.
2.11 "Earnings Per Share" means the Company's Net Income and
excluding preferred dividends, divided by average shares outstanding as
reported in the Company's published financial statements, and adjusted for
major nonrecurring and nonoperating expense and income items, as determined
by the Committee, based on the facts and circumstances involved. 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.
2.12 "Economic Value Added" means the excess NOPBT that
remains after subtracting the Capital Charge, expressed as follows:
EVA = NOPBT -- Capital Charge
2.13 "Executive Officers" mean the Company's Chief Executive
Officer, President, and any Executive Vice President, Senior Vice
President, Vice President and the Corporate Secretary, Treasurer, or
Controller of the Company.
2.14 "Net Income" means the Company's income after taxes as
reported in the Company's published financial statements for the applicable
Award Period. Net Income shall be adjusted for major nonrecurring and
nonoperating income or expense items, as determined by the Committee, based
on the facts and circumstances involved.
2.15 "Net Operating Profit Before Tax" ("NOPBT") means the
before tax operating income of the Company for the Award Period.
2.16 "Participant" means a person who is an Executive
Officer of the Company at the beginning of an Award Period or who is
elected an Executive Officer by the Board during an Award Period who is
identified by the Company and Committee as being eligible to be a
Participant for such Award Period and who timely signs and returns to the
Company a participation letter (or similar document) in such form as is
approved by the Company.
2.17 "Pension Plan" means the Boise Cascade Corporation
Pension Plan for Salaried Employees, as amended from time to time.
2.18 A "Potential Change in Control of the Company" 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
of the Company; (ii) the Company or any Person publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control of the Company; (iii) any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 9.5% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities, unless that Person has filed a schedule under
Section 13 of the Securities Exchange Act of 1934 and the rules and
regulations promulgated under Section 13, and that schedule (including any
and all amendments) indicates that the Person has no intention to
(a) control or influence the management or policies of the Company or
(b) take any action inconsistent with a lack of intention to control or
influence the management or policies of the Company; or (iv) the Board
adopts a resolution to the effect that a Potential Change in Control of the
Company has occurred.
2.19 "Pretax Required Rate of Return" (also commonly known
as the "cost of capital") means the pretax required rate of return
percentage including adjustment for business risk and for debt to equity
structure, as determined by the Committee for the Award Period.
2.20 "Retirement" means a Participant's termination of
employment with the Company for reasons other than death, total disability
(as defined in the Pension Plan), or disciplinary reasons (as that term is
used for purposes of the Company's Corporate Policy 10.2, Termination of
Employment) at any time after the Participant has attained age 55 with 10
or more years of service (as defined in the Pension Plan).
2.21 "Return on Equity" means the Company's Net Income,
divided by average shareholders' equity.
2.22 "Return on Total Capital" shall be the Company's Net
Income divided by the average Total Capital, as reported in the Company's
published financial statements for the applicable Award Period.
2.23 "Stock Unit" means a notional account unit equal in
value to one share of the Company's common stock.
3. DETERMINATION OF AWARDS. As soon as practical after the
conclusion of each Award Period, the Committee shall review and evaluate
the Corporate Performance Award Criteria applicable to the Award Period in
light of the Company's performance measured in accordance with such
criteria, and shall determine whether the criteria have been satisfied. If
satisfied, the Committee shall so certify in a written statement and shall
apply the criteria to determine the percentage amount of the Award for each
Participant.
4. PAYMENT OF AWARDS. Payment of Awards, less withholding taxes,
shall be made to Participants as soon as practical following the
Committee's certification that the applicable Award Criteria have been
satisfied and upon determination of the amount of each Award. Funding of
Awards under this Plan shall be out of the general assets of the Company.
Payment of Awards for which a deferral election has been made by a
Participant pursuant to Section 8 hereof shall be made in accordance with
the Participant' s deferral election. Notwithstanding the foregoing, no
payments shall be made under this Plan unless the material terms of the
Plan have been approved by a majority vote of the Company's shareholders
voting with respect to such matters.
5. ADMINISTRATION AND INTERPRETATION OF THE PLAN. The Committee
shall have final discretion, responsibility, and authority to administer
and interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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, as provided in Section 2.16. If an Executive
Officer becomes a Participant at any time other than at the commencement of
an Award Period, the amount of his or her Award under the Corporate
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 a Participant
compared to the total number of calendar days in the Award Period.
At such time as an Executive Officer becomes a Participant in
this Plan, he or she shall be eligible to be a Participant in all
subsequent Award Periods under the Plan until he or she ceases to be an
Executive Officer of the Company, his or her employment with the Company
terminates, he or she is excluded from participation by the Committee, or
he or she fails to sign a participation letter as provided in Section 2.16.
If a person becomes a Participant under this Plan and is also a
Participant under the Company's Key Executive Performance Plan for Key
Executives or any similar incentive plan for the same Award Period, such
Participant will also be eligible to receive a pro rata Award under the Key
Executive Performance Plan for Key Executives or such other plan, in
accordance with the terms of such plan, at the end of the Award Period.
7. TREATMENT OF AWARDS UPON RETIREMENT, DISABILITY, DEATH,
REASSIGNMENT OR TERMINATION. A Participant who (a) retires (including
early retirement as defined under the Pension Plan and retirement under the
Company's Supplemental Early Retirement Plan for Executive Officers),
(b) becomes totally disabled, (c) dies, or (d) terminates employment as a
direct result of the sale or permanent closure of a division or facility of
the Company or as a direct result of a merger, reorganization, sale, or
restructuring of all or part of the Company, will cease to be a Participant
in the Plan as of the day of the occurrence of such event. In this event,
the Participant (or his or her designated beneficiary or estate in the case
of death) shall receive a pro rata Award under the Plan (if one is paid),
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. This prorated 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. Any award to be paid
pursuant to clause (d) above shall be calculated based on the corporate
Performance Award Criteria applicable to the Award Period through the date
of the occurrence of such event and shall be calculated as though such
event had not occurred.
If a Participant is excluded from participation by decision of
the Committee during an Award Period, the Participant shall cease
participation as of the date of such decision and shall receive a prorated
Award for the Award Period (if one is paid). The calculation and payment
of this prorated award will be made in the same manner as that of a
Participant who has retired, become permanently disabled, or died.
Participants who otherwise terminate their employment with the
Company during an Award Period, whether voluntarily or involuntarily, with
or without cause, shall not be eligible to receive any Award for the Award
Period, unless payment of an Award to such Participant is approved by the
Committee.
8. DEFERRAL OF AWARDS. A Participant may elect to defer receipt
of all or any portion of any Corporate Performance Award made under the
Plan to a future date as provided in this Section 8, provided the amount to
be so deferred exceeds $2,000. A Participant who has earned an Award in
excess of $2.5 million for an Award period shall be required to defer the
portion of the Award which exceeds $2.5 million. If a Participant timely
elects to defer receipt of all or a portion of his or her Award, the
amount of such deferred Award will be credited to an account on the
Company's books maintained for the executive for purposes of this Plan (the
"Deferred Bonus Account"). Notwithstanding Section 6 of this Plan, if a
Participant has made a deferral election under this or any other Company
incentive plan for a plan year, the deferral election shall be applied to
all incentive plan Awards for the plan year and all amounts so deferred
shall be credited to the Deferred Bonus Account under this Plan and subject
to the terms of this Section 8. Deferred Bonus Accounts shall not be
funded and shall represent unfunded and unsecured obligations of the
Company. Participants shall be unsecured general creditors of the Company
with respect to such Deferred Bonus Accounts.
8.1 Eligible Participants may elect to defer receipt of
their Award (if any) for any Award Period, in accordance with and subject
to the following:
(a) Prior to September 30 of the Award Period for
which a deferral election is to be effective, the Participant must sign and
return to the Company a completed Deferral Election Form, which shall
specify (1) the percentage or amount of the Award to be deferred; (2) the
form of payment (lump sum or installment) applicable to the Award; and
(3) the date on which payment of the deferred Award is to commence.
Elections hereunder shall be irrevocable except as otherwise provided in
the Plan.
(b) The Participant's Deferred Bonus Account will
be credited, in accordance with the Participant's election, with either
(A) the amount of the deferral plus nominal interest accruing thereon from
the effective date of the deferral at a rate determined annually by the
Company (which shall not be less than the prime rate offered by the Bank of
America NT & SA each January 1) (an "Interest Account") or (B) Participant
Stock Units in the amount of the deferral, plus Company Matching Stock
Units and Dividend Equivalent Stock Units as described below (a "Stock Unit
Account").
(1) An election to have a Deferred Bonus
Account credited with Stock Units must be made by the Participant no later
than January 31 of the year in which payment of the Award would be made
absent a deferral election. If a Participant timely elects to have his or
her Deferred Bonus Account credited with Stock Units, the Participant's
Deferred Bonus Account shall be credited, on the date on which the Award
would otherwise have been paid pursuant to the Plan, with the number of
Stock Units equal to (A) 100% of the amount of such deferred compensation
("Participant Stock Units") plus (B) 25% of the amount of such deferred
compensation ("Company Matching Stock Units"), with each Stock Unit value
based on either the closing price of the Company's common stock on the New
York Stock Exchange ("NYSE") on that date (or, if the common stock is not
traded on the NYSE on such date, on the immediately preceding trading day)
or another generally accepted pricing standard chosen by the Company. Each
Stock Unit in a Participant's Deferred Bonus Account shall thereafter have
a value equal to the market value of one share of the Company's common
stock. Except as provided in subparagraphs (4) and (5) hereof, Stock Units
must be held for a minimum period of six months from the date on which such
Stock Units are first credited to the Participant's account. Stock Units
may not be sold, transferred, assigned, alienated, or pledged by any
Participant.
(2) On each dividend payment date for the
common stock, additional Stock Units shall be credited to each
Participant's Deferred Bonus Account ("Dividend Equivalent Stock Units").
Dividend Equivalent Stock Units shall (A) be equal in value to the imputed
dividend on each Stock Unit credited to the Participant's account as of the
record date for such dividend; (B) be allocated, as appropriate, to either
the Participant Stock Units or the Company Matching Stock Units credited to
the Participant's Deferred Bonus Account; and (C) vest in accordance with
the vesting of the underlying Stock Units to which they are allocated.
(3) A Participant shall be fully vested
in his or her Participant Stock Units, including allocated Dividend
Equivalent Stock Units, at all times. Vesting in Company Matching Stock
Units, including allocated Dividend Equivalent Stock Units, shall be as
follows: (A) 100% upon the Participant's death, permanent and total
disability, or Retirement; (B) 100% upon a Change in Control of the
Company; (C) 100% upon the Participant's involuntary termination (other
than a termination for disciplinary reasons as that term is used in
Corporate Policy 10.2) or termination as a direct result of the sale or
permanent closure of a facility, operating unit, or division of the
Company; or (D) in any other case, 20% (cumulative) on each anniversary of
the date the Participant's account was first credited with Stock Units
under this Plan.
(4) Upon the occurrence of a Potential
Change in Control of the Company, shares of Common Stock equal to the
number of Stock Units in all Participants' Deferred Bonus Accounts shall be
transferred to the Trustee of the Deferred Compensation and Benefits Trust
to be held in accordance with the terms of that Trust and this Plan. Upon
a Change in Control of the Company, all Stock Units credited to a
Participant's Deferred Bonus Account shall be converted to Stock Units of
equivalent value payable in the common stock of the successor entity to the
Company, as follows: if the Change in Control involves the merger or sale
of the entire Company or a tender offer for all the outstanding Common
Stock, conversion shall be at the conversion, sale, or exchange price
applicable to the Common Stock in connection with such Change in Control.
Shares of Common Stock held by the Trustee shall be converted to shares of
common stock of the successor entity (if any) at the same conversion value
as described in this subsection. Following a Change in Control and after
public disclosure of at least 30 days financial results of the consolidated
entity, each Participant may elect, at any time or from time to time, to
convert all or any portion of his or her Stock Unit Account to a dollar
equivalent and have such amount credited to the Interest Account in the
Participant's Deferred Bonus Account. If a Participant makes such an
election, the Trustee shall sell, into the open market, shares of stock
attributable to such Participant's Deferred Bonus Account as previously
acquired and held pursuant to this subsection, and shall hold, invest, and
reinvest the proceeds of such sale in accordance with the terms of the
Deferred Compensation and Benefits Trust. If the Change in Control does
not involve the merger or sale of the entire Company or a tender offer for
all the outstanding Common Stock, Stock Units shall be converted to a
dollar equivalent at the highest trading price of the Company's Common
Stock during the 20-day period immediately preceding the date of the Change
in Control and credited to the Participants' Interest Account(s).
(5) If the Participant's Deferred Bonus
Account is credited with Stock Units, the Participant shall be paid the
value of all vested Stock Units in his or her Deferred Bonus Account in
accordance with the Participant's election under Section 8.1(a) above and
in the form of the Company's Common Stock (or, if applicable, in accordance
with Subsection (4) above). Such payment shall be consistent with the
payment election made by the Participant pursuant to Section 8.1(a) above.
If a Participant's Deferred Bonus Account is credited with Stock Units and
the Participant terminates employment and is eligible for a distribution
but shares of Common Stock are not then available for distribution, the
Company may elect, in its sole discretion, to delay the distribution until
such shares become available.
(c) If any payment is made from a Participant's
Deferred Bonus Account during a year, interest or Dividend Equivalent Stock
Units, as appropriate, 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.
(d) A Participant's Deferred Bonus Account for a
given Plan year will be paid to the Participant in a lump sum on one of the
following dates:
(1) The date selected by the Participant in
the applicable Deferral Agreement, or
(2) January 1 of the year following the
Participant's normal or early retirement if no earlier date has been
selected previously by the Participant.
In lieu of lump-sum payment, a
Participant may elect to receive payment in consecutive equal annual
installments over a period not exceeding 10 years commencing with the date
the Participant selects in the applicable Deferral Agreement.
(e) Earlier payment of Deferred Bonus Account balances
will be made only in accordance with Plan provisions permitting hardship or
other early withdrawals, waiting periods, and account limitations, and
penalties will apply as set forth in the Plan.
(f) Any amounts deferred shall not be considered as
compensation for pension purposes or for purposes of the Company's Savings
and Supplemental Retirement Plan. Any resulting reduction in a
Participant's pension benefit, however, will be provided from the Company's
unfunded supplemental pension plan.
8.2 Except as otherwise provided herein, election to defer
payment of an award is irrevocable.
8.3 If a Participant 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 to be distributed
will be determined in accordance with paragraph 8.1.b.
8.4 If a Participant terminates because of death or if a
Participant dies after his or her normal or early retirement and there is
an unpaid balance in his or her Deferred Bonus Account, the executive's
Deferred Bonus Account or unpaid balance thereof will be paid by the
Company to the Participant's designated beneficiary or beneficiaries in the
month following the month in which the executive's death occurs. The
amount of such Deferred Bonus Account or unpaid balance thereof to be
distributed will be determined in accordance with paragraph 8.1.c.
8.5 A Participant must designate the beneficiary or
beneficiaries who are to receive his or her Deferred Bonus Account in the
event of the Participant'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 a Participant has not designated a
beneficiary or beneficiaries or if all the designated beneficiaries are
deceased, the Deferred Bonus Account will be paid to the Participant's
estate.
8.6 Distributions of Interest Accounts may be made in
accordance with the provisions of this Section 8, notwithstanding a
Participant's Deferral Election Form.
8.6.1 HARDSHIP TERMINATION AND DISTRIBUTION. In the
event of serious and unanticipated financial hardship, a Participant may
request a lump-sum distribution of all or a portion of his or her Interest
Account balance. The Participant making a hardship distribution request
under this section shall document, to the Company's satisfaction, that
distribution of his or her Interest Account is necessary to satisfy an
unanticipated, immediate, and serious financial need and that the
Participant does not have access to other funds, including proceeds of any
loans sufficient to satisfy the need. Upon receipt of a request under this
section, the Company may, in its sole discretion, distribute all or a
portion of the Participant's account balance in a lump sum, to the extent
such distribution is necessary to satisfy the financial need. The
Participant shall sign all documentation requested by the Company relating
to any such distribution, and any Participant who receives a hardship
distribution under this paragraph may not make deferrals of Awards for a
minimum of 12 months following the date of any distribution.
8.6.2 EARLY DISTRIBUTION WITH PENALTY. 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 Interest Account or accounts of the Participant under the Plan. The
amount of the payment shall be equal to (i) the Participant's accumulated
Interest 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 receives 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 the deferral option under this Plan, for a period of
12 months after such request is made. In addition, in this 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.
8.6.3 DISTRIBUTION UPON EXTRAORDINARY EVENTS. If any
Participant who has reached retirement age terminates employment with the
Company as a direct result of the sale or divestiture of a facility,
operating division, or reduction in force in connection with any
reorganization of the Company's operations or staff, such Participant may
request distribution of his or her entire Interest Account balance. Upon
receipt of such a request for distribution under this section, the Company
may, in its sole discretion, elect whether to approve or deny the request.
If the Company approves a request under this section, distribution of the
Participant's account shall occur no later than the January 1 of the year
following the year during which such termination of employment occurs.
8.6.4 SMALL ACCOUNT DISTRIBUTIONS. If a Participant
terminates employment with the Company for any reason and the Participant's
benefit under this Plan is less than either (i) $5,000 in lump sum present
value, calculated in accordance with reasonable assumptions, or (ii) the
monthly payment under the benefit payment option selected by the
Participant is less than $75 per month, such Participant may request
distribution of his or her entire account balance. Upon receipt of a
request for distribution under this section, the Company may, in its sole
discretion, elect whether to approve or deny the request. If the request
is approved, the Company shall close the Participant's account and
distribute the Participant's entire account balance in a single lump sum.
Any distribution under this paragraph shall be made no later than January 1
of the year following the year in which such termination of employment
occurs.
8.7 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 request to change the election
to Boise Cascade. Such request must specify, subject to the limits of the
Plan, (i) either a lump-sum payment or annual installments and (ii) a date
at least 1 year later than the date originally elected for such payments to
commence and terminate. Such requests must be received by the Company at
least 30 days prior to January 1 of the year in which the executive
previously elected to have the payments commence. Boise Cascade, in its
sole and absolute discretion, may accept or reject such application. No
change will be permitted that would allow payment of a deferral Award
earlier than originally elected.
8.8 Once an award is made to a Participant, it cannot be
revoked or modified by the Company and will be paid in accordance with the
election made and in accordance with the terms of this Plan.
8.9 The Deferred Bonus Account of a Participant, or any part
thereof, shall not be assignable or transferable by the Participant, 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 a Participant, payments of a
Deferred Bonus Account will be made only to the Participant.
8.10 A Participant who takes early retirement at the request
of the Company may, on that account, change any outstanding deferral
election under this Plan 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.
8.11 The Company believes, but does not represent or
guarantee, that a deferral election made in accordance with the terms of
the Plan is effective to defer the receipt of taxable income. Each
Participant should consider his or her own financial situation and tax
implications prior to electing to defer an Award. Deferral elections are
at the sole discretion of each Participant and the Company makes no
representation regarding the tax or legal consequences of such deferral
elections. Participants should consult an attorney or an accountant
familiar with the federal income and estate tax laws, as well as their
local laws, regarding the tax implications of a deferred Award in their
individual cases.
8.12 This deferral option applies only to Participants in
those countries where tax statutes recognize voluntary compensation
deferral programs that are consistent with the terms of this Plan.
8.13 Except as provided in Section 9, Participants and their
beneficiaries, heirs, successors, and assigns shall have no legal or
equitable right, interest, or claim in any property or assets of the
Company. The 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
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 this Plan shall be an unfunded and
unsecured promise of the Company to pay money in the future.
9. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or other
property acceptable to the trustee equal in value to 105% of the amount
necessary, on an actuarial basis and calculated in accordance with the terms
of the DCB Trust, to pay the Company's obligations under this Plan (the
"Funding Amount"); provided, however, the Company shall transfer shares of
its common stock equal in number to the number of Stock Units credited to
Participants under Section 8.1 in lieu of transferring cash or other
property to satisfy its funding obligations under this Section 9. The cash,
marketable securities, and other property so transferred shall be held,
managed, and disbursed by the trustee subject to and in accordance with the
terms of the DCB 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 as may be necessary in order to
maintain the Funding Amount with respect to this Plan.
Upon a Change in Control of the Company, the assets of the DCB Trust shall
be used to pay benefits under this Plan, except to the extent the Company
pays such benefits. The Company and any successor shall continue to be
liable for the ultimate payment of those benefits.
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, in which event such right and interest shall be
transferred to his or her designated beneficiary, or in the absence of a
designation of beneficiary, by will or in accordance with the laws of
descent and distribution of the state of the Participant's principal
residence at the time of death.
10.2 EMPLOYMENT NOT GUARANTEED. This Plan is not intended
to and does not create a contract of employment in any manner. Employment
with the Company is at will, which means that either the employee or the
Company may end the employment relationship at any time and for any reason.
Nothing in this Plan changes or should be construed as changing that at-
will relationship.
10.3 TAXES. The Company shall deduct from all payments made
under this Plan all applicable federal or state taxes required by law to be
withheld. Participants may, upon written request to the Company, request
additional amounts to be withheld from any Award.
10.4 CONSTRUCTION AND JURISDICTION. The Plan shall be
construed according to the laws of the state of Idaho. In the event any
lawsuit or legal action is brought, by any party, person, or entity
regarding this Plan, benefits hereunder, or any related issue, such action
or suit may be brought only in Federal District Court in the District 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 the Company shall be made in writing and in
such form as the Company shall prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho 83728-
0001.
11. AMENDMENT AND TERMINATION. The Company, acting through its
board of directors or any committee of the board, may at its sole
discretion amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
12. CLAIMS PROCEDURE. Claims for benefits under the Plan shall
be filed in writing, within 90 days after the event giving rise to a claim,
with the Company's Manager of Executive Compensation, who shall have
absolute discretion to interpret and apply the Plan, evaluate the facts and
circumstances, and make a determination with respect to such claim in the
name and on behalf of the Committee. Such written notice of a claim shall
include a statement of all facts believed by the Participant to be relevant
to the claim and shall include copies of all documents, materials, or other
evidence that the Participant believes relevant to such claim. Written
notice of the disposition of a claim shall be furnished the claimant within
90 days after the application is filed. This 90-day period may be extended
an additional 90 days by the Committee, in its sole discretion, by
providing written notice of such extension to the claimant prior to the
expiration of the original 90-day period. 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
under Section 12 hereof shall be entitled, upon written request, to a
review of his or her denied claim. Such request, together with a written
statement of the claimant's position, shall be filed no later than 60 days
after receipt of the written notification provided for in Section 12, and
shall be filed with the Company's Manager of Executive Compensation, who
shall promptly inform the Committee and forward all such material to the
Committee for its review. The Committee may meet in person or by telephone
to review any such denied claim. The Committee shall make its decision, in
writing, within 60 days after receipt of the claimant's request for review.
The Committee's written decision shall state the facts and plan provisions
upon which its decision is based. The Committee's decision shall be final
and binding on all parties. This 60-day period may be extended an
additional 60 days by the Committee, in its discretion, by providing
written notice of such extension to the claimant prior to the expiration of
the original 60-day period.
14. EFFECTIVE DATE. The Plan shall become effective on January 1,
1995, provided it is approved by the Company's shareholders at the 1995
annual meeting of shareholders.
EXHIBIT 10.2
BOISE CASCADE CORPORATION
1986 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
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 shall be deemed to
have occurred if:
(a) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 20% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities; and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 2.1(c)(i) shall not be deemed to be a change in control of the
Company; or
(b) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment,
election, or nomination for election was previously so approved (the
"Continuing Directors"); or
(c) The consummation of a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from the Company, exceed 20% of
the Company's then outstanding shares of common stock or the combined
voting power of the Company's then outstanding securities; and provided
further that any acquisition of securities by any Person in connection
with a transaction described in Subsection 2.1(c)(i) shall not be deemed
to be a change in control of the Company; or
(d) The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the consummation of an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.14, "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.14, "Person" shall
have the meaning given in Section 3(a)(9) of the Exchange Act, as modified
and used in Sections 13(d) and 14(d) thereof, except that such term shall
not include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) 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.
2.2 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.3 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.
2.4 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.
2.5 DEFERRED COMPENSATION AND BENEFITS TRUST. The irrevocable
trust (the "DCB Trust") established by the Company with an independent
trustee for the benefit of persons entitled to receive payments or
benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.6 DISABILITY. A condition that totally and continuously
prevents the Participant, for at least six consecutive months, from
engaging in an "occupation" for remuneration or profit. During the first
24 months of 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 Committee determines, in its sole discretion, that a Disability
exists.
2.7 EARLY RETIREMENT DATE. The date of a Participant's
Termination of Employment for reasons other than death, total disability
(as defined in the Pension Plan), or disciplinary reasons (as that term is
used for purposes of the Company's Corporate Policy 10.2, Termination of
Employment) before attaining age 65 but after attaining age 55, and after
completing 10 years of service (as defined in the Pension Plan). 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 offered by the
Company and applicable to the Participant.
2.8 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.
2.9 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.
2.10 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 Committee.
2.11 NORMAL RETIREMENT Date. The first day of the month on or
after a Participant's 65th birthday.
2.12 PARTICIPANT. An Executive Officer who has entered into a
written Deferred Compensation Agreement with the Company in accordance
with the provisions of the Plan.
2.13 PENSION PLAN. The Boise Cascade Corporation Pension Plan
for Salaried Employees, as amended from time to time.
2.14 POTENTIAL CHANGE IN CONTROL. A Potential Change in Control
of the Company 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 of the Company; (ii) the Company or any
Person publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of the
Company; (iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities, unless
that Person has filed a schedule under Section 13 of the Securities Exchange
Act of 1934 and the rules and regulations promulgated under Section 13, and
that schedule (including any and all amendments) indicates that the Person
has no intention to (a) control or influence the management or policies of
the Company or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
2.15 SERVICE. Service as earned and credited under the Pension
Plan.
2.16 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, provided that transfer from the Company to a
subsidiary or parent of the Company shall not be deemed a Termination of
Employment for purposes of this Plan.
3. ADMINISTRATION AND INTERPRETATION OF THE PLAN. The Committee
shall have final discretion, responsibility, and authority to administer
and interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management.
Any Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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 4-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 4 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 or her 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 Committee. A request to
alter the amount of compensation deferred must be submitted by a
Participant in writing to the Committee 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
Committee, 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
Committee, 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 Committee, 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 or her 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 or she may elect to receive a
return of his or her deferrals. Each such return of deferral shall be
made in a lump sum, 7 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. Any such request shall
be approved or denied at the sole discretion of the Committee. 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 or her account in a
lump sum or in equal monthly 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 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 Committee, pursuant to Section 5.4.
5.4 CHANGE OF ELECTION. A Participant may request a change in
the payout election any time prior to January 1 of the year benefits are
scheduled to be paid, provided further that the request is received by the
Committee 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 discretion of the Committee. 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 request at any time 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 Committee. The lump-sum payment shall be
made within 30 days of the date on which the request for distribution is
received. 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 or her benefits have commenced and prior to the
distribution of the entire Participant Account, his or her 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 or her 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 or her Normal Retirement Date, he or she
shall be entitled to be paid the 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. This Plan is not
intended to and does not create a contract of employment in any manner.
Employment with the Company is at will, which means that either the
employee or the Company may end the employment relationship at any time
and for any reason. Nothing in this Plan changes or should be construed
as changing that at-will relationship.
6.3 TAXES. The Company shall deduct from all payments made
under this Plan all applicable federal or state taxes required by law to
be withheld.
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 Committee or the Company shall be made in writing and
in such form as the Company may prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive
Compensation Manager at 1111 West Jefferson Street, P.O. Box 50, Boise,
Idaho 83728-0001.
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 Company, acting through its
board of directors or any committee of the board, may at its sole
discretion amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
9. UNSECURED GENERAL CREDITOR. Except as provided in Section 10,
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. The 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
an unfunded and unsecured promise of the Company to pay money in the
future.
10. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence of
any Potential Change in Control of the Company, the Company shall transfer
to the DCB Trust an amount of cash, marketable securities, or other property
acceptable to the trustee equal in value to 105% of the amount necessary, on
an actuarial basis and calculated in accordance with the terms of the DCB
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 subject to
and in accordance with the terms of the DCB 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 as may be
necessary in order to maintain the Funding Amount with respect to this Plan.
Upon a change in control of the Company, the assets of the DCB
Trust shall be used to pay benefits under this Plan, except to the extent
the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
EXHIBIT 10.3
BOISE CASCADE CORPORATION
1983 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
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 shall be deemed
to have occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.1(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 2.1(c)(i) shall not be deemed to be a Change in
Control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.12,
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.12, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) 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.
2.2 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.3 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.
2.4 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.
2.5 DEFERRED COMPENSATION AND BENEFITS TRUST. The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.6 DIRECTOR. A member of the Board of Directors of Boise
Cascade Corporation as elected by the shareholders.
2.7 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 72 or, after the 4-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.
2.8 MINIMUM DEATH BENEFIT. The Minimum Death Benefit shall
be a multiple of the total amount of Compensation to be deferred over the
4-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.
2.9 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.
2.10 NORMAL BENEFIT COMMENCEMENT DATE. The first day of the
month on or after a Participant's 72nd birthday.
2.11 PARTICIPANT. A Director who has entered into a written
Deferred Compensation Agreement with the Company in accordance with the
provisions of the Plan.
2.12 POTENTIAL CHANGE IN CONTROL. A Potential Change in
Control of the Company 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 of the company; (ii) the Company or any
Person publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of the
company; (iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities, unless
that Person has filed a schedule under Section 13 of the Securities Exchange
Act of 1934 and the rules and regulations promulgated under Section 13, and
that schedule (including any and all amendments) indicates that the Person
has no intention to (a) control or influence the management or policies of
the Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
2.13 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 Committee
shall have final discretion, responsibility, and authority to administer
and interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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 or her 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 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 Committee. A request to
alter the amount of Compensation deferred shall be submitted by a
Participant in writing to the Committee 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
Committee, 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 or her deferred
Compensation 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 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.
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 or her account shall be
paid out in quarterly installments over 15 years. A Participant may
request a change in the payout election any time prior to January 1 of the
year benefits are first scheduled to be paid, provided that the request is
received by the Committee at least 30 days prior to the first 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
Committee. 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 or her benefits have commenced and prior to the
distribution of his or her entire account, his or her 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 Committee. The lump-sum payment shall be
made within 30 days of the date on which the Committee 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. If a Participant dies before receiving all benefit payments, all
subsequent payments under the Plan shall be made 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 is in effect
at the time when any benefits payable under this Plan 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
under this Plan all applicable federal or state taxes required by law to be
withheld.
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 Committee or the Company shall be made in writing and in
such form as the Company shall prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho
83728-0001.
6.5 UNSECURED GENERAL CREDITOR. Except as provided in
Section 8, 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. The 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 an unfunded and unsecured promise of the Company to pay money
in the future.
7. AMENDMENT AND TERMINATION. The Company, acting through the
Board of Directors or any committee of the Board of Directors, may, at its
sole discretion, amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
8. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or
other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB 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 subject to and in accordance with the terms of the DCB 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 as may be necessary in order to maintain the Funding Amount
with respect to this Plan.
Upon a Change in Control of the Company, the assets of the DCB
Trust shall be used to pay benefits under this Plan, except to the extent
the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
EXHIBIT 10.4
BOISE CASCADE CORPORATION
1982 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
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 shall be deemed to
have occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities; and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 2.1(c)(i) shall not be deemed to be a Change in Control of the
Company; or
(b) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment,
election, or nomination for election was previously so approved (the
"Continuing Directors"); or
(c) The consummation of a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from the Company, exceed 20% of
the Company's then outstanding shares of common stock or the combined
voting power of the Company's then outstanding securities; and provided
further that any acquisition of securities by any Person in connection
with a transaction described in Subsection 2.1(c)(i) shall not be deemed
to be a Change in Control of the Company; or
(d) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.12, "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.12, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) 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.
2.2 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.3 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.
2.4 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.
2.5 DEFERRED COMPENSATION AND BENEFITS TRUST. The irrevocable
trust (the "DCB Trust") established by the Company with an independent
trustee for the benefit of persons entitled to receive payments or
benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.6 DISABILITY. A condition that totally and continuously
prevents the Participant, for at least six consecutive months, from
engaging in an "occupation" for remuneration or profit. During the first
24 months of 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 Committee determines, in its sole discretion, that a Disability
exists.
2.7 EARLY RETIREMENT DATE. The date of a Participant's
Termination of Employment for reasons other than death, total disability
(as defined in the Pension Plan), or disciplinary reasons (as that term is
used for purposes of the Company's Corporate Policy 10.2, Termination of
Employment) before attaining age 65 but after attaining age 55, and after
completing 10 years of service (as defined in the Pension Plan). 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 offered by the
Company and applicable to the Participant.
2.8 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.
2.9 NORMAL RETIREMENT DATE. The first day of the month on or
after a Participant's 65th birthday.
2.10 PARTICIPANT. An Executive Officer who has entered into a
written Deferred Compensation Agreement with the Company in accordance
with the provisions of the Plan.
2.11 PENSION PLAN. The Boise Cascade Corporation Pension Plan
for Salaried Employees, as amended from time to time.
2.12 POTENTIAL CHANGE IN CONTROL. A Potential Change in Control
of the Company 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 of the Company; (ii) the Company or any Person
publicly announces an intention to take or to consider taking actions which
if consummated would constitute a Change in Control of the Company;
(iii) any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 9.5% or more of either the then
outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities, unless that Person has
filed a schedule under Section 13 of the Securities Exchange Act of 1934 and
the rules and regulations promulgated under Section 13, and that schedule
(including any and all amendments) indicates that the Person has no
intention to (a) control or influence the management or policies of the
Company or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
2.13 SERVICE. Service as earned and credited under the Pension
Plan.
2.14 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, provided that transfer from the Company to a
subsidiary or parent of the Company shall not be deemed a Termination of
Employment for purposes of this Plan.
3. ADMINISTRATION AND INTERPRETATION OF THE PLAN. The Committee
shall have final discretion, responsibility, and authority to administer
and interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management.
Any Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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 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 participate in the Plan for 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
subsequently and with the approval of the Company become a Participant
before January 1, 1987, for such a period of time, up to and including
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 Committee. A request to
alter the amount of Compensation deferred shall be submitted by a
Participant in writing to the Committee 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
Committee, 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
Committee, 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 Committee, 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 Committee may, in its discretion, approve 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 Committee, a Participant may elect to defer commencement of payment of
the Early Benefit. This election shall be in writing and submitted to the
Committee 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 Committee may, in its discretion, approve 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 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 Committee
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 Committee. The lump-sum payment shall be
made within 30 days of the date on which the request for distribution is
received. 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 Pension 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 Pension 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 consecutive 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 or she 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 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 60 days following Termination of Employment.
If Termination of Employment occurs after 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
Section 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. Upon the
occurrence of any Potential Change in Control of the Company, the Company
shall transfer to the DCB Trust an amount of cash, marketable securities, or
other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB 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 subject
to and in accordance with the terms of the DCB 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 as
may be necessary in order to maintain the Funding Amount with respect to
this Plan.
Upon a Change in Control of the Company, the assets of the
DCB Trust shall be used to pay benefits under this Plan, except to the
extent the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
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. This Plan is not intended to
and does not create a contract of employment in any manner. Employment
with the Company is at will, which means that either the employee or the
Company may end the employment relationship at any time and for any
reason. Nothing in this Plan changes or should be construed as changing
that at-will relationship.
6.3 TAXES. The Company shall deduct from all payments made
under this Plan all applicable federal or state taxes required by law to
be withheld.
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 Committee or the Company shall be made in writing and
in such form as the Company may prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive
Compensation Manager at 1111 West Jefferson Street, P.O. Box 50, Boise,
Idaho 83728-0001.
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 Company, acting through its
board of directors or any committee of the board, may at its sole
discretion amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
EXHIBIT 10.6
BOISE CASCADE CORPORATION
SUPPLEMENTAL EARLY RETIREMENT PLAN FOR EXECUTIVE OFFICERS
(As Amended Through July 29, 1999)
ARTICLE I -- PURPOSE OF THE PLAN
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
2.1 "BOARD OF DIRECTORS." The term Board of Directors shall
mean the Board of Directors of Boise Cascade Corporation.
2.2 "CHANGE IN CONTROL." A Change in Control shall be deemed to
have occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.2(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(b) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 2.2(c)(i) shall not be deemed to be a Change in
Control of the Company; or
(d) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.14, "Beneficial
Owner" shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.14, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) 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.
2.3 "COMMITTEE." 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.
2.4 "COMPANY." Boise Cascade Corporation, a corporation
organized and existing under the laws of the state of Delaware, or its
successor or successors.
2.5 "COMPETITOR." 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 or any subsidiary,
partnership, or joint venture of the Company. The determination of whether
a business is a Competitor shall be made by the Company's General Counsel,
in his or her sole discretion.
2.6 CONSTRUCTION. Except to the extent preempted by federal
law, this Supplemental Plan shall be construed according to the laws of the
state of Idaho. 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.
2.7 "DEFERRED COMPENSATION AND BENEFITS TRUST." The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.8 "EARLY RETIREMENT BENEFITS." The benefits that will be
paid to an Executive Officer who retires from the Company under the
provisions of this Supplemental Plan.
2.9 "EARLY RETIREMENT DATE." The date of an Executive
Officer's Termination of Employment on or after his or her 55th birthday
but before his or her Normal Retirement Date.
2.10 "EFFECTIVE DATE." The date this Supplemental Plan
becomes effective as established by the Board of Directors.
2.11 "EXECUTIVE OFFICER." A person employed by the Company
as an executive officer as that term is defined by the Securities and
Exchange Commission.
2.12 "INVOLUNTARY RETIREMENT." 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 10 or more years of service and has reached
the age of at least 55 years.
2.13 "NORMAL RETIREMENT DATE." The first day of the month on
or after an Executive Officer's 65th birthday.
2.14 "POTENTIAL CHANGE IN CONTROL." A Potential Change in
Control of the Company 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 of the Company; (ii) the Company or any
Person publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of the
Company; (iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities, unless
that Person has filed a schedule under Section 13 of the Securities Exchange
Act of 1934 and the rules and regulations promulgated under Section 13, and
that schedule (including any and all amendments) indicates that the Person
has no intention to (a) control or influence the management or policies of
the Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
2.15 "SALARIED PLAN." 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.
2.16 "SUPPLEMENTAL PLAN." The Boise Cascade Corporation
Supplemental Early Retirement Plan for Executive Officers, as amended from
time to time.
ARTICLE III -- ELIGIBILITY FOR EARLY RETIREMENT BENEFITS
3.1 ELIGIBILITY. An Executive Officer (i) with 10 or more
years of service with the Company, as defined in the Salaried Plan;
(ii) who has served as an Executive Officer of the Company for at least
5 full years measured from the date of his or her election to such office;
and (iii) whose employment with the Company is terminated through
Involuntary Retirement, or who elects early retirement on or after his or
her 55th birthday but before his or her Normal Retirement Date, shall
receive the Early Retirement Benefits as set forth in Article IV hereof;
provided, however, if an Executive Officer's employment is terminated for
"disciplinary reasons," as that term is used in the Company's Corporate
Policy 10.2, Termination of Employment, such 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 or she 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 or her 55th birthday but before his or her Normal Retirement Date
shall notify the Company of his or her decision, in writing, at least
30 days in advance of the Early Retirement Date.
ARTICLE IV -- EARLY RETIREMENT BENEFITS
4.1 EARLY RETIREMENT BENEFITS. An Executive Officer who is
eligible to and elects to retire on or after his or her 55th birthday but
before his or her Normal Retirement Date, 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
hereunder 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 on or before his or her
Early Retirement Date to receive, as an alternative to the amounts
described above, Early Retirement Benefits commencing upon the Early
Retirement Date 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 Executive Officer pursuant to
Article VII of the Salaried Plan), payable to the Executive Officer as of
his or her 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 selected by the Executive Officer pursuant to Article VII
of the Salaried Plan), payable to the Executive Officer as of his or her
Early Retirement Date, after application of the reduction factors as set
forth in Article VI of the Salaried Plan due to the Executive Officer's
election to retire early.
If the calculations made pursuant to this section 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 and as provided hereunder, shall,
except as provided in Section 4.6, 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 or her 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
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. If an
Executive Officer eligible for an Early Retirement supplement under the
terms of this Supplemental Plan terminates employment by reason of death,
his or her 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 or her 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. Upon the
occurrence of any Potential Change in Control of the Company, the Company
shall transfer to the DCB Trust an amount of cash, marketable securities,
or other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB Trust, to pay the Company's obligations under this
Supplemental Plan (the "Funding Amount"). The cash, marketable securities,
and other property so transferred shall be held, managed, and disbursed by
the trustee subject to and in accordance with the terms of the DCB 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 as may be necessary in order to maintain the
Funding Amount with respect to this Supplemental Plan. For purposes of
calculating the amount required to be transferred by the Company to the DCB
Trust, any Executive Officer whose employment has not been previously
terminated shall be deemed to have elected to retire upon the later of the
2nd 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.
Upon a Change in Control of the Company, the assets of the
DCB Trust shall be used to pay benefits under this Plan, except to the
extent the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
ARTICLE V -- DUTIES
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 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 or her 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 or her benefits hereunder, the Executive Officer can request
the Executive Compensation Committee of the Board of Directors to review
his or her case. The request for hearing must be made in writing within
60 days from the date of the Committee's decision. The Executive
Compensation Committee of the Board of Directors shall review said decision
within 4 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 or her 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 or her rights,
the Executive Officer can request the Executive Compensation Committee of
the Board of Directors to review his or her case. The Executive Officer's
request must be made within 60 days of the mailing of the Company's written
decision, and the Executive Compensation Committee of the Board of
Directors will handle the review in the same manner as set forth above with
respect to appeals from Committee 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 or her 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 or her 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, nor shall any
Executive Officer have any right to transfer, assign, encumber, or
otherwise alienate any of the benefits or proceeds which he or she 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.
9
EXHIBIT 10.7
BOISE CASCADE CORPORATION
SUPPLEMENTAL PENSION PLAN
(As Amended Through July 29, 1999)
ARTICLE I
1. PURPOSE OF THE PLAN. It is the policy of Boise Cascade
Corporation to provide retirement benefits to eligible employees in
accordance with the terms and conditions of the Company's retirement plans.
Under certain circumstances the effect of federal and state tax laws may
preclude payment of full benefits to which an employee is otherwise
entitled out of the assets of the Company's retirement plans qualified
under Section 401 of the Internal Revenue Code of 1986 (the "Code"). In
addition, the election of certain employees to voluntarily defer receipt of
otherwise taxable and pensionable compensation may have the effect of
reducing the amount of retirement benefits which such employees would
otherwise be entitled to receive out of the Company's tax-qualified
retirement plans. In order to ensure that employees of the Company receive
the full retirement benefits earned during the course of their employment
with the Company, the Company will provide benefits as described in this
Plan.
ARTICLE II
2. DEFINITIONS.
2.1 "Act" means the Employee Retirement Income Security Act
of 1974 ("ERISA"), as amended from time to time.
2.2 "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
2.3 "Company" means Boise Cascade Corporation and any of
its subsidiaries or affiliated business entities participating in the
Pension Plan.
2.4 "Compensation" means a Participant's compensation as
defined in the Pension Plan, but without regard to any limitations required
by Section 401(a)(17) of the Code, and including amounts voluntarily
deferred at the Participant's election under any of the nonqualified
deferred compensation plans of the Company.
2.5 "Effective Date" means January 1, 1994.
2.6 "Maximum Benefit" means the monthly equivalent of the
maximum benefit permitted by the Code to be paid to a participant in the
Company's Pension Plan, taking into account all limitations required by the
Code in order for the Pension Plan to retain its qualified status under
Section 401 of the Code.
2.7 "Participant" means any employee of the Company who is
an active Participant in the Pension Plan on or after the Effective Date
and whose pension benefits determined on the basis of the provisions of the
Pension Plan, without regard to the limitations of the Code, would exceed
the Maximum Benefits permitted under the Code.
2.8 "Pension Plan" means the Boise Cascade Corporation
Pension Plan for Salaried Employees, as amended from time to time.
2.9 "Plan" means the Boise Cascade Corporation Supplemental
Pension Plan, as amended from time to time, which shall be an unfunded plan
providing benefits for a select group of senior management or highly
compensated employees of the Company.
2.10 "Plan Administrator" means the individual designated by
the Company as the Plan Administrator for purposes of compliance with the
requirements of the Act.
2.11 "Unrestricted Benefit" means the maximum monthly
normal, early, or deferred vested (or disability) retirement benefit,
whichever is applicable, which a Participant has earned, calculated in
accordance with the benefit formula under the Pension Plan and determined
without regard to any limitations imposed by the Code, including but not
limited to limitations under Code Sections 401(a)(17) and 415. The amount
of the Unrestricted Benefit shall be based on a Participant's Compensation
as defined in this Plan.
2.12 All capitalized terms used herein not otherwise defined
shall have the meaning ascribed to such terms under the Pension Plan.
ARTICLE III
3. BENEFITS.
3.1 NORMAL RETIREMENT BENEFIT. Upon the Normal Retirement
of a Participant, as defined in the Pension Plan, a Participant shall be
entitled to a monthly benefit under this Plan equal in amount to his or her
Unrestricted Benefit minus the Maximum Benefit.
3.2 EARLY RETIREMENT BENEFIT. Upon the early retirement of
a Participant as provided under the Pension Plan, such Participant shall be
entitled to a monthly benefit under this Plan equal to his or her
Unrestricted Benefit minus the Maximum Benefit.
3.3 DEFERRED VESTED RETIREMENT BENEFIT. If a Participant
terminates employment with the Company and is entitled to a deferred vested
retirement benefit provided under the Pension Plan, such Participant shall
be entitled to a monthly benefit under this Plan equal to his or her
Unrestricted Benefit minus the Maximum Benefit.
3.4 SPOUSAL PENSION BENEFIT. Subject to Section 3.5 below,
on the death of a Participant whose spouse is eligible for a pre- or post-
retirement surviving spouse benefit under the Pension Plan, the
Participant's surviving spouse shall be entitled to a monthly benefit equal
to the surviving spouse benefit determined in accordance with the
provisions of the Pension Plan without regard to the limitations under the
Code, minus the Maximum Benefit.
3.5 FORMS OF BENEFIT PAYMENT.
(a) If on the date of a Participant's termination
of employment with the Company his or her accrued vested benefit under this
Plan is less than $5,000 in present value (calculated in accordance with
present value determinations under the Pension Plan), such benefit shall be
distributed in a lump sum on or about February 1 of the calendar year
following the year in which termination of employment occurred.
(b) If on the date of a Participant's termination
of employment with the Company his or her accrued vested benefit under this
Plan is equal to or greater than $5,000 in present value (calculated in
accordance with present value determinations under the Pension Plan), such
benefit shall be distributed in a lump sum on or about February 1 of the
calendar year following the year in which termination of employment
occurred, unless the Participant elects a form of benefit payment described
in Subsection (i) or (ii) below:
(i) A Participant described in
paragraph (b) above may elect to have benefits payable under Sections 3.1,
3.2, 3.3, or 3.4 of this Article III paid in such form and at such time as
benefits are paid to the Participant (or beneficiary, if applicable) under
the Pension Plan; or
(ii) A Participant described in paragraph
(b) above may elect to have his or her benefit paid in monthly installments
over a period not to exceed 15 years, commencing no later than the first of
the month following the Participant's 65th birthday. A Participant
electing this form of distribution shall be eligible to have, upon written
request to the Company at any time after payment of benefits has commenced,
the present value of his or her unpaid benefit distributed in a lump sum.
Any such lump sum distribution, less a 10% penalty, shall be paid as soon
as administratively feasible after the Company's receipt of such request.
3.6 TAXES. The Company shall deduct from all payments made
under this Plan all applicable federal or state taxes required by law to be
withheld.
ARTICLE IV
4. PLAN ADMINISTRATION.
4.1 ADMINISTRATOR. The Plan shall be administered by the
Company, acting through its Retirement Committee, which shall have complete
and unrestricted authority to interpret the Plan and issue such
administrative rules and procedures as it deems appropriate, in its sole
discretion. The Plan Administrator shall have the duty and responsibility
of maintaining records, making the requisite calculations, and disbursing
the payments hereunder. The Plan Administrator's interpretations,
determinations, procedures, and calculations shall be final and binding on
all persons and parties concerned.
4.2 AMENDMENT AND TERMINATION. The Company may amend or
terminate the Plan at any time, acting through the Executive Compensation
Committee of the Company's Board of Directors, provided, however, that no
such amendment or termination shall adversely affect a benefit to which a
Participant or his or her beneficiary is entitled under Article III prior
to the effective date of such amendment or termination unless such
Participant or beneficiary becomes entitled to an amount equal to such
benefit under another plan or policy adopted by the Company.
4.3 PAYMENTS. The Company will pay all benefits arising
under this Plan and all costs, charges, and expenses relating hereto.
4.4 NONASSIGNABILITY OF BENEFITS. The benefits payable
hereunder or the right to receive future benefits under the Plan may not be
anticipated, alienated, pledged, encumbered, or subjected to any charge or
legal process, and if any attempt is made to do so, or a person eligible
for any benefit becomes bankrupt, the interest under the Plan of the person
affected may be terminated by the administrator which, in its sole
discretion, may cause the same to be held or applied for the benefit of one
or more of the dependents of such person or make any other disposition of
such benefits that it deems appropriate, in its sole discretion.
4.5 STATUS OF PLAN. The benefits under this Plan shall not
be funded but shall constitute liabilities by the Company payable when due.
4.6 EMPLOYMENT NOT GUARANTEED. This Plan is not intended
to and does not create a contract of employment in any manner. Employment
with the Company is at will, which means that either the employee or the
Company may end the employment relationship at any time and for any reason.
Nothing in this Plan changes or should be construed as changing that at-
will relationship.
4.7 APPLICABLE LAW. All questions pertaining to the
construction, validity, and effect of this Plan shall be determined in
accordance with the laws of the United States and, to the extent not
preempted by such laws, by the laws of the state of Idaho.
4.8 DEFERRED COMPENSATION AND BENEFITS TRUST. Upon a
Potential Change in Control of the Company (as defined in the Company's
Deferred Compensation and Benefits Trust (the "DCB Trust"), the Company
shall calculate using reasonable assumptions, the present value of all
amounts payable under this Plan (the "Funding Amount") and, thereupon,
shall transfer to the trustee of the DCB Trust an amount equal to 105% of
the funding amount in cash or marketable securities, to be held by the
trustee subject to and in accordance with the terms of the DCB Trust. For
purposes of calculating the funding amount, any employee whose employment
has not previously been terminated and who is entitled to benefits
hereunder shall be deemed for this purpose to have terminated his or her
employment with the Company upon the later of the second anniversary of the
Potential Change in Control or the date as of which that calculation is
being made.
Upon a Change in Control of the Company (as defined in
the DCB Trust), the assets of the DCB Trust shall be used to pay benefits
under this Plan, except to the extent the Company pays such benefits. The
Company and any successor shall continue to be liable for the ultimate
payment of those benefits.
4.9 APPEALS PROCEDURE. Claims for benefits under this Plan
shall be subject to determination and review by the Company. If any
Participant disagrees with the Company's determination of benefits
hereunder, the Participant shall have the right to appeal the Company's
determination in accordance with procedures adopted by the Company
applicable to appeals under the Pension Plan.
EXHIBIT 10.8
BOISE CASCADE CORPORATION
1987 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
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 shall be
deemed to have occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities, and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 2.1(c)(i) shall not be deemed to be a Change in Control of the
Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least 2/3rds of the directors then still in office who either
were directors on the date hereof or whose appointment, election, or
nomination for election was previously so approved (the "Continuing
Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from the Company, exceed 20% of
the Company's then outstanding shares of common stock or the combined
voting power of the Company's then outstanding securities, and provided
further that any acquisition of securities by any Person in connection
with a transaction described in Subsection 2.1(c)(i) shall not be deemed
to be a Change in Control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.12,
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.12,
"Person" shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
such term shall not include (i) the Company or any of its subsidiaries,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) 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.
2.2 COMMITTEE. The Executive Compensation Committee of
the Company's Board of Directors or any successor to the Committee.
2.3 COMPENSATION. A Participant's fees for services
rendered by a Participant as a Director 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.
2.4 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.
2.5 DEFERRED COMPENSATION AND BENEFITS TRUST. The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive
payments or benefits hereunder, the assets of which will be subject to
claims of the Company's creditors in the event of bankruptcy or
insolvency.
2.6 DIRECTOR. A member of the Board of Directors of Boise
Cascade Corporation as elected by the shareholders.
2.7 EARLY BENEFIT COMMENCEMENT DATE. The date of a
Participant's Termination as a Director for reasons other than death,
prior to attainment of age 72.
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, 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 2.8 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 on
or after a Participant's 72nd birthday.
2.11 PARTICIPANT. A Director who has entered into a
written Deferred Compensation Agreement with the Company in accordance
with the provisions of the Plan.
2.12 POTENTIAL CHANGE IN CONTROL. A Potential Change in
Control of the Company 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 of the Company; (ii) the Company or any
Person publicly announces an intention to take or to consider taking
actions which if consummated would constitute a Change in Control of the
Company; (iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 9.5% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities, unless
that Person has filed a schedule under Section 13 of the Securities Exchange
Act of 1934 and the rules and regulations promulgated under Section 13, and
that schedule (including any and all amendments) indicates that the Person
has no intention to (a) control or influence the management or policies of
the Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
2.13 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. The Committee shall have
final discretion, responsibility, and authority to administer and
interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management.
Any Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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
4-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 and, 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 any time prior to January 1 of the year
benefits are scheduled to be paid, provided that the request is received
by the Committee 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 Committee. 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 Committee. The lump-sum payment shall be
made within 30 days of the date on which the Committee 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. If a Participant dies before receiving all benefit payments,
all subsequent payments under the Plan shall be made 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 2 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 under this Plan all applicable federal or state taxes required by law
to be withheld.
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 Committee or the Company shall be made in writing and
in such form as the Company shall prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive
Compensation Manager at 1111 West Jefferson Street, P.O. Box 50, Boise,
Idaho 83728-0001.
7. AMENDMENT AND TERMINATION. The Company, acting through the
Board of Directors or any committee of the Board of Directors, may, at its
sole discretion, amend or terminate the Plan at any time, provided that
the amendment or termination shall not adversely affect the vested or
accrued rights or benefits of any Participant without the Participant's
prior consent.
8. UNSECURED GENERAL CREDITOR. Except as provided in Section 9,
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. The 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
an unfunded and unsecured promise of the Company to pay money in the
future.
9. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or
other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB 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 subject to and in accordance with the terms of the DCB 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 as may be necessary in order to maintain the Funding Amount
with respect to this Plan.
Upon a Change in Control of the Company, the assets of the DCB
Trust shall be used to pay benefits under this Plan, except to the extent
the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
EXHIBIT 10.9
BOISE CASCADE CORPORATION
1984 KEY EXECUTIVE STOCK OPTION PLAN
(As Amended Through February 10, 2000)
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 1986,
as amended from time to time.
(c) "Committee" means the Executive Compensation
Committee of the Board of Directors of the Company or any successor to the
Committee.
(d) "Company" means Boise Cascade Corporation, a
Delaware corporation.
(e) "Competitor" means any business, foreign or
domestic, which is engaged, at any time relevant to the provisions of this
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 or any subsidiary,
partnership, or joint venture of the Company. The determination of whether
a business is a Competitor shall be made by the Company's General Counsel,
in his or her sole discretion.
(f) "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.
(g) "Employee" means a key employee (including an
officer of the Company), who is employed by the Company or any subsidiary,
partnership, or joint venture of 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.
(h) "Employment with any Competitor" means
providing significant services as an employee or consultant, or otherwise
rendering services of a significant nature for remuneration, to a
Competitor.
(i) "Executive Officer" means an Employee who has
been duly elected by the Company's board of directors to serve as an
executive officer of the Company in accordance with the Company's Bylaws
but shall not include assistant treasurers or assistant secretaries.
(j) "Fair Market Value" means:
(i) the closing price of the Stock as
reported by the consolidated tape of the New York Stock Exchange on a
particular date; or
(ii) 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
(iii) 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
(iv) 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.
(k) "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.
(l) "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."
(m) "Optionee" means an Employee who has been
granted an Option under this Plan.
(n) "Pension Plan" means the Boise Cascade
Corporation Pension Plan for Salaried Employees, as amended from time to
time.
(o) "Retirement" means an Employee's termination of
employment with the Company (or any subsidiary, partnership, or joint
venture of the Company) for reasons other than death, total disability (as
defined in the Pension Plan), or disciplinary reasons (as that term is used
for purposes of the Company's Corporate Policy 10.2, Termination of
Employment) at any time after the Employee has attained age 55 with 10 or
more years of service (as defined in the Pension Plan).
(p) "Stock" means the common stock, $2.50 par
value, of the Company.
(q) "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.
(r) "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.
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 11,900,000. 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. In no event, however, 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. Furthermore, the aggregate number
of shares of Stock with respect to which Options or Stock Appreciation
Rights may be granted to any one Employee throughout the duration of the
Plan may not exceed 15% of the total number of shares of Stock available
for issuance pursuant to Subsection 4.1 of the Plan.
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 (including an irrevocable commitment in
writing to deliver cash resulting from the sale of Stock subject to an
Option);
(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 or she 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).
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 shares of Stock with respect to which the Option
is to be exercised. Full payment for the Option 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 of exercise and payment of
the exercise price, 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 of
exercise, 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 NOT GUARANTEED BY PLAN. This Plan is not
intended to and does not create a contract of employment in any manner.
Employment with the Company is at will, which means that either the
employee or the Company may end the employment relationship at any time and
for any reason. Nothing in this Plan changes or should be construed as
changing that at-will relationship.
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.
Notwithstanding the foregoing, Options granted to or
held by any Executive Officer may be transferred as a gift (but not sold
for value) by such Executive Officer to any parent, grandparent, child, or
grandchild of such Executive Officer, or to a trust established for the
benefit of any such individual(s). Options so transferred shall continue
to be subject to all terms and conditions described in the applicable Stock
Option agreement, and any such transfer by gift shall be subject to all
applicable rules and regulations of the Internal Revenue Service and
Securities and Exchange Commission.
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. An Optionee, however, 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 have final
discretion, responsibility, and authority to administer and interpret the
Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any Employee
may appeal any action or decision of these employees to the Company's
General Counsel and may request that the Committee reconsider decisions of
the General Counsel. The Committee shall have final discretion,
responsibility, and authority 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. 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 shall be final and binding on the Employees.
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. If, while unexercised Options
remain outstanding hereunder:
(a) Any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 20% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities; and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 13(c)(i)
shall not be deemed to be a change in control of the Company; or
(b) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment, election, or nomination
for election was previously so approved (the "Continuing Directors");or
(c) The consummation of a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities; and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 13(c)(i) shall not be deemed to be a change in
control of the Company; or
(d) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale; then from and after the date on which any such event described in
paragraphs (a) through (d) above occurs (which shall constitute a "change
in control" of the Company), all Options shall be exercisable in full,
whether or not then exercisable under the terms of their grant.
For purposes of this section, "Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
For purposes of this section, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include
(i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) 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.
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.
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. 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 covering the Stock subject
to such Options 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.
EXHIBIT 10.11
Executive officers elected
prior to 12/1/87
BOISE CASCADE CORPORATION
1980 SPLIT-DOLLAR LIFE INSURANCE PLAN
(As Amended Through July 29, 1999)
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
Boise Cascade Corporation ("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 participation 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 insurance 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 payable 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 Subsection 2.4(b).
2.2 ASSIGNMENT. An agreement whereby the Participant, or
his or her 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.
2.3 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.
2.4 CHANGE IN CONTROL. A Change in Control shall be deemed
to have occurred if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.3(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 2.3(c)(i) shall not be deemed to be a Change in
Control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.17,
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.17, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) 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.
2.5 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.6 CORPORATE CAPITAL INTEREST.
(a) During the first 7 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 Subsection 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 8th 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 outstanding, 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.
2.7 DEFERRED COMPENSATION AND BENEFITS TRUST. The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.8 EFFECTIVE DATE. February 26, 1980.
2.9 EMPLOYEE. An individual who receives a Base Salary for
personal services rendered to the Company.
2.10 INSURANCE CARRIER. The life insurance companies
selected to issue policies under or pursuant to the Plan.
2.11 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.
2.12 IRC. Internal Revenue Code of 1986, as amended.
2.13 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.
2.14 PENSION PLAN. The Boise Cascade Corporation Pension
Plan for Salaried Employees, as amended from time to time.
2.15 PLAN. This Boise Cascade Corporation Split-Dollar Life
Insurance Plan.
2.16 PLAN ADMINISTRATOR. The Company's Salaried and
Executive Compensation Manager, P.O. Box 50, Boise, Idaho 83728-0001,
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.
2.17 POTENTIAL CHANGE IN CONTROL. A Potential Change in
Control of the Company 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 of the Company; (ii) the Company or any
Person publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control of the Company;
(iii) any Person becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 9.5% or more of either the then
outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities, unless that Person has
filed a schedule under Section 13 of the Securities Exchange Act of 1934 and
the rules and regulations promulgated under Section 13, and that schedule
(including any and all amendments) indicates that the Person has no
intention to (a) control or influence the management or policies of the
Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company for purposes of this Plan has occurred.
2.18 PREMIUM PAYMENT SCHEDULE. The schedule of Insurance
Policy premiums payable by the Company, as specified on the form attached
hereto.
2.19 RETIREMENT. The termination of employment of a
Participant, for reasons other than death or total disability (as defined
in the Pension Plan), at any time after the Participant has attained age 55
with 10 or more years of service (as defined in the Pension Plan).
2.20 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 Section 2.4.
2.21 TRUSTEE'S PAYMENT SCHEDULE. The schedule of Insurance
Policy premiums payable by the Trustee 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. The Committee shall have final
discretion, responsibility, and authority to administer and interpret the
Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Claims for benefits under the Plan and
appeals of claim denials shall be in accordance with Section 9. Any
interpretation by the Committee shall be final and binding on the
Participants.
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 or she 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 Section 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 Section 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 a multiple
of $10,000, where necessary.
5.2 TIMING OF PURCHASE OF INSURANCE. The right of a
Participant (or his or her 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 Section 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, however, 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 participation 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 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
7 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 7 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 Subsection 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 4 Annual Premiums during the first 7 policy
years, and in no event shall it borrow an amount greater than the sum of
3 years' payments described in Subsection 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 8th policy year, shall repay the Insurance Policy loan previously
made pursuant to Subsection 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; and (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 Subsection 6.2(b)(2), within a 1-year period after a
Potential Change in Control, or at any time after a Change in Control,
except upon the date specified in Section 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) above,
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 Subsection 6.3(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) If 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. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or
other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB 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 subject to and in accordance with the terms of the DCB 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 as may be necessary in order to maintain the Funding Amount
with respect to the Plan.
Upon a Change in Control of the Company, the assets of the DCB
Trust shall be used to pay benefits under this Plan, except to the extent
the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
8.1 TRUSTEE'S RIGHTS AND OBLIGATION. In the event of a
Change in Control or a Potential Change in Control, the trustee for the DCB
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 Subsection 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 shall be required to continue the funding of
the Insurance Policy until the later of (a) the applicable date specified
in Subsections 6.3(a) or 6.3(b), whichever 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 Section 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 PLAN. This Plan is not
intended to and does not create a contract of employment in any manner.
Employment with the Company is at will, which means that either the
employee or the Company may end the employment relationship at any time and
for any reason. Nothing in this Plan changes or should be construed as
changing that at-will relationship.
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 construed 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 Committee or the Company shall be made in writing and in
such form as the Company may prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho 83728-
0001.
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 Subsection 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.
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 Participants, ERISA imposes
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 attorneys' 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.
EXHIBIT 10.12
[As amended through July 29, 1999]
CONFIDENTIAL
(Date)
[ ]
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 the event there is, or is threatened, a change
in control of the Company. In this connection, the Board of Directors of
the Company (the "Board") recognizes that 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 management, including yourself, to their assigned duties without
distraction Company's 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 in the
face of a change in control of the Company and in consideration of your
agreement set forth in Section 2.B 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 prior or
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 amends, supersedes, and
restates in its entirety the Agreement between you and the Company dated
____________. This amendment shall be effective 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.
A. 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 have been terminated in accordance with
Section 3 below. A "change in control of the Company" shall be deemed to
have occurred if the event set forth in any one of the following paragraphs
shall have occurred:
(1) Any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 20% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities; and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2A(3)(i) of
this Agreement shall not be deemed to be a change in control of the
Company; or
(2) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment, election or nomination
for election was previously so approved (the "Continuing Directors"); or
(3) The consummation of a merger or consolidation of the
Company (or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from the Company, exceed 20% of
the Company's then outstanding shares of common stock or the combined
voting power of the Company's then outstanding securities; and provided
further that any acquisition of securities by any Person in connection
with a transaction described in Subsection 2A(3)(i) of this Agreement
shall not be deemed to be a change in control of the Company; or
(4) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, any event or transaction which
would otherwise constitute a change in control of the Company (a
"Transaction") shall not constitute a change in control of the Company for
purposes of your benefits under this Agreement if, in connection with the
Transaction, you participate as an equity investor in the acquiring entity
or any of its affiliates (the "Acquiror"). For purposes of the preceding
sentence, you shall not be deemed to have participated as an equity
investor in the Acquiror by virtue of (a) obtaining beneficial ownership of
any equity interest in the Acquiror as a result of the grant to you of an
incentive compensation award under one or more incentive plans of the
Acquiror (including but not limited to the conversion in connection with
the Transaction of incentive compensation awards of the Company into
incentive compensation awards of the Acquiror), on terms and conditions
substantially equivalent to those applicable to other executives of the
Company immediately prior to the Transaction, after taking into account
normal differences attributable to job responsibilities, title, and the
like; (b) obtaining beneficial ownership of any equity interest in the
Acquiror on terms and conditions substantially equivalent to those obtained
in the Transaction by all other stockholders of the Company; or (c) having
obtained an incidental equity ownership in the Acquiror prior to and not in
anticipation of the Transaction.
B. For purposes of this Agreement, a "potential change in control
of the Company" shall be deemed to have occurred if (1) the Company enters
into an agreement, the consummation of which would result in the occurrence
of a change in control of the Company, (2) the Company or any Person
publicly announces an intention to take or to consider taking actions which
if consummated would constitute a change in control of the Company; (3) any
Person becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 9.5% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of the
Company's then outstanding securities; or (4) the Board 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 until the earlier of (a) the date which is six
months from the occurrence of the first such potential change in control of
the Company, or (b) the date of a change in control of the Company.
C. For purposes of this Agreement, "Beneficial Owner" shall have
the meaning set forth in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
D. For purposes of this Agreement, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include
(1) the Company or any of its subsidiaries, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (4) 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.
3. TERMINATION AND CHANGE IN CONTROL. If (1) any of the events
described in Section 2 hereof constituting a change in control of the
Company shall have occurred and your employment subsequently terminates
during the term of this Agreement or (2) there has occurred a potential
change in control, your employment subsequently terminates during the term
of this Agreement in contemplation of a change in control, and subsequently
an actual change in control of the Company pursuant to Section 2 occurs,
you shall be entitled to the benefits provided in Sections 4 and 5 hereof
unless in either case such termination is because of your death, by the
Company for Cause or Disability, or by you other than for Good Reason.
A. 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."
B. CAUSE. Termination by the Company of your employment for
"Cause" shall mean termination upon (1) 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 (2) 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 (1) or (2) of the first sentence of this Subsection and
specifying the particulars thereof in detail. All decisions by the Company
regarding termination for Cause must be supported by clear and convincing
evidence.
C. 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:
(1) The assignment to you of any duties inconsistent with your
status as an Executive Officer of the Company or an adverse alteration in
the nature or status of your responsibilities from those in effect
immediately prior to a change in control of the Company;
(2) The disposition by the Company of the business of the
Company for which your services are principally provided pursuant to a
partial or complete liquidation of the Company, a sale of assets (including
stock of a subsidiary) of the Company, or otherwise;
(3) 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;
(4) 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 of the Company, except for required travel on the
Company's business to an extent substantially consistent with your business
travel obligations as such existed immediately prior to the change in
control;
(5) The failure by the Company to continue in effect any
compensation plan in which you were participating immediately prior to the
change in control of the Company, including but not limited to your
participation, if any, in the Company's Key Executive Performance Plan for
Executive Officers (the "KEPP"), the 1982, 1986, and 1995 Executive Officer
Deferred Compensation Plans, the 1987 and 1995 Key Executive Deferred
Compensation Plans (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 of
the Company, 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 of the Company; or the failure by the Company to continue
your participation therein on a basis not materially less favorable, both
in terms of the amount of benefits provided and the level of your
participation relative to other participants, as existed immediately prior
to the change in control of the Company;
(6) 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 of the Company;
(7) 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
(8) Any purported termination of your employment which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Subsection D below (and, if applicable, Subsection B above). Furthermore,
no such purported termination of your employment shall be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this
Subsection shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
D. 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.
E. DATE OF TERMINATION, ETC. "Date of Termination" shall mean
(1) 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 (2) if your employment is terminated pursuant to
Subsection B or C above or for any other reason, the date specified in the
Notice of Termination (which, in the case of a termination pursuant to
Subsection B above shall not be less than thirty days, and in the case of a
termination pursuant to Subsection C 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.
A. 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 your employment is terminated pursuant to Section 3.A hereof.
Thereafter, your benefits shall be determined in accordance with the insur-
ance 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.
B. 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.
C. If your employment shall be terminated by the Company or any
subsidiary corporation by which you are employed other than for Cause or
Disability, or by you for Good Reason, then you shall be entitled to the
benefits provided below:
(1) 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 without regard to any reduction in base salary that would constitute
Good Reason, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due;
(2) The Company shall pay to you, not later than the fifth
day following the Date of Termination, a lump sum severance payment equal
to (a) three times the sum of (i) your annual base salary at the rate in
effect at the time Notice of Termination is given without regard to any
reduction in base salary that would constitute Good Reason, plus (ii) your
target bonus payout under the Company's Key Executive Performance Plan for
Executive Officers (the "KEPP") (or any substitute plan) for the year in
which occurs the Date of Termination or change in control of the Company,
whichever is greater, less (b) the dollar amount, if any, which you are
paid upon termination of employment, without regard to the provisions of
this Agreement, under the Company's Severance Pay Policy for Executive
Officers as in effect immediately prior to the Date of Termination;
(3) 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 of the Company or as in effect on Date of
Termination;
(4) 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 (a) 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 (or any substitute plan) allocable to you
in respect of the Plan year preceding that in which the Date of Termination
occurs, and (b) a KEPP award (or award under a substitute plan) for the
year in which the Date of Termination occurs, equal to the greater of
(i) 30% of your base salary for such year (determined without regard to any
reduction in your base salary constituting Good Reason), prorated through
the month in which the Date of Termination occurs, or (ii) the actual KEPP
award (or award under such substitute plan) 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 (or criteria under such substitute plan) in which you are
participating as of the Date of Termination, prorated through the month in
which the Date of Termination occurs; and
(5) 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).
D. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) 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, either (a) 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 of the Company or (b) at your election, such
plans or arrangements in which you were participating immediately prior to
the Date of Termination, 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.
E. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) 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 (a), (b), (c), or (d), whichever is applicable:
(a) 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 of the Company, 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 of the Company, had you
satisfied the age and service requirements as of the Date of Termination;
or
(b) 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 of the Company, 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 of the Company, had you
satisfied the age and service requirements as of the Date of Termination;
or
(c) 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 of the Company, 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 of the Company, had you
satisfied the age and service requirements as of the Date of Termination;
or
(d) 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 of the Company, you shall receive the benefits to
which you are entitled under the Early Retirement Plan.
The benefits under this paragraph E 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 of the
Company.
F. If your employment shall be terminated (1) by the Company or
subsidiary corporation by which you are employed other than for Cause or
Disability or (2) 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.D 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.
A. Notwithstanding any provision hereof to the contrary, in the
event you (1) would receive payments under this Agreement or under any
other plan, program, or policy sponsored by the Company (the "Total
Payments"); and (2) which Total Payments relate to a change in control of
the Company and which are determined by the Company to be subject to excise
tax under Section 4999 of the Code (the "Excise Tax"); then (3) the Company
shall pay to you an additional amount (the "Gross-up Payment") such that
the net amount retained by you, after deduction of any Excise Tax on the
Total Payments and any federal, state and local income and employment
taxes, and Excise Tax upon the Gross-up Payment, shall be equal to the
Total Payments.
B. For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax,
(1) all of the Total Payments shall be treated as "parachute payments"
(within the meaning of Section 280G(b)(2) of the Code) unless, in the
Company's opinion, such payments or benefits (in whole or in part) do not
constitute parachute payments, including by reason of Section 280G(b)(4)(A)
of the Code, and (2) all "excess parachute payments" within the meaning of
Section 280G(b)(1) of the Code shall be treated as subject to the Excise
Tax unless, in the Company's opinion, such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in
excess of the base amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax. For purposes of determining the
amount of the Gross-up Payment, you will be deemed to pay federal income
tax at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-up Payment is to be made and state and local income
taxes at the highest marginal rate of taxation in the state and locality of
your residence on the Date of Termination, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes.
C. The payments provided in Subsection 5(A) shall be made not
later than the fifth day following the Date of Termination; provided,
however, if the amount of such payment cannot be finally determined on or
before such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company of the minimum amount of such
payments to which you are clearly entitled and shall pay the remainder of
such payments (together with interest on the unpaid remainder (or on all
such payments to the extent the Company fails to make such payments when
due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later than the
thirtieth (30th) day after the Date of Termination. In the event that the
amount of the estimated payments exceeds the amount subsequently determined
to have been due, such excess shall constitute a loan by the Company to
you, payable on the fifth (5th) business day after demand by the Company
(together with interest at 120% of the rate provided in
Section 1274(b)(2)(B) of the Code). At the time that payments are made
under this Agreement, the Company shall provide you with a written
statement setting forth the manner in which such payments were calculated
and the basis for such calculations including, without limitation, any
opinions or other advice the Company has received from Tax Counsel, its
auditor, or other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).
D. In the event that the Excise Tax is finally determined to be
less than the amount taken into account hereunder in calculating the Gross-
up Payment, you shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-up Payment attributable to
such reduction (plus that portion of the Gross-up Payment attributable to
the Excise Tax and federal, state, and local income and employment taxes
imposed on the Gross-up Payment being repaid by you, to the extent that
such repayment results in a reduction in the Excise Tax and a dollar-for-
dollar reduction in your taxable income and wages for purposes of federal,
state, and local income and employment taxes) plus interest on the amount
of such repayment at 120% of the rate provided in Section 1274(b)(2)(B) of
the Code. In the event that the Excise Tax is determined, for any reason,
to exceed the amount taken into account hereunder in calculating the Gross-
up Payment, the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest, penalties, or additions payable
by you with respect to such excess and such portion) within five (5)
business days following the time that the amount of such excess is finally
determined. You and the Company shall reasonably cooperate with the other
in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the
Total Payments.
6. DEFERRED COMPENSATION AND BENEFITS TRUST. The Company has
established 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 Sections 4 and 5 hereof, calculated in
accordance with the following rules: (A) 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 or Disability on the second anniversary of the potential change
in control of the Company; and (B) Upon any subsequent recalculation, your
employment will be deemed to have been terminated by the Company other than
for Cause or Disability on the later of the date of actual termination or
the date of such recalculation.
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 shall 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 of the Company, 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 of the Company.
(b) Upon a change in control of the Company, 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 of the Company, 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.
A. 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 Agreement, "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.
B. 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.
C. 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. 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 Sections 4 and 5 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 or an executive officer of the Company.
13. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with Delaware law.
14. 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 ___________________________
J. W. Holleran
Senior Vice President and General Counsel
Agreed to this [ ] day of [ ],
______________________________
[Name of Officer]
Enclosure
EXHIBIT 10.17
Contains 1999/2000 revisions to change-in-control language.
DIRECTORS INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of ___________, 200___, 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 previously 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 marketplace for such insurance, it has become
increasingly more difficult 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 Indemnitee'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 expenses to Indemnitee to the full
extent permitted by law and as set forth in this Agreement and, to the
extent insurance is maintained, 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 agree as
follows:
1. CERTAIN DEFINITIONS:
(a) A CHANGE IN CONTROL: shall be deemed to have occurred
if:
(i) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities, and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 1(a)(iii)(a) shall not be deemed to be a Change in Control of
the Company; or
(ii) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least 2/3rds of the directors then still in office who either
were directors on the date hereof or whose appointment, election, or
nomination for election was previously so approved (the "Continuing
Directors"); or
(iii) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (a) a merger or consolidation which would
result in both (i) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation, and (ii) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (b) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
20% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then outstanding
securities; provided, however, if such Person acquires securities directly
from the Company, such securities shall not be included unless such Person
acquires additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities, and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 1(a)(iii)(a) shall not be deemed to be a Change in Control of
the Company; or
(iv) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, any event or
transaction which would otherwise constitute a Change in Control of the
Company (a "Transaction") shall not constitute a Change in Control of the
Company if, in connection with the Transaction, the Indemnitee
participates as an equity investor in the acquiring entity or any of its
affiliates (the "Acquiror"). For purposes of the preceding sentence, the
Indemnitee shall not be deemed to have participated as an equity investor
in the Acquiror by virtue of (i) obtaining beneficial ownership of any
equity interest in the Acquiror as a result of the grant to the Indemnitee
of an incentive compensation award under one or more incentive plans of
the Acquiror (including but not limited to the conversion in connection
with the Transaction of incentive compensation awards of the Company, if
any, into incentive compensation awards of the Acquiror), on terms and
conditions substantially equivalent to those applicable to other directors
of the Company immediately prior to the Transaction, after taking into
account normal differences attributable to job responsibilities, title,
and the like; (ii) obtaining beneficial ownership of any equity interest
in the Acquiror on terms and conditions substantially equivalent to those
obtained in the Transaction by all other stockholders of the Company; or
(iii) having obtained an incidental equity ownership in the Acquiror prior
to and not in anticipation of the Transaction.
For purposes of this section, "Beneficial Owner" shall
have the meaning set forth in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
For purposes of this section, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities, or (iv) 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.
(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 Indemnitee 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 participating in
(including on appeal) or preparing to defend, be a witness in, or
participate in any Claim relating to any Indemnifiable Event.
(d) INDEMNIFIABLE EVENT: any event or occurrence related
to the fact that Indemnitee is or was a director, employee, 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) A 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 of the Company; (ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company; (iii) any Person
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 9.5% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company's
then outstanding securities, unless that Person has filed a schedule under
Section 13 of the Securities Exchange Act of 1934 and the rules and
regulations promulgated under Section 13, and that schedule (including any
and all amendments) indicates that the Person has no intention to
(a) control or influence the management or policies of the Company, or
(b) take any action inconsistent with a lack of intention to control or
influence the management or policies of the Company; or (iv) the Board
adopts a resolution to the effect that a Potential Change in Control of
the Company 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 permitted 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 Indemnitee 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 2 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 condition 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 Indemnitee 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 condition 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 previously paid; provided, however, 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 determination 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 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 10 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. The 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, penalties, 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 2 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 indemnification 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 competent 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 (including attorneys'
fees) and, if requested by Indemnitee, shall (within 2 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 Indemnifiable Events
and/or (ii) recovery under any directors' liability 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 judgment, order,
settlement (whether with or without court approval), or conviction, or
upon a plea of nolo contendere or its equivalent, 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 Corporation 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 Agreement, it is the intent of the parties that Indemnitee shall
enjoy by this Agreement the greater benefits so afforded by such change.
9. LIABILITY INSURANCE. To the extent the Company maintains 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 Indemnitee, Indemnitee's spouse, heirs,
executors, or personal or legal representatives after the expiration of
2 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 2-year period; provided, however, 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. 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 and their
respective successors, assigns, including any direct or indirect successor
by purchase, merger, consolidation, 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 continue 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.
17. PRIOR AGREEMENTS. This Agreement shall supersede any and all
prior agreements executed by the Company and Indemnitee relating to the
subject matter hereof, and any and all such prior agreements shall be null
and void as of the effective date of this Agreement.
Executed as of the date first written above.
BOISE CASCADE CORPORATION
By ____________________________
Name: George J. Harad
Title: Chairman of the Board &
Chief Executive Officer
INDEMNITEE
_______________________________
[Name]
EXHIBIT 10.18
AMENDMENT NO. 4
This Amendment No. 4 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 13, 1996, is
effective July 29, 1999, and amends the Trust Agreement as follows:
Sections 3.01 and 3.02 of Article III, CHANGE IN CONTROL, are revised to
read:
SECTION 3.01 DEFINITION OF POTENTIAL CHANGE IN CONTROL. For
purposes of this Trust, a "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 of the Company; (ii) the Company or any Person publicly announces
an intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company; iii) any Person
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 9.5% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the Company's
then outstanding securities, unless that Person has filed a schedule under
Section 13 of the Securities Exchange Act of 1934 and the rules and
regulations promulgated under Section 13, and that schedule (including any
and all amendments) indicates that the Person has no intention to
(a) control or influence the management or policies of the Company or
(b) take any action inconsistent with a lack of intention to control or
influence the management or policies of the Company; or (iv) the Board
adopts a resolution to the effect that a Potential Change in Control of
the Company has occurred.
SECTION 3.02 DEFINITION OF CHANGE IN CONTROL. For purposes
of this Trust, a "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 is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 20% or more of
either the then outstanding shares of common stock of the Company or the
combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities; and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 3.02(c)(i) shall not be deemed to be a change in control of the
Company; or
(b) The following individuals cease for any reason to
constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board 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 on the date hereof or whose appointment,
election, or nomination for election was previously so approved (the
"Continuing Directors"); or
(c) The consummation of a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company) with any
other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be
included unless such Person acquires additional securities which, when
added to the securities acquired directly from the Company, exceed 20% of
the Company's then outstanding shares of common stock or the combined
voting power of the Company's then outstanding securities; and provided
further that any acquisition of securities by any Person in connection
with a transaction described in Subsection 3.02(c)(i) shall not be deemed
to be a change in control of the Company; or
(d) The stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or the consummation of
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
In witness whereof, the parties have executed this Amendment No. 4
as of the date first written above.
BOISE CASCADE CORPORATION
By ______________________________
J. W. Holleran
Senior Vice President and
General Counsel
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
By_______________________________
Title____________________________
EXHIBIT 10.19
BOISE CASCADE CORPORATION
DIRECTOR STOCK COMPENSATION PLAN
(As Amended Through July 29, 1999)
1. PLAN ADMINISTRATION AND ELIGIBILITY.
1.1 PURPOSE. The purpose of the Director Stock
Compensation 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. The Executive Compensation Committee
or any successor to the Committee (the "Committee") shall have final
discretion, responsibility, and authority to administer and interpret the
Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
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
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 1/2 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, 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 as reported by the New York Stock Exchange or another
generally accepted pricing standard chosen by the Company, in each case on
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
determining shareholders eligible to receive a dividend to be paid on
Shares.
3.3.3.7 "VALUATION DATE." July 31, or if
Fair Market Value is not available on July 31, the immediately preceding
business day for which Fair Market Value is available.
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 comply 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
6 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 6 months after the Grant Date]. No option shall be exercisable after
expiration of 3 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 purchased 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 NOT TRANSFERABLE. 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 operation 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. Notwithstanding
Section 3.7, if, while unexercised options remain outstanding hereunder:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 3.11(c)(i)
shall not be deemed to be a change in control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 3.11(c)(i) shall not be deemed to be a change in
control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale; then from and after the date on which any such event described in
paragraphs (a) through (d) above occurs (which shall constitute a "change
in control" of the Company), all options previously granted under this Plan
shall be immediately exercisable in full.
For purposes of this section, "Beneficial Owner" shall
have the meaning set forth in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
For purposes of this section, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) 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.
4. GENERAL PROVISIONS.
4.1 EFFECTIVE DATE OF THIS PLAN. This Plan shall be
effective January 1, 1992, subject to approval by the shareholders of the
Company. Options may be granted under this Plan only after shareholder
approval of this Plan. Directors may give written notice pursuant to
Subsection 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. Notwithstanding the foregoing, no
options may be granted pursuant to this Plan on or after the 10th
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 directors 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 6 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,
consolidation, 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 10.20
BOISE CASCADE CORPORATION
DIRECTOR STOCK OPTION PLAN
(As Amended Through December 9, 1999)
1. PLAN ADMINISTRATION AND ELIGIBILITY.
1.1 PURPOSE. The purpose of the Boise Cascade Corporation
(the "Company") Director Stock Option Plan (the "Plan") is to encourage
ownership of the Company's common stock by its nonemployee directors.
1.2 ADMINISTRATION. The Executive Compensation Committee
or any successor to the Committee (the "Committee") shall have final
discretion, responsibility, and authority to administer and interpret the
Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Any interpretation by the Committee
shall be final and binding on the Participants.
1.3 PARTICIPATION IN THE PLAN. Individuals who are
directors of the Company as of each January 1, and who are not employees of
the Company or any of its subsidiaries, are eligible to receive grants of
options in that calendar year in accordance with Section 3.1 of this Plan
("Eligible Directors").
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 200,000
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 Eligible Director on July 31 of each year (or, if
July 31 is not a business day, on the immediately preceding trading day)
(the "Grant Date"). Any nonemployee director first elected as a director
after January 1 but prior to December 31 in any year shall be granted an
option covering the same number of shares as options granted to Eligible
Directors on the Grant Date for that calendar year. The Grant Date for an
option granted to a newly-elected director hereunder shall be the later of
July 31 or the date of such director's election to the Board, and the
Option Price of such option shall be determined as of such Grant Date.
3.2 OPTION PRICE. The purchase price per share for the
Shares covered by each option shall be the closing price for a share of
Common Stock as reported on the composite tape by the New York Stock
Exchange, or another generally accepted pricing standard chosen by the
Company, on the Grant Date (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 2,000. The Board of Directors may increase or decrease this number, not
more frequently than once each year, by action taken at least 6 months
prior to the Grant Date for which such increase or decrease is effective.
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, he or she shall not be
eligible to receive a grant of an option in any year following the year in
which he or she terminates.
3.5 WRITTEN DOCUMENTATION. Each grant of an option under
this Plan shall be evidenced in writing, which shall comply 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. Options may be exercised 12 months
after their Grant Date, provided, however, that options held by a director
shall be immediately exercisable upon 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 6 months
after the Grant Date. No option shall be exercisable after the earlier to
occur of (a) 3 years from the date upon which the option holder terminates
his or her position as a director of the Company or (b) 10 years from the
option's Grant Date.
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, (iii) a loan from the Company, or
(iv) delivery of an irrevocable written notice instructing the Company to
deliver the Shares being purchased to a broker selected by the Company,
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 NOT TRANSFERABLE. Each option granted under
this Plan shall not be transferable by the optionee other 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 operation of law or
otherwise, or be made subject to execution, attachment, or similar process.
Notwithstanding the foregoing, Options granted to or
held by any director may be transferred as a gift (but not sold for value)
by such director to any parent, grandparent, child, or grandchild of such
director, or to a trust established for the benefit of any such
individual(s). Options so transferred shall continue to be subject to all
terms and conditions described in the applicable Stock Option agreement,
and any such transfer by gift shall be subject to all applicable rules and
regulations of the Internal Revenue Service and Securities and Exchange
Commission.
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. Notwithstanding
Section 3.7, if, while unexercised options remain outstanding hereunder:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 3.11(c)(i)
shall not be deemed to be a change in control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 3.11(c)(i) shall not be deemed to be a change in
control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale; then from and after the date on which any such event described in
paragraphs (a) through (d) above occurs (which shall constitute a "change
in control" of the Company), all options previously granted under this Plan
shall be immediately exercisable in full.
For purposes of this section, "Beneficial Owner" shall
have the meaning set forth in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
For purposes of this section, "Person" shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) 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.
4. GENERAL PROVISIONS.
4.1 EFFECTIVE DATE OF THIS PLAN. This Plan shall be
effective December 16, 1994, subject to approval by the shareholders of the
Company. Options may be granted under this Plan only after shareholder
approval of this Plan.
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. Notwithstanding the foregoing, no
options may be granted pursuant to this Plan on or after the
10th anniversary of this Plan's effective date.
4.3 AMENDMENT OF THIS PLAN. The Board of Directors 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 directors eligible to participate in the Plan,
(iii) change the exercise price of the options, or (iv) materially increase
the benefits accruing to participants under or the cost of this Plan to the
Company. Moreover, in no event may Plan provisions be amended more than
once every 6 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 any director
holding options granted under this Plan without his or her consent.
4.4 CHANGES IN SHARES. In the event of any merger,
consolidation, 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. Any options granted under this Plan
prior to effectiveness of a registration statement filed with the
Securities and Exchange Commission covering the Shares to be issued
hereunder 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 10.21
BOISE CASCADE CORPORATION
1995 EXECUTIVE OFFICER DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
1. PURPOSE OF THE PLAN. The purpose of the Boise Cascade
Corporation 1995 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 on behalf of the Company. The Plan is also intended to
provide Participants with an opportunity to supplement their retirement
income through deferral of current compensation. The Plan is an unfunded
plan providing deferred compensation to a select group of senior management
or highly compensated employees of the Company.
2. DEFINITIONS.
2.1 ACCOUNT ACCUMULATION RATE. The rate of imputed
interest which shall be applied to Participants' Deferred Accounts. This
rate shall be equal to Moody's Times 130% during (i) the period of time the
Participant is employed by the Company or any of its subsidiaries, and
(ii) the period following the Participant's Termination of Employment,
provided that at the time of such Termination of Employment the Participant
(i) satisfies the Rule of 70 or (ii) has attained age 55 and has 10 or more
Years of Service. With respect to any time period not included in the
foregoing, the Account Accumulation Rate applicable to a Participant's
Deferred Account shall be equal to Moody's.
2.2 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.3 COMPENSATION. A Participant's salary, commission,
bonus, and other payments for personal services rendered by a Participant
to the Company during a calendar year, determined prior to giving effect to
any deferral election under this Plan or any incentive compensation plan
sponsored by the Company. 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 any savings or 401(k) plan sponsored by
the Company; 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 stock option, stock bonus,
restricted stock, phantom stock or similar long-term incentive plan.
2.4 COMPETITOR. Any business, foreign or domestic, which
is engaged, at any time relevant to the provisions of this 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 or any subsidiary, partnership, or
joint venture of the Company. The determination of whether a business is a
Competitor shall be made by the Company's General Counsel, in his or her
sole discretion.
2.5 DEFERRED ACCOUNT. The record on the Company's books of
the cumulative amount of a Participant's compensation deferred pursuant to
this Plan, including amounts credited to the Participant's account pursuant
to Section 4.3, plus either imputed interest on such deferred amounts
accrued as provided in Section 4.4, or the value of Stock Units credited to
the Participant's account as provided in Section 4.4.
2.6 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.
2.7 DEFERRED COMPENSATION AND BENEFITS TRUST. The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
a. A "Potential Change in Control of the Company"
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 of the Company; (ii) the Company or any Person publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company; (iii) any
Person becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 9.5% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of the
Company's then outstanding securities; unless that Person has filed a
schedule under Section 13 of the Securities Exchange Act of 1934 and the
rules and regulations promulgated under Section 13, and that schedule
(including any and all amendments) indicates that the Person has no
intention to (a) control or influence the management or policies of the
Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
b. A "Change in Control" shall be deemed to have
occurred if:
(i) Any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
20% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then outstanding
securities; provided, however, if such Person acquires securities directly
from the Company, such securities shall not be included unless such Person
acquires additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities, and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 2.7(b)(iii)(a) shall not be deemed to be a Change in Control of
the Company; or
(ii) The following individuals cease for any
reason to constitute at least 66 2/3% of the number of directors then
serving: individuals who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least 2/3rds of the directors then still in office who either
were directors on the date hereof or whose appointment, election, or
nomination for election was previously so approved (the "Continuing
Directors"); or
(iii) The consummation of a merger or
consolidation of the Company (or any direct or indirect subsidiary of the
Company) with any other corporation other than (a) a merger or
consolidation which would result in both (i) continuing directors
continuing to constitute at least 66 2/3% of the number of directors of the
combined entity immediately following consummation of such merger or
consolidation, and (ii) the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 66 2/3%
of the combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities; provided, however, if
such Person acquires securities directly from the Company, such securities
shall not be included unless such Person acquires additional securities
which, when added to the securities acquired directly from the Company,
exceed 20% of the Company's then outstanding shares of common stock or the
combined voting power of the Company's then outstanding securities, and
provided further that any acquisition of securities by any Person in
connection with a transaction described in Subsection 2.7(b)(iii)(a) shall
not be deemed to be a Change in Control of the Company; or
(iv) The stockholders of the Company approve
a plan of complete liquidation or dissolution of the Company or the
consummation of an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section, "Beneficial Owner" shall have the
meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
For purposes of this section, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not include
(i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) 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.
2.8 EXECUTIVE OFFICER. Executive Officers of the Company
required to be identified as such in the Company's Annual Report on
Form 10-K as filed with the Securities and Exchange Commission.
2.9 MOODY'S. An annualized rate of interest equal to
Moody's Composite Average of Yields on Corporate Bonds as determined from
Moody's Bond Record published by Moody's Investor's Service, Inc. (or any
successor thereto), or, if such monthly report is no longer published, a
substantially similar rate determined in a manner determined to be
appropriate by the Company, in its sole discretion. The rate to be applied
for purposes of this Plan shall be based, for any given month, on the
published rate for the immediately preceding calendar month.
2.10 MOODY'S TIMES 130%. An annualized rate of interest equal
to 130% times Moody's Composite Average of Yields on Corporate Bonds as
determined from Moody's Bond Record published by Moody's Investor's
Service, Inc. (or any successor thereto), or, if such monthly report is no
longer published, a substantially similar rate selected by the Company, in
its sole discretion. The rate to be applied for purposes of this Plan
shall be based, for any given month, on such published rate for the
immediately preceding calendar month.
2.11 NORMAL RETIREMENT DATE. The first day of the month on
or after a Participant's 65th birthday.
2.12 PARTICIPANT. An Executive Officer who has entered into
a written Deferred Compensation Agreement with the Company in accordance
with the provisions of the Plan.
2.13 PENSION PLAN. The Boise Cascade Corporation Pension
Plan for Salaried Employees, as amended from time to time.
2.14 RETIREMENT. The termination of employment of a
Participant for reasons other than death, total disability (as defined in
the Pension Plan), or disciplinary reasons (as that term is used for
purposes of Corporate Policy 10.2, Termination of Employment), at any time
after the Participant has attained age 55 with 10 or more Years of Service.
2.15 RULE OF 70. The attainment by a Participant of a
number of Years of Service and age which, when added together, equal or
exceed 70.
2.16 STOCK UNIT. The notional account unit equal in value
to one share of the Company's common stock.
2.17 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, provided that transfer from the
Company to a subsidiary or parent of the Company shall not be deemed a
Termination of Employment for purposes of this Plan.
2.18 YEAR OF SERVICE. A Year of Service as accumulated
under the Pension Plan.
3. ADMINISTRATION AND INTERPRETATION OF THE PLAN. The Committee
shall have final discretion, responsibility, and authority to administer
and interpret the Plan. This includes the discretion and authority to
determine all questions of fact, eligibility, or benefits relating to the
Plan. The Committee may also adopt any rules it deems necessary to
administer the Plan. The Committee's responsibilities for administration
and interpretation of the Plan shall be exercised by Company employees who
have been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Claims for benefits under the Plan and
appeals of claim denials shall be in accordance with Sections 11 and 12.
Any interpretation by the Committee shall be final and binding on the
Participants.
4. PARTICIPANT COMPENSATION DEFERRAL.
4.1 COMPENSATION DEFERRAL. An Executive Officer who wishes
to participate in the Plan during the period from January 1, 1996, through
December 31, 2000, shall execute a written Deferred Compensation Agreement
in substantially the form attached hereto as Exhibit A. The amount of
annual Compensation to be deferred shall be in whole percentage increments
as specified in the 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 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 Committee. A request to
alter the amount of compensation deferred must be submitted by a
Participant in writing to the Committee 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
Committee, 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.
4.3 COMPANY CONTRIBUTION. The Company shall, at the
election of a Participant, contribute to the Participant's Deferred Account
an additional amount equal to 4.2% of the Participant's Compensation, to be
used to provide benefits as specified in the Deferred Compensation
Agreement. If a Participant elects to have such an amount contributed
under the Deferred Compensation Agreement, the Company shall not make any
matching contribution for such Participant under any savings or 401(k) plan
sponsored or participated in by the Company.
4.4 ACCOUNT ELECTIONS.
(a) Each Participant may elect at any time, and
from time to time, to have his or her Deferred Account credited with either
the applicable Account Accumulation Rate or allocated Stock Units, with
such elections effective for deferrals of Compensation earned beginning
with the first pay period immediately following the Committee's receipt of
the Participant's valid written election. However, under no circumstances
may such elections be made more frequently than once in any 4-month period.
If a Participant timely elects to have his or her Deferred Account
credited with Stock Units, then the Participant's Deferred Account shall be
credited with the number of Stock Units (on the date on which the
Compensation would otherwise have been paid to the Participant), equal to
(i) 100% of the amount of such deferred Compensation ("Participant Stock
Units"), plus (ii) 25% of the amount of such deferred Compensation
("Company Matching Stock Units"), with each Stock Unit value based on the
closing price of the Company's common stock on the New York Stock Exchange
("NYSE") on that date (or, if the common stock is not traded on the NYSE on
such date, on the immediately preceding trading day) or another generally
accepted pricing standard chosen by the Company. Each Stock Unit in a
Participant's Deferred Account shall thereafter have a value equal to the
market value of one share of the Company's common stock. Except as
provided in subparagraph (d) and Subsection 5.1(b) hereof, Stock Units must
be held for a minimum of 6 months from the date on which such Stock Units
are first credited to the Participant's account. Stock Units may not be
sold, transferred, assigned, alienated, or pledged by any Participant.
(b) If a Participant elects to receive Stock Units,
then on each dividend payment date for the common stock, additional Stock
Units shall be credited to the Participant's Deferred Account ("Dividend
Equivalent Stock Units"). Dividend Equivalent Stock Units shall (i) be
equal in value to the imputed dividend on each Stock Unit credited to the
Participant's account as of the record date for such dividend; (ii) be
allocated, as appropriate, to either the Participant Stock Units or the
Company Matching Stock Units credited to the Participant's Deferred
Account; and (iii) vest in accordance with the vesting of the underlying
Stock Units to which they are allocated.
(c) A Participant shall be fully vested in his or
her Participant Stock Units, including allocated Dividend Equivalent Stock
Units, at all times. Vesting in Company Matching Stock Units, including
allocated Dividend Equivalent Stock Units, shall be as follows: (i) 100%
upon the Participant's death, total disability, or Retirement; (ii) 100%
upon a Change in Control; (iii) 100% upon the Participant's involuntary
termination (other than a termination for "Disciplinary Reasons" as that
term is used in Corporate Policy 10.2, Termination of Employment) or
termination as a direct result of the sale or permanent closure of a
facility, operating unit, or division of the Company; or (iv) for
termination of employment for all other reasons (including voluntary
terminations), 20% (cumulative) on each anniversary of the date the
Participant's account was first credited with Stock Units under this Plan.
(d) Upon the occurrence of a Potential Change in
Control, shares of Common Stock equal to the number of Stock Units in all
Participants' Deferred Accounts shall be transferred to the Trustee of the
DCB Trust to be held in accordance with the terms of the DCB Trust and this
Plan. Upon a Change in Control, all Stock Units credited to a
Participant's Deferred Account shall be converted to Stock Units of
equivalent value payable in the common stock of the successor entity to the
Company, as follows: if the Change in Control involves the merger or sale
of the entire Company or a tender offer for all the outstanding Common
Stock, conversion shall be at the conversion, sale, or exchange price
applicable to the Common Stock in connection with such Change in Control.
Shares of Common Stock held by the Trustee shall be converted to shares of
common stock of the successor entity (if any) at the same conversion value
as described in this subsection. Following a Change in Control and after
public disclosure of at least 30 days financial results of the consolidated
entity, each Participant may elect, at any time or from time to time, to
convert all or any portion of his or her Stock Unit Account to a dollar
equivalent and have such amount credited thereafter with the applicable
Account Accumulation Rate. If a Participant makes such an election, the
Trustee shall sell, into the open market, shares of stock attributable to
Stock Units in such Participant's Deferred Account as previously acquired
and held pursuant to this subsection, and shall hold, invest, and reinvest
the proceeds of such sale in accordance with the terms of the Deferred
Compensation and Benefits Trust. If the Change in Control does not involve
the merger or sale of the entire Company or a tender offer for all the
outstanding Common Stock, Stock Units shall be converted to a dollar
equivalent at the highest trading price of the Company's Common Stock
during the 20-day period immediately preceding the date of the Change in
Control and credited to the Participants' Interest Account(s).
5. PAYMENT OF DEFERRED AMOUNTS.
5.1 PARTICIPANT ACCOUNT.
(a) The Company shall maintain, for each
Participant, a record of the Participant's deferrals in accordance with
elections made by the Participant as described in Section 4.4. Each
Participant's Deferred Account will be credited with the amount of the
Participant's deferred Compensation, plus the amount of the Company
contribution pursuant to Section 4.3, if any. Each Deferred Account shall
reflect, in accordance with the Participant's election(s), either the
dollar amount of the Participant's deferred Compensation plus the
applicable Account Accumulation Rate ("Interest Account"), or an allocation
of Participant Stock Units equal in value to the deferred Compensation plus
Company Matching Stock Units and Dividend Equivalent Stock Units in
accordance with Section 4.4 ("Stock Unit Account").
(b) If the Participant's Deferred Account is
credited with Stock Units, the Participant shall be paid the value of all
vested Stock Units in his or her Deferred Account in accordance with the
Participant's election under his or her Deferred Compensation Agreement and
in the form of the Company's Common Stock (or, if applicable, in accordance
with Subsection 4.4(d)). Such payment shall be made in accordance with the
Participant's Deferred Compensation Agreement. If a Participant's Deferred
Account is credited with Stock Units and the Participant terminates
employment and is eligible for a distribution but shares of Common Stock
are not then available for distribution, the Company may elect, in its sole
discretion, to delay the distribution until such shares become available.
5.2 PLAN BENEFITS UPON TERMINATION OF EMPLOYMENT
(NONRETIREMENT). Upon Termination of Employment for reasons other than
death or disability prior to satisfying the Rule of 70 or attaining age 55
with 10 or more Years of Service, the Account Accumulation Rate on such
Participant's Deferred Account shall be adjusted, effective as of the Date
of Termination of Employment, to a rate equal to Moody's. Such rate shall
apply prospectively from the Date of Termination to all undistributed
amounts of the Participant's Deferred Account.
If a Participant provides services for remuneration to
a Competitor following Termination of Employment, the Company may, in its
sole discretion, distribute the Participant's account balance in a lump sum
in lieu of any other benefits provided under this Plan. The Company may,
in its discretion, consent to a Participant's rendering services to a
Competitor, and if it does consent, it may place whatever limitations it
considers appropriate on the consent. If the Participant breaches the
terms of the consent, the Company may, in its sole discretion, distribute
the Participant's account in a lump sum.
5.3 PLAN BENEFITS UPON RETIREMENT. Upon Termination of
Employment, for reasons other than disability, after satisfying the Rule
of 70, or attaining age 55 with 10 or more Years of Service, a Participant
shall be paid his or her Deferred Account in a lump sum or in equal monthly
installments calculated to distribute his or her Deferred Account over 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 be credited with imputed interest at the applicable Account
Accumulation Rate. If a Participant does not make an election, his or her
account shall be paid out in monthly installments over 15 years beginning
January 1 of the year following Termination of Employment.
5.4 HARDSHIP DISTRIBUTION. In the event of serious and
unanticipated financial hardship, a Participant may request termination of
his or her participation in the Plan and a lump-sum distribution of all or
a portion of his or her Interest Account balance. The Participant making a
hardship termination and distribution request under this section shall
document, to the Committee's satisfaction, that termination of
participation and distribution of his or her Interest Account is necessary
to satisfy an unanticipated, immediate, and serious financial need, and
that the Participant does not have access to other funds, including
proceeds of any loans, sufficient to satisfy the need. Upon receipt of a
request under this section, the Committee may, in its sole discretion,
terminate the Participant's involvement in the Plan and distribute all or a
portion of the Participant's Interest Account balance in a lump sum, to the
extent such distribution is necessary to satisfy the financial need. The
Participant shall sign all documentation requested by the Committee
relating to any such distribution, and any Participant whose participation
in the Plan terminates under this paragraph may not resume participation
for a minimum of 12 months following the date of any distribution.
5.5 PREMATURE DISTRIBUTION WITH PENALTY. 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 Interest Account or Accounts of the Participant under the Plan. The
amount of the payment shall be equal to (i) the Participant's accumulated
Interest Account balance under the Plan as of the payment date, reduced by
(ii) an amount equal to 10% of that 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 Committee. The
lump-sum payment shall be made within 30 days of the date on which the
Committee 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 this 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.
5.6 DISTRIBUTION UPON EXTRAORDINARY EVENTS. If any
Participant terminates employment with the Company as a direct result of
the sale or divestiture of a facility, operating division, or reduction in
force in connection with any reorganization of the Company's operations or
staff, such Participant may request distribution of his or her entire
Deferred Account balance. Upon receipt of a request for distribution under
this section, the Committee may, in its sole discretion, elect whether to
approve or deny the request. If the Committee approves a request under
this section, distribution of the Participant's account shall occur no
later than January 1 of the year following the year during which such
Termination of Employment occurs.
5.7 SMALL ACCOUNT DISTRIBUTIONS. If a Participant
terminates employment with the Company for any reason and (i) the
Participant's benefit under this Plan is less than $5,000 in lump sum
present value, calculated in accordance with reasonable assumptions, or
(ii) the monthly payment under the benefit payment option selected by the
Participant is less than $75 per month, such Participant may request
distribution of his or her entire Deferred Account balance. Upon receipt
of a request for distribution under this section, the Committee may, in its
sole discretion, elect whether to approve or deny the request. If the
request is approved, the Committee shall close the Participant's account
and distribute the Participant's entire account balance in a single lump
sum. Any distribution under this paragraph shall be made no later than
January 1 of the year following the year in which such Termination of
Employment occurs.
5.8 CHANGE OF ELECTION. A Participant may request a change
in the payout election any time prior to January 1 of the year benefits are
scheduled to be paid, provided that the request is received by the
Committee at least 30 days prior to the first 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 Committee. No
change will be permitted that would allow a payment to be made earlier than
originally elected in the Deferred Compensation Agreement.
5.9 DISTRIBUTIONS FOLLOWING PARTICIPANT DEATH. If a
Participant dies after his or her benefits have commenced and prior to the
distribution of his or her entire Deferred Account, his or her beneficiary
shall receive any benefit payments in accordance with the Deferred
Compensation Agreement. If a Participant dies prior to the commencement of
Plan distributions, the Company shall pay his or her designated beneficiary
or beneficiaries the Participant's Deferred Account balance. Payments
shall be made as specified in the Deferred Compensation Agreement. The
Participant's Interest Account shall be updated with a monthly rate of
interest equal to the Account Accumulation Rate.
5.10 DISABILITY BENEFIT. If a Participant terminates
employment with the Company prior to attaining age 65 due to a disability,
the Participant may apply to the Committee to have his or her account
distributed in monthly installments over a 15-year period commencing on the
first day of the month following the month in which the Committee approves
such request. The Committee may, in its sole discretion, approve or deny
any such request.
5.11 RECIPIENTS OF PAYMENTS; DESIGNATION OF BENEFICIARY.
All payments to be made by the Company shall be made to the Participant, if
living. If a Participant dies before receiving all benefit payments, all
subsequent payments under the Plan shall be made 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 is in effect
when any benefits payable under this Plan 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. This Plan is not
intended to and does not create a contract of employment in any manner.
Employment with the Company is at will, which means that either the
employee or the Company may end the employment relationship at any time and
for any reason. Nothing in this Plan changes or should be construed as
changing that at-will relationship.
6.3 TAXES. The Company shall deduct from all payments made
under this Plan all applicable federal or state taxes required by law to be
withheld.
6.4 CONSTRUCTION. To the extent not preempted by federal
law, 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 Committee or the Company shall be made in writing and in
such form as the Company may prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho
83728-0001.
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 accordance with the Company's Supplemental Pension
Plan.
8. AMENDMENT AND TERMINATION. The Company, acting through its
Board of Directors or any committee of the Board, may, at its sole
discretion, amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
9. UNSECURED GENERAL CREDITOR. Except as provided in Section 10,
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. The 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 an
unfunded and unsecured promise of the Company to pay money in the future.
10. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or other
property acceptable to the trustee equal in value to 105% of the amount
necessary, on an actuarial basis and calculated in accordance with the terms
of the DCB Trust, to pay the Company's obligations with respect to Deferred
Accounts under this Plan (the "Funding Amount"), except as otherwise
provided with respect to Stock Units in Subsection 4.4(d). The cash,
marketable securities, and other property so transferred shall be held,
managed, and disbursed by the trustee subject to and in accordance with the
terms of the DCB 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 as may be necessary in order to
maintain the Funding Amount with respect to this Plan.
Upon a Change in Control of the Company, the assets of the DCB
Trust shall be used to pay benefits under this Plan, except to the extent
the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
11. CLAIMS PROCEDURE. Claims for benefits under the Plan shall be
filed in writing, within 90 days after the event giving rise to a claim,
with the Company's Salaried and Executive Compensation Manager, who shall
have absolute discretion to interpret and apply the Plan, evaluate the
facts and circumstances, and make a determination with respect to such
claim in the name and on behalf of the Committee. Such written notice of a
claim shall include a statement of all facts believed by the Participant to
be relevant to the claim and shall include copies of all documents,
materials, or other evidence that the Participant believes relevant to such
claim. Written notice of the disposition of a claim shall be furnished the
claimant within 90 days after the application is filed. This 90-day period
may be extended an additional 90 days by the Salaried and Executive
Compensation Manager, in his or her sole discretion, by providing written
notice of such extension to the claimant prior to the expiration of the
original 90-day period. 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.
12. 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 a review of his or her denied claim.
Such request, together with a written statement of the claimant's position,
shall be filed no later than 60 days after receipt of the written
notification provided for in the above paragraph, and shall be filed with
the Company's Salaried and Executive Compensation Manager, who shall
promptly inform the Committee. The Committee shall make its decision, in
writing, within 60 days after receipt of the claimant's request for review.
The Committee's written decision shall state the facts and Plan provisions
upon which its decision is based. The Committee's decision shall be final
and binding on all parties. This 60-day period may be extended an
additional 60 days by the Committee, in its discretion, by providing
written notice of such extension to the claimant prior to the expiration of
the original 60-day period.
EXHIBIT 10.22
BOISE CASCADE CORPORATION
1995 BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
(As Amended Through July 29, 1999)
1. PURPOSE OF THE PLAN. The purpose of the Boise Cascade
Corporation 1995 Board of Directors Deferred Compensation Plan (the "Plan")
is to further the growth and development of Boise Cascade Corporation (the
"Company") by providing nonemployee directors of the Company the
opportunity to defer receipt of all or a portion of their cash compensation
and thereby reward and encourage their productive efforts on the Company's
behalf.
2. DEFINITIONS.
2.1 ACCOUNT ACCUMULATION RATE. The rate of imputed
interest which shall be applied to Participants' Deferred Accounts. This
rate shall be equal to Moody's Times 130%.
2.2 COMMITTEE. The Executive Compensation Committee of the
Company's Board of Directors or any successor to the Committee.
2.3 COMPENSATION. A Participant's fees, payable in cash,
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.
2.4 DEFERRED ACCOUNT. The record on the Company's books of
the cumulative amount of (i) a Participant's compensation deferred pursuant
to this Plan, plus (ii) imputed interest on such deferred amounts accrued
as provided in Section 5.1.
2.5 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, from a minimum of $5,000/year to a maximum of 100% of his or her
Compensation, and the Company agrees to make benefit payments in accordance
with the provisions of the Plan.
2.6 DEFERRED COMPENSATION AND BENEFITS TRUST. The
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
a. A "Potential Change in Control of the Company"
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 of the Company; (ii) the Company or any Person publicly
announces an intention to take or to consider taking actions which if
consummated would constitute a Change in Control of the Company; (iii) any
Person becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing 9.5% or more of either the then outstanding
shares of common stock of the Company or the combined voting power of the
Company's then outstanding securities, unless that Person has filed a
schedule under Section 13 of the Securities Exchange Act of 1934 and the
rules and regulations promulgated under Section 13, and that schedule
(including any and all amendments) indicates that the Person has no
intention to (a) control or influence the management or policies of the
Company, or (b) take any action inconsistent with a lack of intention to
control or influence the management or policies of the Company; or (iv) the
Board adopts a resolution to the effect that a Potential Change in Control
of the Company has occurred.
b. A "Change in Control" shall be deemed to have
occurred if:
(i) Any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company representing
20% or more of either the then outstanding shares of common stock of the
Company or the combined voting power of the Company's then outstanding
securities; provided, however, if such Person acquires securities directly
from the Company, such securities shall not be included unless such Person
acquires additional securities which, when added to the securities acquired
directly from the Company, exceed 20% of the Company's then outstanding
shares of common stock or the combined voting power of the Company's then
outstanding securities, and provided further that any acquisition of
securities by any Person in connection with a transaction described in
Subsection 2.6(b)(iii)(a) shall not be deemed to be a Change in Control of
the Company; or
(ii) The following individuals cease for any
reason to constitute at least 66 2/3% of the number of directors then
serving: individuals who, on the date hereof, constitute the Board and any
new director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest, including but
not limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least 2/3rds of the directors then still in office who either
were directors on the date hereof or whose appointment, election, or
nomination for election was previously so approved (the "Continuing
Directors"); or
(iii) The consummation of a merger or
consolidation of the Company (or any direct or indirect subsidiary of the
Company) with any other corporation other than (a) a merger or
consolidation which would result in both (i) continuing directors
continuing to constitute at least 66 2/3% of the number of directors of the
combined entity immediately following consummation of such merger or
consolidation and (ii) the voting securities of the Company outstanding
immediately prior to such merger or consolidation continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 66 2/3%
of the combined voting power of the voting securities of the Company or
such surviving entity or any parent thereof outstanding immediately after
such merger or consolidation, or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined voting
power of the Company's then outstanding securities; provided, however, if
such Person acquires securities directly from the Company, such securities
shall not be included unless such Person acquires additional securities
which, when added to the securities acquired directly from the Company,
exceed 20% of the Company's then outstanding shares of common stock or the
combined voting power of the Company's then outstanding securities, and
provided further that any acquisition of securities by any Person in
connection with a transaction described in Subsection 2.6(b)(iii)(a) shall
not be deemed to be a Change in Control of the Company; or
(iv) The stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or the
consummation of an agreement for the sale or disposition by the Company of
all or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 66 2/3% of the combined voting power of the
voting securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section, "Beneficial Owner"
shall have the meaning set forth in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section, "Person" shall have
the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) 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.
2.7 DIRECTOR. An individual who is not an employee of
Boise Cascade Corporation and who is a member of the Board of Directors of
Boise Cascade Corporation.
2.8 MOODY'S TIMES 130%. An annualized rate of interest
equal to 130% times Moody's Composite Average of Yields on Corporate Bonds
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 rate selected by the Board, in
its sole discretion. The rate to be applied for purposes of this Plan
shall be based, for any given month, on the published rate for the
immediately preceding calendar month.
2.9 PARTICIPANT. A Director who has entered into a written
Deferred Compensation Agreement with the Company in accordance with the
provisions of the Plan.
2.10 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. The Committee shall have
final discretion, responsibility, and authority to administer and interpret
the Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Claims for benefits under the Plan and
appeals of claim denials shall be in accordance with Sections 10 and 11.
Any interpretation by the Committee shall be final and binding on the
Participants.
4. PARTICIPANT COMPENSATION DEFERRAL.
4.1 COMPENSATION DEFERRAL. 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 for the period from January 1, 1996, through December 31, 2000.
The amount deferred shall result in corresponding reductions in the
Compensation payable to a Participant.
4.2 PARTICIPATION. A person who is a Director or becomes a
Director on or subsequent to January 1, 1996, and prior to December 31,
2000, shall be entitled to participate in the Plan until December 31, 2000,
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. Reduction of compensation pursuant to the Deferred Compensation
Agreement shall commence as of the date of such director's election to the
Board of Directors.
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 Committee. A request to
alter the amount of Compensation deferred must be submitted by a
Participant in writing to the Committee 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
Committee, 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, a record of the Participant's deferrals by accumulating
the amount of his or her deferred compensation, and each month the account
shall be updated with a monthly rate of interest equal to the applicable
Account Accumulation Rate.
5.2 BENEFITS. Upon Termination, 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 applicable Account Accumulation Rate. 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 Committee, pursuant to Section 5.3.
5.3 CHANGE OF ELECTION. A Participant may request a change
in the payout election any time prior to January 1 of the year benefits are
scheduled to be paid. The changed payout election must be one of the
payout options in the original Deferred Compensation Agreement. Such
request must be in writing and shall be approved or denied at the sole
discretion of the Committee. 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 Deferred Account balance under the Plan as of the
payment date, reduced by (ii) an amount equal to 10% of such 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 Committee. The lump-sum payment shall be made within
30 days of the date on which the Committee 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 Deferred 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 Participant's Deferred Account
balance. Payments shall be made as specified in the Deferred Compensation
Agreement. The undistributed portion of Participant's account shall be
updated with a monthly rate of interest equal to the applicable Account
Accumulation Rate.
5.6 RECIPIENT OF PAYMENTS; DESIGNATION OF BENEFICIARY. All
payments to be made by the Company shall be made to the Participant, if
living. If a Participant dies before receiving all benefit payments, all
subsequent payments under the Plan shall be made 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 is in effect
when any benefits payable under this Plan become due, the beneficiary shall
be the spouse of the Participant, or if no spouse is then living, 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
under this Plan all applicable federal or state taxes required by law to be
withheld.
6.3 CONSTRUCTION. To the extent not preempted by federal
law, 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 Committee or the Company shall be made in writing and in
such form as the Company shall prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho 83728-
0001.
7. AMENDMENT AND TERMINATION. The Company, acting through its
Board of Directors or any committee of the Board of Directors, may, at its
sole discretion, amend or terminate the Plan at any time, provided that the
amendment or termination shall not adversely affect the vested or accrued
rights or benefits of any Participant without the Participant's prior
consent.
8. UNSECURED GENERAL CREDITOR. Except as provided in Section 9,
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. The 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 an
unfunded and unsecured promise of the Company to pay money in the future.
9. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or
other property acceptable to the trustee equal in value to 105% of the
amount necessary, on an actuarial basis and calculated in accordance with
the terms of the DCB 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 subject to and in accordance with the terms of the DCB 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 as may be necessary in order to maintain the Funding Amount
with respect to this Plan.
Upon a Change in Control, the assets of the DCB Trust shall be
used to pay benefits under this Plan, except to the extent the Company pays
such benefits. The Company and any successor shall continue to be liable
for the ultimate payment of those benefits.
10. CLAIMS PROCEDURE. Claims for benefits under the Plan shall be
filed in writing, within 90 days after the event giving rise to a claim,
with the Company's Salaried and Executive Compensation Manager, who shall
have absolute discretion to interpret and apply the Plan, evaluate the
facts and circumstances, and make a determination with respect to such
claim in the name and on behalf of the Company. Such written notice of a
claim shall include a statement of all facts believed by the Participant to
be relevant to the claim and shall include copies of all documents,
materials, or other evidence that the Participant believes relevant to such
claim. Written notice of the disposition of a claim shall be furnished the
claimant within 90 days after the application is filed. This 90-day period
may be extended an additional 90 days by the Salaried and Executive
Compensation Manager, in his or her sole discretion, by providing written
notice of such extension to the claimant prior to the expiration of the
original 90-day period. 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.
11. 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 a review of his or her denied claim.
Such request, together with a written statement of the claimant's position,
shall be filed no later than 60 days after receipt of the written
notification provided for in the above paragraph, and shall be filed with
the Company's Salaried and Executive Compensation Manager, who shall
promptly inform the Committee. The Committee shall make its decision, in
writing, within 60 days after receipt of the claimant's request for review.
The Committee's written decision shall state the facts and plan provisions
upon which its decision is based. The Committee's decision shall be final
and binding on all parties. This 60-day period may be extended an
additional 60 days by the Committee, in its discretion, by providing
written notice of such extension to the claimant prior to the expiration of
the original 60-day period.
EXHIBIT 10.23
BOISE CASCADE CORPORATION
1995 SPLIT-DOLLAR LIFE INSURANCE PLAN
(As Amended Through July 29, 1999)
1. PURPOSE OF THE PLAN. The purpose of the Boise Cascade
Corporation Split-Dollar Life Insurance Plan (the "Plan") is to provide
executive officers who participate in the Plan with an insured death
benefit during employment and after retirement. Executive officers who
become Participants may purchase a life insurance policy from a designated
insurance carrier. Payment of policy premiums will be shared by Boise
Cascade Corporation ("the Company"), as described herein. Executives who
participate in the Plan shall execute a Split-Dollar Agreement,
substantially in the form attached hereto as Exhibit A, prior to becoming
eligible for any benefits under this Plan.
The Committee shall designate executive officers eligible to
participate in the Plan.
2. DEFINITIONS.
2.1 "ANNUAL PREMIUM" means the amount of consideration
determined by the Insurance Carrier for the cost of coverage provided by
the Plan. The Annual Premium shall have the following two components:
(a) The basic Annual Premium shall be the amount of the Annual Premium for
standard risk life insurance coverage determined by the Insurance Carrier's
published rate schedule; and (b) the extra premium shall be the amount of
the Annual Premium, if any, required for a life insurance risk determined
by the Insurance Carrier to be substandard.
2.2 "ASSIGNMENT OR COLLATERAL ASSIGNMENT" means an
agreement to be signed by each Participant, substantially in the form
attached hereto as Exhibit B, whereby the Participant, as owner of the
Insurance Policy, agrees to set over certain Insurance Policy rights to the
Company as collateral security for the Company's Corporate Capital Interest
under the Plan.
2.3 "BASE SALARY" means the annual Base Salary in effect on
the policy anniversary date preceding the Participant's death if the
Participant dies while an active Employee of the Company.
2.4 A "CHANGE IN CONTROL" shall be deemed to have occurred
if:
(a) Any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 20% or
more of either the then outstanding shares of common stock of the Company
or the combined voting power of the Company's then outstanding securities;
provided, however, if such Person acquires securities directly from the
Company, such securities shall not be included unless such Person acquires
additional securities which, when added to the securities acquired directly
from the Company, exceed 20% of the Company's then outstanding shares of
common stock or the combined voting power of the Company's then outstanding
securities, and provided further that any acquisition of securities by any
Person in connection with a transaction described in Subsection 2.3(c)(i)
shall not be deemed to be a Change in Control of the Company; or
(b) The following individuals cease for any reason
to constitute at least 66 2/3% of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
2/3rds of the directors then still in office who either were directors on
the date hereof or whose appointment, election, or nomination for election
was previously so approved (the "Continuing Directors"); or
(c) The consummation of a merger or consolidation
of the Company (or any direct or indirect subsidiary of the Company) with
any other corporation other than (i) a merger or consolidation which would
result in both (a) continuing directors continuing to constitute at least
66 2/3% of the number of directors of the combined entity immediately
following consummation of such merger or consolidation and (b) the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity or any
parent thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the Company's then
outstanding securities; provided, however, if such Person acquires
securities directly from the Company, such securities shall not be included
unless such Person acquires additional securities which, when added to the
securities acquired directly from the Company, exceed 20% of the Company's
then outstanding shares of common stock or the combined voting power of the
Company's then outstanding securities, and provided further that any
acquisition of securities by any Person in connection with a transaction
described in Subsection 2.3(c)(i) shall not be deemed to be a Change in
Control of the Company; or
(d) The stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or the consummation
of an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or disposition
by the Company of all or substantially all of the Company's assets to an
entity, at least 66 2/3% of the combined voting power of the voting
securities of which are owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to such
sale.
For purposes of this section and Section 2.17,
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
For purposes of this section and Section 2.17, "Person"
shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) 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.
2.5 "CODE" means the Internal Revenue Code of 1986, as
amended.
2.6 "COMMITTEE" means the Executive Compensation Committee
of the Company's Board of Directors or any successor to the Committee.
2.7 "CORPORATE CAPITAL INTEREST" means accumulative amounts
paid by the Company for an Insurance Policy Annual Premium as set forth in
Section 6.1. The Corporate Capital Interest shall be reduced by policy
loans, if any (including interest thereon), made by the Company.
2.8 "DEFERRED COMPENSATION AND BENEFITS TRUST" means the
irrevocable trust (the "DCB Trust") established by the Company with an
independent trustee for the benefit of persons entitled to receive payments
or benefits hereunder, the assets of which will be subject to claims of the
Company's creditors in the event of bankruptcy or insolvency.
2.9 "EFFECTIVE DATE" means April 1, 1995.
2.10 "EMPLOYEE" means an individual who receives a Base
Salary for personal services rendered to the Company.
2.11 "FINAL SALARY" means the Participant's annual Base
Salary on his or her Retirement date.
2.12 "INSURANCE CARRIER" means the life insurance company or
companies selected to issue policies under or pursuant to the Plan.
2.13 "INSURANCE POLICY" means any individually purchased
Insurance Policy, together with additional policy benefits and riders, if
any, 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 for purposes of
this Plan as for purposes of the Insurance Policy.
2.14 "PARTICIPANT" means an executive officer of the Company
who is designated by the Committee as eligible to participate in the Plan
and who has met all the applicable eligibility requirements under the Plan.
2.15 "PENSION PLAN" means the Boise Cascade Corporation
Pension Plan for Salaried Employees, as amended from time to time.
2.16 "PLAN ADMINISTRATOR" means the Committee. The
Committee may delegate day-to-day administrative functions to the Company's
management.
2.17 A "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 of the Company;
(ii) the Company or any Person publicly announces an intention to take or to
consider taking actions which if consummated would constitute a Change in
Control of the Company; (iii) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 9.5% or
more of either the then outstanding shares of common stock of the Company or
the combined voting power of the Company's then outstanding securities,
unless that Person has filed a schedule under Section 13 of the Securities
Exchange Act of 1934 and the rules and regulations promulgated under Section
13, and that schedule (including any and all amendments) indicates that the
Person has no intention to (a) control or influence the management or
policies of the Company, or (b) take any action inconsistent with a lack of
intention to control or influence the management or policies of the Company;
or (iv) the Board adopts a resolution to the effect that a Potential Change
in Control of the Company has occurred.
2.18 "RETIREMENT" means the termination of employment of a
Participant, for reasons other than death or total disability (as defined
in the Pension Plan), at any time after the Participant has attained age 55
with 10 or more years of service (as defined in the Pension Plan), and
5 years of service as an executive officer of the Company.
2.19 "TRUSTEE'S PAYMENT SCHEDULE" means the schedule of
Insurance Policy premiums payable by the trustee 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. The Committee shall have final
discretion, responsibility, and authority to administer and interpret the
Plan. This includes the discretion and authority to determine all
questions of fact, eligibility, or benefits relating to the Plan. The
Committee may also adopt any rules it deems necessary to administer the
Plan. The Committee's responsibilities for administration and
interpretation of the Plan shall be exercised by Company employees who have
been assigned those responsibilities by the Company's management. Any
Company employee exercising responsibilities relating to the Plan in
accordance with this section shall be deemed to have been delegated the
discretionary authority vested in the Committee with respect to those
responsibilities, unless limited in writing by the Committee. Any
Participant may appeal any action or decision of these employees to the
Company's General Counsel and may request that the Committee reconsider
decisions of the General Counsel. Claims for benefits under the Plan and
appeals of claim denials shall be in accordance with Section 9. Any
interpretation by the Committee shall be final and binding on the
Participants.
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.
4.1 ELIGIBILITY TO PARTICIPATE. In order to become a
Participant in the Plan, an individual must meet all of the following
requirements:
(a) Be an executive officer of the Company,
identified by the Committee as eligible to participate in the Plan;
(b) Complete an application for insurance in the
manner set by the Insurance Carrier;
(c) Meet the insurability requirements of the
Insurance Carrier; and
(d) Sign all documents, including the Split-Dollar
Agreement and Assignment, necessary or appropriate in the judgment of the
Committee or Insurance Carrier, to carry out the intent of the Plan.
4.2 ALTERNATE OWNERS. The Plan permits an alternate person
or entity to be the owner of the Insurance Policy. The alternate owner
must sign all documents, including the Split-Dollar Agreement and the
Assignment, necessary or appropriate in the judgment of the Committee or
Insurance Carrier, to carry out the intent of the Plan. The Participant
shall still be the Insured and all the provisions of the Plan shall
continue as if the Participant were the owner of the Insurance Policy.
5. BENEFITS.
5.1 DEATH DURING EMPLOYMENT. If a Participant's death
occurs while employed by the Company, the Participant's beneficiary shall
receive a death benefit equal to 2 times Base Salary.
5.2 POST-RETIREMENT DEATH BENEFIT. A death benefit equal
to 1 times Final Salary shall be payable on behalf of a Participant whose
death occurs subsequent to Participant's Retirement.
5.3 TIMING OF PURCHASE OF INSURANCE. The right of a
Participant to purchase an Insurance Policy under the Plan is granted only
upon the initial adoption of the Plan or, for an Employee who meets the
eligibility requirements under the Plan after adoption of the Plan, the
date of initial eligibility of the Employee under the Plan. The face
amount of the Insurance Policy shall be rounded up to the nearest multiple
of $1,000, where necessary. Since participation under the Plan involves
the purchase of an Insurance Policy which is subject to the Employee's
insurability, the Company does not guarantee that each otherwise eligible
Employee will be able to acquire an Insurance Policy pursuant to this Plan.
5.4 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 the
event that the death benefit from the Insurance Policy exceeds the sum of
the Company's Corporate Capital Interest and the Participant's death
benefit under Sections 5.1 or 5.2, the excess death proceeds shall be paid
to the Participant's beneficiary. Participants shall not be eligible for
any death benefit under the Boise Cascade Group Life Insurance Plan.
5.5 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.
5.6 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 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 by multiplying the amount of life insurance
protection to which the Participant is entitled by the lower of the
government's 1-year term ("PS-58") rates or the Insurance Carrier's
currently published term rates. This amount shall be paid by the Company
on behalf of the Participant and 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 Company.
(1) The difference between the basic Annual
Premium and that portion for which the Participant is responsible pursuant
to Subsection 6.1(a)(1).
(2) Any extra premium in an amount up to
40% of the basic Annual 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. All interest payments as a result of such
borrowing shall be the responsibility of the Company.
6.2 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
Subsection 6.1(b)(2), within a 1-year period after a Potential Change in
Control, or at any time after a Change in Control, except upon the date
specified in Section 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 later of (i) the date of the Participant's
Retirement or (ii) the date 15 Annual Premiums have been paid by the
Company;
(b) The death of a Participant; or
(c) The termination of employment of a Participant
other than by death or Retirement.
In the event of a termination described in (a) above,
the Company will recover its Corporate Capital Interest by Insurance Policy
withdrawal and release its interest in the Insurance Policy. Any such
policy loan shall become the sole obligation of the Participant as owner of
the Policy. The actual death benefit provided by the Insurance Policy may
be greater than or less than the death benefit, described in Section 5,
based on the investment performance of the Insurance Policy. In the event
the Insurance Policy does not ultimately provide the prescribed death
benefit, it is not the intention of the Company to make up any death
benefit shortfall.
In the event of a termination described in (b), the
Company shall recover its Corporate Capital Interest out of the death
proceeds of the Insurance Policy, and the Participant's beneficiary will
receive the balance of the death proceeds. In the event that the Insurance
Policy does not provide the prescribed death benefit, it is not the
intention of the Company to make up any death benefit shortfall.
In the event of a termination described in (c) above,
the Participant may recover or purchase all or any portion of the Company's
Corporate Capital Interest in the Insurance Policy pursuant to terms
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, solely in the Plan Administrator's discretion. The
provisions of Subsection 6.3(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, directly or indirectly, in the Insurance Policy.
From such date, the Participant shall be solely responsible for the payment
of any future premiums.
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 the 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 the Company
shall have no involvement whatsoever, directly or indirectly, in the
Insurance Policy;
(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
Insurance Carrier's policy interest crediting rate and the amount of the
Corporate Capital Interest may vary the death benefits.
8. DEFERRED COMPENSATION AND BENEFITS TRUST. Upon the occurrence
of any Potential Change in Control of the Company, the Company shall
transfer to the DCB Trust an amount of cash, marketable securities, or other
property acceptable to the trustee equal in value to 105% of the amount
necessary, on an actuarial basis and calculated in accordance with the terms
of the DCB 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 subject to
and in accordance with the terms of the DCB 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 as may be
necessary in order to maintain the Funding Amount with respect to this Plan.
Upon a Change in Control of the Company, the assets of the DCB
Trust shall be used to pay the benefits under this Plan, except to the
extent the Company pays such benefits. The Company and any successor shall
continue to be liable for the ultimate payment of those benefits.
8.1 TRUSTEE'S RIGHTS AND OBLIGATION. In the event of a
Change in Control or a Potential Change in Control, the trustee for the DCB
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 Subsection 6.3(c), and the Company shall be required to
participate in the funding of each Insurance Policy until the first of the
events described in Subsections 6.3(a) or 6.3(b) occurs.
8.3 TERMINATION OF FUNDING. In the event of and after a
Change in Control, the trustee shall be required to continue the funding of
the Insurance Policy until the later of (a) the applicable date specified
in Subsections 6.3(a) or 6.3(b), whichever 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 Section 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 PLAN. This Plan is not
intended to and does not create a contract of employment in any manner.
Employment with the Company is at will, which means that either the
employee or the Company may end the employment relationship at any time and
for any reason. Nothing in this Plan changes or should be construed as
changing that at-will relationship.
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, JURISDICTION, AND VENUE. The Plan shall
be construed according to the laws of the state of Idaho to the extent not
preempted by federal law. In the event legal action is brought to enforce
or interpret the Plan, such legal action may be brought only in federal
district court for the District of Idaho in Ada County, 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 Committee or the Company shall be made in writing and in
such form as the Company may prescribe. Such communication shall be
effective upon receipt by the Company's Salaried and Executive Compensation
Manager at 1111 West Jefferson Street, P.O. Box 50, Boise, Idaho 83728-
0001.
10.5 AMENDMENT AND TERMINATION. Except after a Change in
Control, the Committee may, at any time, amend or terminate the Plan. At
any date of termination of the Plan not preceded by a Change in Control, a
Participant shall be entitled to preserve and continue the Insurance Policy
in accordance with Subsection 6.3(c).
10.6 AGENT FOR SERVICE OF PROCESS. The Company's General
Counsel is designated as the agent to receive service of legal process on
behalf of the Plan.
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, all Plan documents at the
Company's headquarters in Boise, Idaho.
(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 Participants, ERISA imposes
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 attorneys' 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.
EXHIBIT 10.24
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN
I. 1999 PAYOUT CRITERIA
PAYOUT AS A PERCENT OF SALARY
FINANCIAL
IMPROVEMENT CEO SVP VP
______________ ______ ______ _____
($163,208,889) 0.0% 0.0% 0.0%
($150,000,000) 1.5% 1.2% 0.9%
$150,000,000 106.5% 83.7% 60.9%
$324,054,000 126.8% 99.7% 72.5%
$324,054,001 138.5% 108.8% 79.2%
$424,054,000 150.2% 118.0% 85.8%
o For Financial Improvement in excess of $424.1 million, the payout
increases proportionally to the increase from $324.1 million to
$424.1 million.
o The payout is interpolated on a straight line for Financial Improvement
not shown in the table.
o Financial Improvement is measured by calculating the company's economic
value added.
Economic Value Added = Net Operating Profit Before Tax - Capital Charge
Net Operating Profit
Before Tax (NOPBT)* = Income from operating assets
+ Imputed interest of capitalized lease obligations
+ Increase (decrease) in LIFO reserve
- Amortization of restructuring losses
* Unusual nonrecurring and nonoperating income or expense items do not
affect NOPBT
Capital Charge = Capital x 16%
Capital** = Operating Capital
+ Imputed capital value of lease obligations
+ Total LIFO reserve account
- Gain from the sale of assets
+ Unamortized restructuring losses
** Nonrecurring and nonoperating losses do not affect Operating Capital.
There may be adjustments to Operating Capital for strategic investments
while they are under construction and up to two additional years subject
to approval by the Executive Compensation Committee of the Board.
II. ALTERNATIVE PAYOUT
An Alternative Payout shall be calculated as follows: the actual percentage
payouts earned for the 1999 plan year under the company's Paper Division
Incentive Plan, Packaging Division Incentive Plan, Timber and Wood Products
Division Incentive Plan, BMDD Incentive Plan, BCOP Incentive Plan, and Trucking
Division Incentive Plan shall be averaged (weighted according to the total
capital of each respective division). This average payout shall then be
multiplied by the ratio each officer's target payout bears to the target payout
of key executives in such plans (e.g., VP ratio = 40/24; SVP ratio = 55/24; CEO
ratio = 70/24) to arrive at the Alternative Payout percentage. The Alternative
Payout may be reduced by the Executive Compensation Committee, in its sole
discretion, to any percentage amount (including zero).
Payout under the Plan will be the greater of (1) payout determined under
criteria based on economic value added or (2) the Alternative Payout.
BOISE CASCADE CORPORATION
KEY EXECUTIVE PERFORMANCE PLAN
I. 2000 PAYOUT CRITERIA
PAYOUT AS A PERCENT OF SALARY
FINANCIAL
IMPROVEMENT CEO SVP VP
___________ ______ ______ ______
($158,806,000) 0.0% 0.0% 0.0%
($150,000,000) 1.0% 0.8% 0.6%
$150,000,000 106.0% 83.3% 60.6%
$216,839,000 113.8% 89.4% 65.0%
$216,839,001 125.5% 98.6% 71.7%
$316,839,000 137.2% 107.8% 78.4%
o For Financial Improvement in excess of $316.8 million, the payout
increases proportionally to the increase from $216.8 million to
$316.8 million.
o The payout is interpolated on a straight line for Financial Improvement
not shown in the table.
o Financial Improvement is measured by calculating the company's economic
value added.
Economic Value Added = Net Operating Profit Before Tax - Capital Charge
Net Operating Profit
Before Tax (NOPBT)* = Income from operating assets
+ Imputed interest of capitalized lease obligations
+ Increase (decrease) in LIFO reserve
- Amortization of restructuring losses
* Unusual nonrecurring and nonoperating income or expense items do not
affect NOPBT
Capital Charge = Capital x 16%
Capital** = Operating Capital
+ Imputed capital value of lease obligations
+ Total LIFO reserve account
- Gain from the sale of assets
+ Unamortized restructuring losses
** Nonrecurring and nonoperating losses do not affect Operating Capital.
There may be adjustments to Operating Capital for strategic investments
while they are under construction and up to two additional years subject
to approval by the Executive Compensation Committee of the Board.
II. ALTERNATIVE PAYOUT
An Alternative Payout shall be calculated as follows: the actual percentage
payouts earned for the 1999 plan year under the company's Paper Division
Incentive Plan, Packaging Division Incentive Plan, Timber and Wood Products
Division Incentive Plan, BMDD Incentive Plan, BCOP Incentive Plan, and Trucking
Division Incentive Plan shall be averaged (weighted according to the total
capital of each respective division). This average payout shall then be
multiplied by the ratio each officer's target payout bears to the target payout
of key executives in such plans (e.g., VP ratio = 40/24; SVP ratio = 55/24; CEO
ratio = 70/24) to arrive at the Alternative Payout percentage. The Alternative
Payout may be reduced by the Executive Compensation Committee, in its sole
discretion, to any percentage amount (including zero).
Payout under the Plan will be the greater of (1) payout determined under
criteria based on economic value added or (2) the Alternative Payout.
EXHIBIT 11
<TABLE>
<CAPTION>
Boise Cascade Corporation
Computation of Per Share Earnings
1999 1998 1997
_________ _________ _________
(expressed in thousands,
except per share amounts)
<S> <C> <C> <C>
Net income (loss) as reported, before cumulative effect of accounting change $ 199,753 $ (25,692) $ (30,410)
Preferred dividends (13,559) (15,578) (31,775)
Excess of Series F Preferred Stock redemption price over carrying value - (3,958) -
_________ __________ _________
Basic income (loss) before cumulative effect of accounting change 186,194 (45,228) (62,185)
Cumulative effect of accounting change - (8,590) -
_________ __________ _________
Basic income (loss) $ 186,194 $ (53,818) $ (62,185)
========= ========== =========
Average shares outstanding used to determine basic income (loss) per common share 56,861 56,307 52,049
========= ========== =========
Net income (loss) per common share
Basic income (loss) before cumulative affect of accounting change $ 3.27 $ (.81) $ (1.19)
Cumulative affect of accounting change - (.15) -
_________ __________ _________
Basic income (loss) per common share (1) $ 3.27 $ (.96) $ (1.19)
========= ========== =========
Basic income (loss) before cumulative effect of accounting change $ 186,194 $ (45,228) $ (62,185)
Preferred dividends eliminated 13,559 14,133 20,965
Supplemental ESOP contribution (11,588) (12,079) (12,114)
_________ __________ _________
Diluted income (loss) before cumulative effect of accounting change 188,165 (43,174) (53,334)
Cumulative effect of accounting change - (8,590) -
_________ __________ _________
Diluted income (loss) $ 188,165 $ (51,764) $ (53,334)
========= ========== =========
Average shares outstanding used to determine basic income (loss) per common share 56,861 56,307 52,049
Stock options and other 419 204 615
Series G Conversion Preferred Stock - - 3,647
Series D Convertible Preferred Stock 4,139 4,396 4,310
_________ __________ _________
Average shares used to determine diluted income (loss) per common share 61,419 60,907 60,621
========= ========== =========
Diluted income (loss) before cumulative effect of accounting change $ 3.06 $ (.71) $ (.88)
Cumulative affect of accounting change - (.14) -
_________ __________ _________
Diluted income (loss) per common share(1) $ 3.06 $ (.85) $ (.88)
========= ========== =========
</TABLE>
(1) Because the computation of diluted loss per common share was
antidilutive, the diluted loss per common share reported for the
years ended December 31, 1998 and 1997 were the same as basic loss
per common share.
EXHIBIT 12.1
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31
__________________________________________________________
1999 1998 1997 1996 1995
_________ _________ _________ _________ _________
(dollar amounts expressed in thousands)
<S> <C> <C> <C> <C> <C>
Interest costs $ 158,980 $ 174,541 $ 153,691 $ 146,234 $ 154,469
Interest capitalized
during the period 238 1,341 10,575 17,778 3,549
Interest factor related to
noncapitalized leases(1) 13,065 11,308 11,931 12,982 8,600
_________ _________ _________ _________ _________
Total fixed charges $ 172,283 $ 187,190 $ 176,197 $ 176,994 $ 166,618
Income (loss) before
income taxes, minority
interest, and cumulative
effect of accounting change $ 355,940 $ (16,878) $ (28,930) $ 31,340 $ 589,410
Undistributed (earnings)
losses of less than 50%
owned persons, net of
distributions received (6,115) 3,791 5,180 (1,290) (36,861)
Total fixed charges 172,283 187,190 176,197 176,994 166,618
Less: Interest capitalized (238) (1,341) (10,575) (17,778) (3,549)
Guarantee of interest
on ESOP debt (12,856) (14,671) (16,341) (17,874) (19,339)
_________ _________ _________ _________ _________
Total earnings before
fixed charges $ 509,014 $ 158,091 $ 125,531 $ 171,392 $ 696,279
Ratio of earnings to
fixed charges 2.95 - - - 4.18
Excess of fixed charges over
earnings before fixed
charges $ - $ 29,099 $ 50,666 $ 5,602 $ -
(1) Interest expense for operating leases with terms of one year or longer is based on an imputed interest rate for each
lease.
</TABLE>
EXHIBIT 12.2
<TABLE>
<CAPTION>
BOISE CASCADE CORPORATION AND SUBSIDIARIES
Ratio of Earnings to Combined Fixed Charges
and Preferred Dividend Requirements
Year Ended December 31
_________________________________________________________
1999 1998 1997 1996 1995
_________ _________ _________ _________ ________
(dollar amounts expressed in thousands)
<S> <C> <C> <C> <C> <C>
Interest costs $ 158,980 $ 174,541 $ 153,691 $ 146,234 $154,469
Interest capitalized during the period 238 1,341 10,575 17,778 3,549
Interest factor related to
noncapitalized leases(a) 13,065 11,308 11,931 12,982 8,600
Preferred stock dividend
requirements - pretax 17,129 19,940 44,686 65,207 59,850
_________ _________ _________ _________ _________
Combined fixed charges and
preferred dividend requirements $ 189,412 $ 207,130 $ 220,883 $ 242,201 $226,468
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting change $ 355,940 $ (16,878) $ (28,930) $ 31,340 $589,410
Undistributed (earnings) losses of
less than 50% owned persons, net of
distributions received (6,115) 3,791 5,180 (1,290) (36,861)
Combined fixed charges and preferred
dividend requirements 189,412 207,130 220,883 242,201 $ 226,468
Less: Interest capitalized (238) (1,341) (10,575) (17,778) (3,549)
Guarantee of interest on ESOP debt (12,856) (14,671) (16,341) (17,874) (19,339)
_________ _________ _________ _________ _________
Total earnings before combined fixed
charges and preferred dividend
requirements $ 526,143 $ 178,031 $ 170,217 $ 236,599 $ 756,129
Ratio of earnings to combined fixed
charges and preferred dividend
requirements 2.78 - - - 3.34
Excess of combined fixed charges and
preferred dividend requirements over
earnings before combined fixed
charges and preferred dividend
requirements $ - $ 29,099 $ 50,666 $ 5,602 $ -
(a) Interest expense for operating leases with terms of one year or longer is based on an
imputed interest rate for each lease.
</TABLE>
EXHIBIT 13.1
FINANCIAL REVIEW
RESULTS OF OPERATIONS
1999 1998 1997
______________ _______________ _______________
Sales $ 7.0 billion $ 6.2 billion $ 5.5 billion
Net income (loss) $199.8 million $ (34.3) million $ (30.4) million
Net income (loss)
per diluted share $3.06 $(.96) $(1.19)
Net income (loss)
before nonroutine
items $148.2 million $ 20.7 million $ (30.4) million
Net income (loss)
per diluted share
before nonroutine
items $2.22 $.09 $(1.19)
(percentage of sales)
Materials, labor, and
other operating
expenses 77.4% 78.7% 80.8%
Selling and
distribution
expenses 10.7% 10.8% 10.1%
General and
administrative
expenses 1.8% 2.4% 2.5%
The 1998 net loss includes a second-quarter pretax charge of $80.9 million
for the closure of four wood products manufacturing facilities and the
revaluation of paper-related assets. It also includes a fourth-quarter
pretax charge of $38.0 million for the elimination of jobs through early
retirements and layoffs in our paper and building products manufacturing
businesses and at our Boise, Idaho, headquarters; the closure of our paper
research and development facility in Portland, Oregon; restructuring of
Boise Cascade Office Products (BCOP) operations in the United Kingdom; and
dissolution of an unprofitable BCOP joint venture in Germany.
In second quarter 1999, we reversed $39.5 million of these 1998
restructuring charges when we decided to continue operations at two of the
four wood products manufacturing facilities and when BCOP's restructuring
in the United Kingdom proved to be less costly than originally anticipated.
In 1999, we reversed $2.7 million of 1998 restructuring charges, primarily
in our paper and paper products segment, to reflect actual experience.
In October 1999, we filed an amended 1998 Form 10-K and amended first and
second quarter 1999 Form 10-Qs following discussions with the Securities
and Exchange Commission(SEC) concerning the timing of charges related to
the early retirement program announced in fourth quarter 1998. These
amendments decreased both the previously reported operating loss in fourth
quarter 1998 and the reported operating income in first quarter 1999 by
$4.4 million pretax.
Additional information on 1999 and 1998 restructuring activities is in the
discussion by segment and the "Financial Condition and Liquidity" sections
of this Financial Review and in Note 8 accompanying the financial
statements.
Net income in 1999 includes a fourth-quarter pretax gain of $47.0 million
from the sale of 56,000 acres of central Washington timberland. Results in
1998 included a $45.0 million pretax gain related to an insurance
settlement for our plywood plant in Medford, Oregon, which was severely
damaged by fire in September 1998.
The nonroutine items discussed above are primarily included in "Other
(income) expense, net" in the Statements of Income (Loss).
The following table shows income (loss) from operations by segment as
reported and adjusted for nonroutine items before taxes and minority
interest.
<TABLE>
Year Ended December 31
___________________________________________________________
1999 1998 1997
__________________ __________________ _________________
Before Before Before
Non- Non- Non-
As routine As routine As routine
Reported Items Reported Items Reported Items
________ ________ ________ _______ ________ _______
(in millions)
<S> <C> <C> <C> <C> <C> <C>
Office products $154.6 $150.6 $121.5 $132.6 $ 119.8 $119.8
Building products 273.8 191.3 57.7 75.9 45.0 45.0
Paper and paper products 117.7 115.4 10.0 47.5 (11.6) (11.6)
Corporate and other (45.4) (41.4) (46.2) (39.1) (44.8) (44.8)
________ _______ ________ _______ ________ _______
Total 500.7 415.9 143.0 216.9 108.4 108.4
Interest expense (144.7) (144.7) (159.9) (159.9) (137.3) (137.3)
________ _______ ________ _______ _______ _______
Consolidated totals $356.0 $271.2 $(16.9) $ 57.0 $ (28.9) $(28.9)
======== ======= ======== ======= ======= =======
</TABLE>
As of January 1, 1998, we adopted the provisions of a new accounting
standard, American Institute of Certified Public Accountants (AICPA)
Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities." This statement required the write-off of previously
capitalized preoperating costs, which resulted in an after-tax charge of
$8.6 million, or 15 cents per diluted share. Earnings per share in 1998
also included a negative 7 cents per diluted share related to the
redemption of our Series F preferred stock.
All of the nonroutine items positively affected 1999 results by
$51.6 million, or 84 cents per diluted share, and negatively affected 1998
results by $55.0 million, or $1.05 per diluted share.
Sales have increased over the last three years, primarily as a result of
growth in our office products and building materials distribution
businesses, which was accomplished principally by increasing sales in
existing operations and completing acquisitions. Additionally, wood
products prices were strong in 1999.
Materials, labor, and other operating expenses as a percent of sales
improved in 1999, primarily because of increased building products sales
prices and reduced wood, fiber, and conversion costs in both our building
products and paper and paper products segments. The improvement in 1998
was primarily due to increased sales prices in our paper and paper products
segment without a corresponding increase in costs and to lower wood costs
in our building products segment. Selling and distribution expense as a
percent of sales was higher in 1999 and 1998 than 1997 because of the
growth in office products and building materials distribution sales, which
have higher associated selling and distribution costs than our
manufacturing businesses. General and administrative expenses decreased as
a percent of sales in 1999 due to our cost-reduction efforts and to
leveraging fixed costs over higher sales.
The following table shows the estimated increase in operating income from
1998 to 1999 as a result of our restructuring activities and other cost-
saving initiatives.
Cash Noncash
____ _______
(in millions)
Office products
Improved operating results over 1998
for restructured European locations $ - $ 4.2
Building products
1998 operating losses for closed locations 6.0 1.0
Cost savings 10.4 -
Paper and paper products
Cost savings 48.5 1.2
Corporate and other
Cost savings 8.9 -
_____ _____
Total $73.8 $ 6.4
===== =====
Interest expense was $144.7 million in 1999, $159.9 million in 1998, and
$137.3 million in 1997. The decrease from 1998 to 1999 was due primarily
to lower debt levels. The increase from 1997 to 1998 was due primarily to
higher debt levels and lower capitalized interest in conjunction with
significant capital additions. Capitalized interest was $0.2 million in
1999, $1.3 million in 1998, and $10.6 million in 1997. The amount of
interest capitalized has decreased significantly since the completion of
the expansion of our pulp and paper mill in Jackson, Alabama, in April
1997.
Our 1999 tax provision rate was 40%. Our 1998 tax benefit rate was 5.7%.
Excluding the nonroutine items described above, the tax provision rate
would have been approximately 46% in 1998. We had a tax benefit rate of
32% in 1997. The changes in our tax rates were due primarily to the
sensitivity of the rate to changing income levels and the mix of income
sources.
OFFICE PRODUCTS DISTRIBUTION
1999 1998 1997
______________ ______________ ______________
Sales $ 3.4 billion $ 3.1 billion $ 2.6 billion
Segment income $154.6 million $121.5 million $119.8 million
Segment income
before nonroutine
items $150.6 million $132.6 million $119.8 million
(percentage of sales)
Gross profit 25.7% 25.7% 25.2%
Operating expenses 21.2% 21.7% 20.6%
Operating expenses
before nonroutine
items 21.3% 21.4% 20.6%
Operating profit 4.6% 4.0% 4.6%
Operating profit before
nonroutine items 4.5% 4.3% 4.6%
BCOP's business strategy includes aggressive sales growth, which has been
accomplished over the last three years by increasing sales in existing
operations and completing acquisitions. Same-location sales grew 8% from
1998 to 1999 and 11% from 1997 to 1998.
BCOP completed two acquisitions in 1999 with annualized sales of
approximately $50 million at the time of announcement, six acquisitions in
1998 with annualized sales of approximately $62 million at the time of
announcement, and eight acquisitions in 1997 with annualized sales of
approximately $340 million at the time of announcement. In 1999, sales of
the businesses acquired during 1998 grew approximately $30 million. In
1998, sales of the businesses acquired during 1997 increased approximately
$189 million. Additional information about BCOP acquisitions is in Note 6
accompanying the financial statements.
In fourth quarter 1998, BCOP began implementing a plan to restructure
operations in the United Kingdom, which involved closing seven small
contract stationer facilities and an administrative office and integrating
selected functions of their U.K. operations. These closures were completed
during the first half of 1999. In December 1998, BCOP also terminated a
joint venture with Otto Versand (Otto) at a cost of about $4.0 million. As
a result of the dissolution of the joint venture, Otto acquired BCOP's 50%
interest in the joint venture, and BCOP purchased Otto's 10% ownership
interest in its French direct-marketing subsidiary, Jean Paul Guisset S.A.
(JPG). BCOP now owns 100% of JPG. As a result of the restructuring and
joint-venture dissolution, BCOP recorded charges of $11.1 million in fourth
quarter 1998.
During second quarter 1999, BCOP revised the amount of the restructuring
reserve for its U.K. operations. The U.K. restructuring program was less
costly than originally anticipated due to lower professional and legal
fees, the sublease of one of the facilities, the decision to retain a small
printing business, and fewer employee terminations. The resulting increase
to operating income of approximately $4.0 million included $0.5 million for
reduced employee-related costs and $3.5 million for other exit costs,
including lower lease costs and lower-than-expected inventory write-downs
of $0.8 million.
In 1999, gross profit as a percent of net sales was flat with that of 1998.
Margins improved for many nonpaper products, primarily as a result of lower
procurement costs, but were negatively affected by lower margins for the
sale of paper. The increase in gross profit as a percent of net sales from
1997 to 1998 was due in part to having a full calendar year of results for
JPG, which has higher gross margins and higher operating expenses than
BCOP's other operations. The 1998 increase was also due to lower
procurement costs and to leveraging fixed occupancy costs over higher sales
volume.
The decrease from 1998 to 1999 in operating expenses, before nonroutine
items, as a percent of sales was due in part to lower operating costs in
Canada as BCOP resolved warehouse integration issues in a new distribution
center, offset in part by increased investment in growth initiatives. The
improvement in results from BCOP's restructuring activity was primarily due
to the elimination of losses from the German joint venture that BCOP
dissolved. The table above shows the estimated increase in 1999 operating
income as a result of our restructuring activities and cost-saving
initiatives.
The increase from 1997 to 1998 in operating expenses, before nonroutine
items, as a percent of sales was due to having a full year of operating
expenses for JPG, higher operating cost structures relative to revenues for
several other European operations, additional costs associated with the
move into a new Toronto warehouse, and costs for customer prospecting as
part of BCOP's entry into Belgium.
Boise Cascade holds 81.1% of BCOP's approximately 65.8 million outstanding
shares of common stock. In December 1999, we announced a proposal to
acquire the minority public shares of BCOP. We believe the reintegration
of BCOP with Boise Cascade would enhance BCOP's operating flexibility and
allow management to concentrate fully on its aggressive internal growth
initiatives.
BUILDING PRODUCTS
1999 1998 1997
_______________ _______________ ______________
Sales $ 2.2 billion $ 1.7 billion $ 1.6 billion
Segment income $ 273.8 million $ 57.7 million $ 45.0 million
Segment income
before nonroutine
items $ 191.3 million $ 75.9 million $ 45.0 million
Sales Volumes
Plywood (1,000 sq. ft.
3/8" basis) 1,529,482 1,815,101 1,836,309
OSB (1,000 sq. ft.
3/8" basis)(1) 373,632 346,803 150,798
Lumber (1,000 board ft.) 517,457 571,731 656,630
LVL (100 cubic ft.) 55,141 38,377 26,814
I-joists (1,000 equivalent
lineal ft.) 135,051 106,445 81,758
Particleboard (1,000 sq. ft.
3/4" basis) 186,860 190,313 195,334
Building materials
distribution
(millions of sales
dollars) $1,273 $ 861 $ 732
Average Net Selling Prices
Plywood (1,000 sq. ft.
3/8" basis) $ 275 $ 239 $ 243
OSB (1,000 sq. ft.
3/8" basis) 197 157 117
Lumber (1,000 board ft.) 522 474 517
LVL (100 cubic ft.) 1,589 1,596 1,595
I-joists (1,000 equivalent
lineal ft.) 1,004 996 1,028
Particleboard (1,000 sq. ft.
3/4" basis) 293 277 283
(1) Includes 100% of the sales of Voyageur Panel, of which we own 47%.
Sales increased from 1998 to 1999, primarily because of growth in building
materials distribution and higher average wood products prices. The
increase in sales in building materials distribution resulted from the
acquisition of Furman Lumber, Inc., a privately held building materials
distributor headquartered in Billerica, Massachusetts; the addition of
another facility in 1999; and increasing sales at existing locations. Unit
sales growth in engineered wood products, partially offset by sales volume
declines in lumber and plywood, also contributed to the increase.
Sales increased from 1997 to 1998, primarily because of growth in building
materials distribution. One facility was added in each year, and sales at
existing locations increased. Sales growth in engineered wood products
also contributed to the increase, partially offset by price declines in
lumber and plywood and a decline in lumber sales volume.
Excluding nonroutine items, improved results from 1998 to 1999 were due to
strong wood products markets. Average plywood and lumber prices were 15%
and 10% higher than in 1998. Significant sales growth in building
materials distribution, an improved product mix, lower wood and conversion
costs, and our restructuring activities all contributed to the improved
results. The table above shows the estimated increase in 1999 operating
income as a result of our restructuring activities and cost-saving
initiatives.
In fourth quarter 1999, we completed the sale of 56,000 acres of central
Washington timberland, resulting in a pretax gain of $47.0 million.
On September 16, 1999, we completed the acquisition of Furman Lumber, Inc.,
for approximately $92.7 million, including cash payments of $90.2 million
and the assumption of $2.5 million of debt. The acquisition of Furman's 12
facilities, which are located in the East, Midwest, and South, has brought
us closer to our goal of achieving national coverage in the building
materials distribution business. Furman had 1999 sales of about
$700 million. Sales of $195.2 million subsequent to our acquisition are
included in our 1999 results of operations. See Note 9 accompanying the
financial statements for additional information about this acquisition.
In May 1999, our plywood plant in Elgin, Oregon, was damaged by fire. The
plant was repaired and began operating at the end of 1999. The loss was
substantially insured, including coverage for business interruption losses.
This fire caused a decrease in plywood sales volume.
In fourth quarter 1998, the building products segment recorded a pretax
charge of $2.8 million, primarily for the elimination of jobs through early
retirements and layoffs.
In September 1998, our plywood plant in Medford, Oregon, was severely
damaged by fire, temporarily reducing our plywood capacity by 20%. The
building products segment realized a $46.5 million pretax gain as the
result of an insurance settlement for the loss. We were also insured for
business interruption losses. We rebuilt a portion of the plant and began
production in September 1999.
Late in second quarter 1998, we adopted a plan to restructure our wood
products manufacturing business by permanently closing sawmills in Elgin,
Oregon; Horseshoe Bend, Idaho; and Fisher, Louisiana; and a plywood plant
in Yakima, Washington. Operating results in 1998 were negatively impacted
by a $61.9 million charge for this restructuring. We closed the sawmills
in Horseshoe Bend and Fisher in 1998. In May 1999, we decided to continue
operations at the Elgin sawmill and Yakima plywood plant because of changes
in wood supply and costs, product prices, improved plant operations, and
the impact of the fire at our Elgin plywood plant. As a result of this
decision, in second quarter 1999, our building products segment reversed
$35.5 million in previously recorded restructuring charges.
The Horseshoe Bend and Fisher facilities had sales of $30,595,000 and
$52,293,000 for the years ended December 31, 1998 and 1997, and operating
losses of $7,015,000 and $698,000 for those years.
Excluding nonroutine items, operating income increased from 1997 to 1998
because of lower wood costs, positive LIFO reserve adjustments arising
primarily from lower log inventory levels, and increased contributions from
our growing engineered wood products and building materials distribution
businesses and our oriented strand board (OSB) joint venture. Decreasing
product prices in 1998 partially offset these favorable variances.
In May 1997, our Voyageur Panel joint venture started up an OSB plant in
Barwick, Ontario, Canada. The plant has the capacity to produce
400 million square feet of OSB panels annually. Boise Cascade holds 47% of
the equity, operates the plant, and markets the product. We account for
the joint venture on the equity method. Accordingly, segment results do
not include the joint venture's sales but do include $6.5 million and
$1.9 million of equity in earnings in 1999 and 1998 and $2.7 million of
equity in losses in 1997 from this joint venture.
PAPER AND PAPER PRODUCTS
<TABLE>
<CAPTION>
1999 1998 1997
_______________ ______________ _______________
<S> <C> <C> <C>
Sales $ 1.7 billion $ 1.8 billion $ 1.6 billion
Segment income (loss) $117.7 million $10.0 million $ (11.6) million
Segment income (loss)
before nonroutine
items $115.4 million $47.5 million $ (11.6) million
Sales Volumes
(thousands of short tons)
Uncoated free sheet 1,426 1,403 1,314
Containerboard 655 624 604
Newsprint 422 431 440
Other 149 129 161
_____ _____ _____
Total 2,652 2,587 2,519
===== ===== =====
Average Net Selling Prices
(per short ton)
Uncoated free sheet $699 $706 $710
Containerboard 335 320 274
Newsprint 414 485 456
</TABLE>
Segment sales were down slightly from 1998 to 1999. Unit sales volume
increased 3%, despite approximately 105,000 tons of market-related
production curtailment. Weighted average prices declined 2%. In 1999,
value-added grades produced on our smaller paper machines accounted for
22%, or 311,000 tons, of our uncoated free sheet sales volume. Value-added
grades generally have higher unit costs than commodities but also higher
net sales prices and profit margins. Overall, the net selling price of the
value-added grades we sold in 1999 was $249 per ton higher than the net
selling price of our commodity grades. Paper segment costs per ton in 1999
were 6% lower than in 1998, due primarily to lower fiber costs and cost-
reduction efforts. Excluding nonroutine items, operating income increased
in 1999 because of a modest increase in unit sales volume and a significant
reduction in costs, offset by slightly lower prices. The table above shows
the estimated increase in 1999 operating income as a result of our
restructuring activities and cost-saving initiatives.
Segment sales increased 9% from 1997 to 1998. Increases in weighted
average product prices and sales volumes contributed to this sales growth.
The sales volume increase in 1998 was due primarily to operating our new
paper machine in Jackson at close to full capacity, offset in part by
taking 84,000 tons of market- and weather-related production curtailments.
In 1998, value-added grades produced on our smaller paper machines
accounted for 21%, or 298,000 tons, of our uncoated free sheet sales
volume. Overall, the net selling price of the 302,000 tons of value-added
grades we sold in 1998 was $257 per ton higher than the net selling price
of our commodity grades. Excluding nonroutine items, operating income
increased in 1998 because of higher average paper prices and a modest
increase in unit sales volume.
In fourth quarter 1998, we recorded a pretax charge of $18.5 million for
restructuring the paper manufacturing business, primarily by eliminating
positions through early retirements and layoffs and the closure of our
paper research and development facility in Portland, Oregon. In 1999, the
segment adjusted these charges to reflect actual experience, which
increased income by $2.3 million.
In second quarter 1998, our paper and paper products segment recorded a
pretax charge related to the revaluation of paper-related assets. Included
in the revaluation were write-downs of $8 million for our investment in a
now-terminated joint venture in China, approximately $5 million for the
fixed assets of a small corrugating facility, and $6 million for an
investment in a joint venture and miscellaneous equipment that had no
future value.
BCOP is the single largest customer of Boise Cascade's paper business.
BCOP purchased 408,000 tons of cut-size office papers produced by Boise
Cascade in 1999, 361,000 tons in 1998, and 319,000 tons in 1997.
We announced in December 1999 that we are reviewing strategic alternatives
for our paper mill in DeRidder, Louisiana, and seven corrugated container
plants. The alternatives could include the sale of all or part of these
assets. If there is a transaction, our intent is to use the capital from
these facilities to expand our growing distribution businesses, reduce
debt, and/or return cash directly to shareholders. The newsprint and
packaging businesses have been an important but increasingly smaller part
of our product mix for many years. Over the past five years, we've focused
our paper business on uncoated free sheet and value-added papers and the
distribution of these grades through BCOP. Reducing or eliminating our
newsprint and containerboard production will enable us to move further in
this strategic direction.
FINANCIAL CONDITION AND LIQUIDITY
Operating Activities. Operations provided $454.6 million in cash in 1999,
$468.7 million in 1998, and $129.0 million in 1997. Improved operating
results provided $523.2 million of cash from net income items in 1999,
offset by $68.6 million of unfavorable changes in working capital items,
primarily receivables. In 1998, net income items provided $379.5 million,
and favorable working capital items added $89.2 million. In 1997, net
income items added $224.7 million, offset by $95.7 million of unfavorable
working capital items, primarily inventories. In September 1998, we sold
fractional ownership interests in a defined pool of trade accounts
receivable. At December 31, 1999, $100,000,000 of the sold accounts
receivable were excluded from receivables on the balance sheet, compared
with the December 31, 1998, balance of $79,000,000. This increase of
$21,000,000 represents cash provided by operations in 1999, compared with
the $79,000,000 of cash provided in 1998. Our working capital ratio was
1.36:1 in 1999, compared with 1.21:1 in 1998.
Investment Activities. Cash used for investment was $327.4 million in
1999, $298.1 million in 1998, and $580.6 million in 1997. Cash
expenditures for property and equipment, timber and timberlands, and
investments in equity affiliates totaled $227.6 million in 1999,
$237.2 million in 1998, and $306.1 million in 1997. The decreasing amounts
are primarily due to reducing our overall level of nonacquisition capital
spending and the completion of the expansion of our Jackson pulp and paper
mill in 1997.
Cash purchases of assets totaled $99.6 million in 1999, $27.3 million in
1998, and $246.9 million in 1997, primarily due to BCOP's expansion program
and the 1999 purchase of Furman Lumber, Inc. Noncash purchases included
acquisition consideration made through the issuance of BCOP common stock,
assumption of debt, and recording of liabilities totaling $9.7 million in
1999, $49.2 million in 1998, and $25.6 million in 1997. Total capital
investment in 1999 was $336.8 million, compared with $313.7 million in 1998
and $578.6 million in 1997. Details of 1999 capital investment by business
are included in the table below.
<TABLE>
<CAPTION>
1999 Capital Investment by Business
Replacement,
Quality/ Timber and Environment
Expansion Efficiency(1) Timberlands and Other Total
_________ ____________ ____________ _____________ _____
(in millions)
<S> <C> <C> <C> <C> <C>
Office products(2) $ 37 $14 $- $ 13 $ 64
Building products (2) 99 28 3 21 151
Paper and paper products 5 24 3 84 116
Corporate and other 1 2 - 3 6
____ ____ ____ ____ ____
Total $142 $68 $6 $121 $337
==== ==== ==== ==== ====
</TABLE>
(1) Quality and efficiency projects include quality improvements,
modernization, energy, and cost-saving projects.
(2) Capital expenditures include the assumption of debt and recording of
liabilities associated with acquisitions.
Capital investment in 2000 is expected to be $350 million to $375 million,
excluding acquisitions, and will be allocated to cost-saving,
modernization, expansion, replacement, maintenance, and environmental and
safety projects. Most of the increase over 1999 is related to
environmental spending that is required to comply with federal government
cluster rules. Excluding those one-time projects, spending in all three
businesses should approximate depreciation in 2000.
In October 1999, we completed the sale of 56,000 acres of timberland in
central Washington. The pretax gain on the sale was $47.0 million, and net
cash proceeds after transaction costs and adjustments for timber harvested
were $50.2 million.
Financing Activities. Cash used for financing was $134.6 million in 1999
and $159.9 million in 1998. Cash provided by financing was $254.3 million
in 1997. Dividend payments totaled $51.1 million in 1999, $55.6 million in
1998, and $70.0 million in 1997. The decrease is due to the redemption of
our Series F preferred stock for $115 million in cash in early 1998 and the
conversion of our Series G preferred stock into 6.9 million shares of
common stock in 1997. In all three years, our quarterly cash dividend was
15 cents per common share. The payment of dividends is dependent on the
existence and amount of net worth in excess of the defined minimum under
our revolving credit agreement.
In 1999, short-term borrowings, primarily notes payable, decreased
$57.7 million, compared with increases of $34.7 million in 1998 and
$58.1 million in 1997. Long-term debt decreased $38.3 million in 1999 and
$17.7 million in 1998 and increased $258.8 million in 1997. The increase
in 1997 was due primarily to our expansion at the Jackson pulp and paper
mill and BCOP's acquisition program.
At December 31, 1999, we had $1.9 billion of debt outstanding, compared
with $2.0 billion at December 31, 1998. Our debt-to-equity ratio was
1.18:1 and 1.41:1 at December 31, 1999 and 1998.
Our debt and debt-to-equity ratio include the guarantee by the company of
the remaining $132.8 million of debt incurred by the trustee of our
leveraged Employee Stock Ownership Plan. 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.
We have a revolving credit agreement with a group of banks that permits us
to borrow as much as $600 million based on customary indices. As of
December 31, 1999, borrowings under the agreement totaled $185 million.
When the agreement expires in June 2002, any amount outstanding will be due
and payable. In October 1998, we entered into an interest rate swap that
expires in October 2000 and results in an effective fixed interest rate
with respect to $75 million of our revolving credit agreement borrowings.
As of December 31, 1999, we were in compliance with our debt covenants, and
our net worth exceeded the defined minimum by $218.1 million.
At December 31, 1999, we had $430 million of borrowing capacity for
additional debt securities registered with the SEC.
In March 1999, we filed a registration statement covering $300 million in
universal shelf capacity with the SEC. Once this registration statement is
refiled and approved, it will allow us to issue debt and/or equity
securities in one or more offerings.
BCOP has a $450 million revolving credit agreement with a group of banks
that expires in June 2001 and provides funds at variable interest rates
based on customary indices. In October 1998, BCOP entered into an interest
rate swap that expires in October 2000 and results in an effective fixed
interest rate with respect to $25 million of BCOP's revolving credit
agreement borrowings. As of December 31, 1999, BCOP had outstanding
borrowings of $190 million under this agreement and was in compliance with
its debt covenants.
In April 1998, BCOP registered $300 million of shelf capacity with the SEC.
In May 1998, BCOP issued $150 million of 7.05% notes under this
registration statement. The notes are due in May 2005. Proceeds from the
issuance were used to repay borrowings under BCOP's revolving credit
agreement. BCOP has $150 million remaining under this registration
statement.
Additional information about our credit agreements and debt is in Note 4
accompanying the financial statements.
In March 2000, we will retire our $100 million 9.9% notes. In February
1999, we redeemed our $100 million 9.875% notes that were due in 2001. In
February 1998, we redeemed 115,000 shares of Series F preferred stock at a
price of $1,000 per preferred share ($25 per depositary share) plus accrued
but unpaid dividends. By July 15, 1997, we had converted or redeemed
8.625 million depositary shares of Series G conversion preferred stock for
6.907 million shares of common stock.
Cash expenditures for the restructuring programs announced in 1998 totaled
approximately $8.8 million in 1998, including $4.2 million for employee-
related costs and $4.6 million for other exit costs, primarily the payment
to dissolve BCOP's German joint venture. The programs required cash
outlays of approximately $11.3 million in 1999 before savings, including
$10.0 million for employee-related costs. These restructuring programs
were cash flow-positive in 1999. Cash requirements related to our
restructuring in 2000 and beyond are not expected to be significant. The
table above shows our cash and noncash savings as a result of our
restructuring activities and cost-saving initiatives.
Our cash requirements going forward, including any potential acquisition of
the approximately 12.4 million BCOP minority shares, will be funded through
a combination of cash flows from operations, borrowings under our existing
credit facilities, issuance of new debt or equity securities, and asset
sales.
We believe inflation has not had a material effect on our financial
condition or results of operations; however, there can be no assurance that
we will not be affected by inflation in the future. Our overall sales are
not subject to significant seasonal variations.
DISCLOSURES OF CERTAIN FINANCIAL MARKET RISKS
Changes in interest rates and currency rates expose the company to
financial market risk. Our debt is predominantly fixed-rate. We
experience only modest changes in interest expense when market interest
rates change. Most foreign currency transactions have been conducted in
local currencies, limiting our exposure to changes in currency rates.
Consequently, our market risk-sensitive instruments do not subject us to
material market risk exposure. Changes in our debt and our continued
international expansion could increase these risks. To manage volatility
relating to these exposures, we may enter into various derivative
transactions, such as interest rate swaps, rate hedge agreements, and
forward exchange contracts. We had no material exposure to losses from
derivative financial instruments held at December 31, 1999. We do not use
derivative financial instruments for trading purposes.
The table below provides information about our derivative financial
instruments and other financial instruments that are sensitive to changes
in interest rates, including interest rate swaps and debt obligations. For
debt obligations, the table presents principal cash flows and related
weighted average interest rates by expected maturity dates. For interest
rate swaps, the table presents notional amounts and weighted average
interest rates by expected maturity dates. Notional amounts are used to
calculate the contractual payments to be exchanged under the contract. For
obligations with variable interest rates, the table sets forth payout
amounts based on current rates and does not attempt to project future
interest rates. We have other instruments that are subject to market risk,
such as obligations for pension plans and other postretirement benefits,
that are not reflected in the table.
<TABLE>
Derivative Financial Instruments
December 31
________________________________________
1999 1998
___________________ ___________________
There- Fair Fair
2000 2001 2002 2003 2004 after Total Value Total Value
_____ _____ _____ _____ _____ ______ ________ ________ ________ ________
(in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Debt
Short-term borrowings $ 71.8 - - - - - $ 71.8 $ 71.8 $ 129.5 $ 129.5
Average interest rates 6.3% - - - - - 6.3% - 6.1% -
Long-term debt
Fixed-rate debt $142.7 $ 93.7 $230.6 $158.1 $74.4 $860.7 $1,560.2 $1,520.7 $1,676.8 $1,701.8
Average interest rates 9.5% 8.0% 8.1% 8.9% 7.6% 7.4% 7.9% - 8.0% -
Variable-rate debt $ .7 $165.6 $110.7 $ .3 - - $ 277.3 $ 277.3 $ 218.6 $ 218.6
Average interest rates 3.7% 6.9% 6.7% 3.7% - - 6.8% - 5.8% -
Interest rate swaps
Notional principle amount of
interest rate exchange
agreements (variable to
fixed) $100.0 - - - - - $ 100.0 $ 1.6 $ 100.0 $ .8
Average pay rate 4.7% - - - - - 4.7% - 4.7% -
Average receive rate 5.4% - - - - - 5.4% - 5.1% -
</TABLE>
TIMBER SUPPLY AND ENVIRONMENTAL ISSUES
In recent years, the amount of timber available for commercial harvest in
the United States has declined due to environmental litigation, changes in
government policy, and other factors. More constraints on available timber
supply may be imposed. As a result, we cannot accurately predict future
log supply. In 1998, we closed sawmills in Fisher, Louisiana, and
Horseshoe Bend, Idaho, in part because of reductions in timber supply and
consequent increases in timber costs. In 1997, we reduced the number of
work shifts at two wood products manufacturing facilities, partly because
of limited log supply. Additional curtailments or closures of our wood
products manufacturing facilities are possible.
With less government-owned timber available than in years past, we meet an
important share of our raw material needs with the 2.3 million acres of
timberland we own or control. During 1999, 50% of our timber needs were
met by private sources, 10% by governmental sources, and 40% by internal
sources. During 1998, these percentages were 50%, 11%, and 39%, and during
1997, they were 54%, 12%, and 34%. Long-term leases generally provide
Boise Cascade with timber harvesting rights and carry with them
responsibility for management of the timberlands. The average remaining
life of all leases and contracts is in excess of 40 years. In addition, we
have an option to purchase approximately 205,000 acres of timberland under
lease and/or contract in the South. We manage our timberlands efficiently
so that they will provide a continuous supply of wood for future needs.
Our Northwest pulp and paper mills receive approximately 62% of their wood
chips from internal sources, including our wood products and whole-log
chipping operations and our cottonwood fiber farm. In 1997, we began
harvesting fast-growing hybrid cottonwood trees at our fiber farm near
Wallula, Washington. Roughly 23% of the pulp used by our Wallula white
paper machine during 1999 was made from this cottonwood fiber.
Boise Cascade's forest management practices embrace the American Forest &
Paper Association's Sustainable Forestry Initiative, a comprehensive system
of principles, objectives, and performance measures that integrate the
sustainable growing and harvesting of trees with protection of wildlife,
plants, soil, and water quality. In late 1999, we introduced a Forest
Stewardship Program that will include third-party audits of our forest
management practices on the 2.3 million acres of timberland we own or
control in the United States. Other features of this program include
establishment of a Forest Stewardship Advisory Council made up of
nationally known conservation experts who will participate with Boise
Cascade forest managers in reviewing audit results and recommending any
changes. Boise Cascade customers will also be invited to accompany audit
teams into the forests to observe their work.
We invest substantial capital to comply with federal, state, and local
environmental laws and regulations. During 1999, expenditures for our
environmental compliance program amounted to $23 million. We expect to
spend approximately $83 million in 2000 for this purpose. Failure to
comply with pollution control standards could result in interruption or
suspension of our operations at affected facilities or could require
additional expenditures. We expect that our operating procedures and
expenditures for ongoing pollution prevention will allow us to continue to
meet applicable environmental standards.
The Environmental Protection Agency (EPA) published rules in 1998 that
further regulate air and water emissions from pulp and paper mills. Our
capital investment to date to comply with these rules has been
approximately $40 million. We estimate that we will spend approximately
$85 million over the next two years to meet the first phase of compliance.
We anticipate that some additional spending will be required beyond 2001 to
comply with rules that must be met by 2006.
These EPA rules set standards for, among other things, the discharge of
chlorinated organics. The company's four white paper mills are already
substituting high levels of chlorine dioxide for elemental chlorine in the
pulp-bleaching process. Chlorine dioxide is a chemical with a name similar
to that of elemental chlorine but with different chemical and physical
properties. All of our mills are working toward complete substitution of
elemental chlorine with chlorine dioxide so that they will be elemental
chlorine-free (ECF) by the end of the first quarter of 2001.
As of December 31, 1999, we had open issues with respect to 34 sites where
we have been notified that we are a "potentially responsible party" under
the Comprehensive Environmental Response, Compensation and Liability Act
(CERCLA) or similar federal and state laws or where we have received a
demand or claim by a private party regarding hazardous substances or other
contaminants. In most cases, Boise Cascade is one of many potentially
responsible parties, and our alleged contribution to these sites is
relatively minor. For sites where a range of potential liability can be
determined, we have established appropriate reserves. We believe we have
minimal or no responsibility with regard to several other sites. We cannot
predict with certainty the total response and remedial costs, our share of
the total costs, the extent to which contributions will be available from
other parties, or the amount of time necessary to complete the cleanups.
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, we do not believe that the known actual
and potential response costs will, in the aggregate, have a material
adverse effect on our financial condition or results of operations.
YEAR 2000 COMPUTER ISSUE
From 1996 to 1999, we replaced many of our business computer systems to
realize cost savings and process improvements. These replacement systems
were year 2000-compliant. Many of the associated costs were deferred and
amortized over the expected life of the software. (See Note 1 in the Notes
to Financial Statements.) Many of our existing systems were already year
2000-compliant, and we modified noncompliant systems before year-end 1999.
Costs to modify noncompliant systems totaled approximately $10 million and
were expensed as they were incurred. Our critical business and
manufacturing systems operated smoothly through the transition from 1999 to
the year 2000, and service to our customers was not interrupted.
NEW ACCOUNTING STANDARDS
New accounting standards are discussed under the caption New Accounting
Standards in Note 1 of the Notes to Financial Statements.
OUTLOOK
We expect our office products distribution business to continue its pattern
of growing sales and income in 2000. Internal growth will come from
accelerating the initiatives we began in 1999 and earlier to broaden our
product offerings to customers and to address new market segments. We will
continue to evaluate acquisitions that fit our strategic and financial
criteria.
The building products segment should also continue to perform well. Our
engineered wood products business should continue to grow at a healthy rate
and make steadily greater contributions to the segment. Our building
materials distribution business will likewise continue to grow, as we fully
absorb and gain the benefits of our acquisition of Furman Lumber, Inc.
However, we don't expect product prices to be as robust in 2000 as they
were in 1999. Although demand should remain relatively strong and
operating rates high, overall performance of the building products segment
may be somewhat lower in 2000 than it was in 1999.
We expect our paper business to post another year of significant
improvement in 2000. Given the competitive cost position our paper
business now enjoys and the progress we have made in pursuing our business
strategies, we believe we are well positioned to capitalize on an improving
business environment for this business. We expect to see a further
tightening of supply and demand, particularly for the grades important to
Boise Cascade. The major economies in Southeast Asia have stabilized, and
conditions are improving. Net imports of uncoated free sheet paper should
flatten during 2000 and then begin to decline over the next few years.
Little new capacity in uncoated free sheet paper is scheduled throughout
the world in 2000 and 2001.
FORWARD-LOOKING STATEMENTS
Our Annual Report to Shareholders, including the preceding outlook, may
contain forward-looking statements as defined by the federal securities
laws. Actual results may differ materially from those expressed in or
implied by the statements. Factors that could cause actual results to
differ include, among other things, our continued ability to execute our
business strategies and achieve cost structure improvements; fluctuations
in production capacity and demand across pulp, paper, and wood products
markets; changes in economic growth in the United States and abroad,
particularly in Asia, and the effect of those changes on imports and
exports of paper and wood products; changes in interest rates, which may
affect the number of housing starts; the pace and success of acquisitions
in our distribution businesses; and other factors included in our filings
with the SEC.
STATEMENTS OF INCOME (LOSS)
Boise Cascade Corporation and Subsidiaries
Year Ended December 31
____________________________________
1999 1998 1997
__________ __________ __________
(expressed in thousands)
Revenues
Sales $6,952,662 $6,162,123 $5,493,820
__________ __________ __________
Costs and expenses
Materials, labor, and other
operating expenses 5,377,932 4,849,678 4,436,650
Depreciation, amortization, and
cost of company timber harvested 288,994 282,737 256,570
Selling and distribution expenses 745,927 666,759 553,240
General and administrative expenses 125,273 150,455 139,060
Other (income) expense, net (77,707) 67,443 710
__________ __________ __________
6,460,419 6,017,072 5,386,230
__________ __________ __________
Equity in net income (loss)
of affiliates 6,115 (3,791) (5,180)
__________ __________ __________
Income from operations 498,358 141,260 102,410
__________ __________ __________
Interest expense (144,740) (159,870) (137,350)
Interest income 2,323 2,274 6,000
Foreign exchange gain (loss) (1) (542) 10
__________ __________ __________
(142,418) (158,138) (131,340)
__________ __________ __________
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting change 355,940 (16,878) (28,930)
Income tax (provision) benefit (142,376) 959 9,260
__________ __________ __________
Income (loss) before minority
interest and cumulative effect
of accounting change 213,564 (15,919) (19,670)
Minority interest, net of
income tax (13,811) (9,773) (10,740)
__________ __________ __________
Income (loss) before cumulative
effect of accounting change 199,753 (25,692) (30,410)
Cumulative effect of accounting
change, net of income tax - (8,590) -
__________ __________ __________
Net income (loss) $ 199,753 $ (34,282) $ (30,410)
========== ========== ==========
Net income (loss) per common share
Basic before cumulative effect
of accounting change $ 3.27 $ (.81) $ (1.19)
Cumulative effect of accounting
change - (.15) -
__________ __________ __________
Basic $ 3.27 $ (.96) $ (1.19)
========== ========== ==========
Diluted before cumulative effect
of accounting change $ 3.06 $ (.81) $ (1.19)
Cumulative effect of accounting
change - (.15) -
__________ _________ __________
Diluted $ 3.06 $ (.96) $ (1.19)
========== ========= ==========
The accompanying notes are an integral part of these Financial Statements.
BALANCE SHEETS
Boise Cascade Corporation and Subsidiaries
December 31
___________________________
Assets 1999 1998
__________ __________
(expressed in thousands)
Current
Cash $ 57,720 $ 66,469
Cash equivalents 9,215 7,899
__________ __________
66,935 74,368
Receivables, less allowances
of $11,289,000 and $10,933,000 663,609 526,359
Inventories 703,984 625,218
Deferred income tax benefits 53,148 92,426
Other 43,432 50,035
__________ __________
1,531,108 1,368,406
__________ __________
Property
Property and equipment
Land and land improvements 70,441 63,307
Buildings and improvements 613,729 575,509
Machinery and equipment 4,300,250 4,082,724
__________ __________
4,984,420 4,721,540
Accumulated depreciation (2,427,415) (2,150,385)
__________ __________
2,557,005 2,571,155
Timber, timberlands, and
timber deposits 294,663 270,570
__________ __________
2,851,668 2,841,725
__________ __________
Goodwill, net of amortization
of $52,506,000 and $37,327,000 488,339 501,691
Investments in equity affiliates 37,418 27,162
Other assets 229,881 232,115
__________ __________
Total assets $5,138,414 $4,971,099
========== ==========
Liabilities and Shareholders' Equity
Current
Short-term borrowings $ 71,800 $ 129,512
Current portion of long-term debt 118,168 161,473
Income taxes payable 19,998 -
Accounts payable 589,278 499,489
Accrued liabilities
Compensation and benefits 148,035 130,480
Interest payable 29,606 36,166
Other 147,794 172,980
__________ __________
1,124,679 1,130,100
__________ __________
Debt
Long-term debt, less current portion 1,584,528 1,578,136
Guarantee of ESOP debt 132,809 155,731
__________ __________
1,717,337 1,733,867
__________ __________
Other
Deferred income taxes 311,346 257,360
Other long-term liabilities 239,940 301,920
__________ __________
551,286 559,280
__________ __________
Minority interest 130,999 116,753
__________ __________
Commitments and contingent liabilities
Shareholders' equity
Preferred stock - no par value;
10,000,000 shares authorized;
Series D ESOP: $.01 stated value;
4,982,209 and 5,356,648 shares
outstanding 224,199 241,049
Deferred ESOP benefit (132,809) (155,731)
Common stock - $2.50 par value;
200,000,000 shares authorized;
57,157,558 and 56,338,426 shares
outstanding 142,894 140,846
Additional paid-in capital 449,040 420,890
Retained earnings 942,702 791,618
Accumulated other comprehensive
income (loss) (11,913) (7,573)
__________ __________
Total shareholders' equity 1,614,113 1,431,099
__________ __________
Total liabilities and shareholders'
equity $5,138,414 $4,971,099
========== ==========
Shareholders' equity per common share $26.64 $23.89
========== ==========
The accompanying notes are an integral part of these Financial Statements.
STATEMENTS OF CASH FLOWS
Boise Cascade Corporation and Subsidiaries
Year Ended December 31
________________________________
1999 1998 1997
_________ _________ _________
(expressed in thousands)
Cash provided by (used for) operations
Net income (loss) $ 199,753 $(34,282) $(30,410)
Cumulative effect of accounting
change, net of income tax - 8,590 -
Items in income (loss) not using
(providing) cash
Equity in net (income) loss
of affiliates (6,115) 3,791 5,180
Depreciation, amortization, and
cost of company timber harvested 288,994 282,737 256,570
Deferred income tax provision
(benefit) 111,577 (9,330) (18,593)
Minority interest, net of
income tax 13,811 9,773 10,740
Restructuring activity (37,815) 118,882 -
Other 1 (654) 1,265
Gain on sale of assets (46,981) - -
Receivables (93,493) 44,331 (12,291)
Inventories (26,772) 11,030 (66,060)
Accounts payable and accrued
liabilities 30,107 48,029 (10,523)
Current and deferred income taxes 13,300 (5,480) 2,735
Other 8,232 (8,676) (9,577)
_________ _________ _________
Cash provided by operations 454,599 468,741 129,036
_________ _________ _________
Cash provided by (used for) investment
Expenditures for property and
equipment (221,206) (229,305) (279,557)
Expenditures for timber and
timberlands (6,300) (7,420) (6,232)
Investments in equity affiliates, net (80) (429) (20,276)
Purchases of assets (99,591) (27,282) (246,861)
Sale of assets 50,212 - -
Other (50,426) (33,672) (27,687)
_________ _________ _________
Cash used for investment (327,391) (298,108) (580,613)
_________ _________ _________
Cash provided by (used for) financing
Cash dividends paid
Common stock (34,008) (33,775) (30,176)
Preferred stock (17,129) (21,866) (39,808)
_________ _________ _________
(51,137) (55,641) (69,984)
Short-term borrowings (57,712) 34,712 58,100
Additions to long-term debt 134,426 170,122 417,989
Payments of long-term debt (172,730) (187,823) (159,201)
Series F Preferred Stock redemption - (115,001) -
Other 12,512 (6,220) 7,408
_________ _________ _________
Cash provided by (used for)
financing (134,641) (159,851) 254,312
_________ _________ _________
Increase (decrease) in cash and
cash equivalents (7,433) 10,782 (197,265)
Balance at beginning of the year 74,368 63,586 260,851
_________ _________ _________
Balance at end of the year $ 66,935 $ 74,368 $ 63,586
========= ========= =========
The accompanying notes are an integral part of these Financial Statements.
<TABLE>
<CAPTION>
STATEMENTS OF SHAREHOLDERS' EQUITY
Boise Cascade Corporation and Subsidiaries
For the Years Ended December 31, 1997, 1998, and 1999
_______________________________________________________________________________________________________________________________
Accumu-
lated
Other
Total Addi- Compre-
Common Share- Deferred tional
hensive-
Shares holders' Preferred ESOP Common Paid-In Retained Income
Outstanding Equity Stock Benefit Stock Capital Earnings (Loss)
_______________________________________________________________________________________________________________________________
(expressed in thousands)
<C> <S> <C> <C> <C> <C> <C> <C> <C>
48,476,366 Balance at December 31, 1996 $1,680,491 $ 553,162 $(196,116) $121,191 $230,728 $ 972,872 (1,346)
_______________________________________________________________________________________________________________________________
Comprehensive income (loss)
Net loss (30,410) - - - - (30,410) -
Other comprehensive income (loss),
net of tax
Cumulative foreign currency
translation adjustment (8,135) - - - - - (8,135)
Minimum pension liability
adjustment 871 - - - - - 871
_______________________________________________________________________________
Other comprehensive loss (7,264) - - - - - (7,264)
_______________________________________________________________________________
Comprehensive loss $ (37,674)
==========
Cash dividends declared
Common stock (31,415) - - - - (31,415) -
Preferred stock (36,402) - - - - (36,402) -
Conversion of Series G
6,907,440 Preferred Stock - (176,404) - 17,269 159,135 - -
842,153 Stock options exercised 28,092 - - 2,105 25,987 - -
(3,092) Treasury stock cancellations (15,193) (15,079) - (8) (18) (88) -
1,056 Other 24,641 - 19,293 3 859 4,486 -
_______________________________________________________________________________________________________________________________
56,223,923 Balance at December 31, 1997 1,612,540 361,679 (176,823) 140,560 416,691 879,043 (8,610)
_______________________________________________________________________________________________________________________________
Comprehensive income (loss)
Net loss (34,282) - - - - (34,282) -
Other comprehensive income
(loss), net of tax
Cumulative foreign currency
translation adjustment 2,181 - - - - - 2,181
Minimum pension liability
adjustment (1,144) - - - - - (1,144)
_______________________________________________________________________________
Other comprehensive income 1,037 - - - - - 1,037
_______________________________________________________________________________
Comprehensive loss $ (33,245)
==========
Cash dividends declared
Common stock (33,792) - - - - (33,792) -
Preferred stock (19,161) - - - - (19,161) -
Redemption of Series F
Preferred Stock (115,001) (111,043) - - - (3,958) -
110,839 Stock options exercised 3,489 - - 277 3,212 - -
(1,433) Treasury stock cancellations (9,637) (9,587) - (4) (11) (35) -
5,097 Other 25,906 - 21,092 13 998 3,803 -
______________________________________________________________________________________________________________________________
56,338,426 Balance at December 31, 1998 1,431,099 241,049 (155,731) 140,846 420,890 791,618 (7,573)
______________________________________________________________________________________________________________________________
Comprehensive income (loss)
Net income 199,753 - - - - 199,753 -
Other comprehensive income
(loss), net of tax
Cumulative foreign currency
translation adjustment (5,632) - - - - - (5,632)
Minimum pension liability
adjustment 1,292 - - - - - 1,292
______________________________________________________________________________
Other comprehensive loss (4,340) - - - - - (4,340)
______________________________________________________________________________
Comprehensive income $ 195,413
==========
Cash dividends declared
Common stock (34,129) - - - - (34,129) -
Preferred stock (17,127) - - - - (17,127) -
846,872 Stock options exercised 29,189 - - 2,117 27,072 - -
(28,731) Treasury stock cancellations (18,175) (16,850) - (72) (225) (1,028) -
991 Other 27,843 - 22,922 3 1,303 3,615 -
______________________________________________________________________________________________________________________________
57,157,558 Balance at December 31, 1999 $1,614,113 $ 224,199 $(132,809) $142,894 $449,040 $ 942,702 $(11,913)
==============================================================================================================================
The accompanying notes are an integral part of these Financial Statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Boise Cascade Corporation and Subsidiaries
1. Summary of Significant Accounting Policies
Consolidation and Use of Estimates. The financial statements include the
accounts of the company and all subsidiaries after elimination of
intercompany balances and transactions. The preparation of financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may vary from those estimates.
Other (Income) Expense, Net. "Other (income) expense, net" includes gains
and losses on the sale and disposition of property and other miscellaneous
income and expense items. In early October 1999, we completed the sale of
56,000 acres of timberland in central Washington. On September 6, 1998,
our Medford, Oregon, plywood plant was severely damaged by fire. We
recorded a net gain related to an insurance settlement for this fire. For
a discussion of our restructuring activity, see Note 8.
The components of "Other (income) expense, net" in the Statements of Income
(Loss) are as follows:
Year Ended December 31
____________________________________
1999 1998 1997
________ ________ ________
(expressed in thousands)
Restructuring activity $(37,022) $117,922 $ -
Medford fire gain - (45,000) -
Sale of timberlands (46,981) - -
Other, net 6,296 (5,479) 710
________ ________ ________
$(77,707) $ 67,443 $ 710
======== ======== ========
Net Income (Loss) Per Common Share. Net income (loss) per common share was
determined by dividing net income (loss), as adjusted, by applicable shares
outstanding. For 1998 and 1997, the computation of diluted net loss per
share was antidilutive; therefore, the amounts reported for basic and
diluted loss were the same.
Year Ended December 31
_________________________________
1999 1998 1997
________ ________ ________
(expressed in thousands)
Basic
Net income (loss) as reported
before cumulative effect
of accounting change $199,753 $(25,692) $(30,410)
Preferred dividends (1) (13,559) (15,578) (31,775)
Excess of Series F Preferred
Stock redemption price over
carrying value - (3,958) -
________ ________ ________
Basic income (loss)
before cumulative effect
of accounting change 186,194 (45,228) (62,185)
Cumulative effect of accounting
change, net of income tax - (8,590) -
________ ________ ________
Basic income (loss) $186,194 $(53,818) $(62,185)
======== ======== ========
Average shares used to
determine basic income
(loss) per common share 56,861 56,307 52,049
======== ======== ========
Diluted
Basic income (loss)
before cumulative effect
of accounting change $186,194 $(45,228) $(62,185)
Preferred dividends eliminated 13,559 - -
Supplemental ESOP contribution (11,588) - -
________ ________ ________
Diluted income (loss)
before cumulative effect
of accounting change 188,165 (45,228) (62,185)
Cumulative effect of accounting
change, net of income tax - (8,590) -
________ ________ ________
Diluted income (loss)(2) $188,165 $(53,818) $(62,185)
======== ======== ========
Average shares used to
determine basic income
(loss) per common share 56,861 56,307 52,049
Stock options and other 419 - -
Series D Convertible
Preferred Stock 4,139 - -
_________ ________ ________
Average shares used to
determine diluted income (loss)
per common share (2) 61,419 56,307 52,049
========= ======== ========
(1) The dividend attributable to our Series D Convertible Preferred Stock
held by the company's ESOP (employee stock ownership plan) is net of a
tax benefit.
(2) Adjustments reducing the net loss to arrive at diluted loss totaling
$2,054,000 and $8,851,000 in 1998 and 1997 were excluded because the
calculation of diluted loss per share was antidilutive. Also, in 1998
and 1997, potentially dilutive common shares of 4,601,000 and
8,572,000 were excluded from average shares because they were
antidilutive.
By July 15, 1997, 8,625,000 depositary shares of our Series G Preferred
Stock were converted or redeemed for 6,907,440 shares of common stock (see
Note 7). Had the conversion occurred on January 1, 1997, the reported
basic and diluted net loss per common share for the year ended December 31,
1997, would have decreased 20 cents to 99 cents.
Foreign Currency Translation. Local currencies are considered the
functional currencies for most of the company's operations outside the
United States. Assets and liabilities are translated into U.S. dollars at
the rate of exchange in effect at the balance sheet date. Revenues and
expenses are translated into U.S. dollars at average monthly exchange rates
prevailing during the year. Resulting translation adjustments are included
in "Accumulated other comprehensive income (loss)." The 1999, 1998, and
1997 foreign exchange gain and losses reported in the Statements of Income
(Loss) arose primarily from translation adjustments where the U.S. dollar
is the functional currency.
Revenue Recognition. We recognize revenue when title to the goods sold
passes to the buyer.
Cash and Cash Equivalents. Cash equivalents consist of short-term
investments that had a maturity of three months or less at the date of
purchase.
Receivables. In September 1998, we sold fractional ownership interests in
a defined pool of trade accounts receivable. At December 31, 1999,
$100,000,000 of sold accounts receivable were excluded from receivables in
the accompanying Balance Sheet, compared with the December 31, 1998,
balance of $79,000,000. This increase of $21,000,000 represents cash
provided by operations in 1999, compared with the $79,000,000 of cash
provided in 1998. The portion of fractional ownership interest retained by
us is included in accounts receivable in the Balance Sheets. This program
represents a revolving sale of receivables committed to by the purchasers
for 364 days and is subject to renewal. Costs related to the program are
included in "Other (income) expense, net" in the Statements of Income
(Loss). Under the accounts receivable sale agreement, the maximum amount
available from time to time is subject to change based on the level of
eligible receivables, restrictions on concentrations of receivables, and
the historical performance of the receivables we sell.
Inventory Valuation. We use the last-in, first-out (LIFO) method of
inventory valuation for raw materials and finished goods inventories at
substantially all of our 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
___________________________
1999 1998
________ ________
(expressed in thousands)
Finished goods and
work in process $538,712 $456,577
Logs 89,764 87,688
Other raw materials and supplies 136,555 145,319
LIFO reserve (61,047) (64,366)
________ ________
$703,984 $625,218
======== ========
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 $238,000 in 1999, $1,341,000 in 1998, and $10,575,000 in 1997.
Substantially all of our 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.
Depreciation is computed over the following estimated useful lives:
Buildings and improvements 5 to 40 years
Furniture and fixtures 5 to 10 years
Machinery, equipment, and delivery trucks 3 to 20 years
Leasehold improvements 5 to 10 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 cost of timber previously harvested.
A portion of our 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 we become liable to purchase the
timber. At December 31, 1999, based on average prices at the time, the
unrecorded amount of those contracts was estimated to be approximately
$89,000,000.
In recent years, the amount of timber available for commercial harvest has
declined because of environmental litigation, changes in government policy,
and other factors. As a result, the company cannot accurately predict
future log supply. Curtailments or closures of wood products manufacturing
facilities are possible.
Goodwill. Goodwill represents the excess of purchase price and related
costs over the value assigned to the net tangible assets of businesses
acquired. Goodwill is amortized on a straight-line basis over its expected
useful life, not to exceed 40 years. Periodically, the company reviews the
recoverability of goodwill. The measurement of possible impairment is
based primarily on the ability to recover the balance of the goodwill from
expected future operating cash flows on an undiscounted basis. In
management's opinion, no material impairment existed at December 31, 1999.
Amortization expense was $15,075,000 in 1999, $12,893,000 in 1998, and
$11,037,000 in 1997.
Investments in Equity Affiliates. As of December 31, 1999, our principal
investment in affiliates accounted for using the equity method was a 47%
interest in Voyageur Panel, which owns an oriented strand board plant in
Barwick, Ontario, Canada. During 1999, Voyageur Panel had sales to us of
$34,304,000, compared with $25,171,000 in 1998 and $4,400,000 in 1997. We
have an agreement with Voyageur Panel under which we operate the plant and
market its product. During 1999, Voyageur Panel paid us sales commissions
of $3,028,000, compared with $2,181,000 in 1998 and $714,000 in 1997.
Management fees paid to us by Voyageur Panel were $1,017,000 in 1999 and
$836,000 in 1998. There were no management fee payments in 1997. The debt
of this affiliate has been issued without recourse to the company.
Deferred Software Costs. We defer certain software costs that benefit
future years. These costs are amortized on the straight-line method over
the expected life of the software. "Other assets" in the Balance Sheets
includes deferred software costs of $53,106,000 and $47,128,000 at
December 31, 1999 and 1998. Amortization of deferred software costs
totaled $12,597,000, $9,624,000, and $4,499,000 in 1999, 1998, and 1997.
American Institute of Certified Public Accountants (AICPA) Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use," was adopted beginning in 1999. Adoption of
this statement had no financial impact on us.
Environmental Remediation and Compliance. Environmental expenditures
resulting in additions to property and equipment that increase useful lives
are capitalized, while other environmental expenditures are charged to
expense. Liabilities are recorded when assessments and/or remedial efforts
are probable and the cost can be reasonably estimated. For further
information, see "Timber Supply and Environmental Issues" on page 21 in the
Financial Review.
Research and Development Costs. Research and development costs are
expensed as incurred. During 1999, research and development expenses were
$3,623,000, compared with $11,769,000 in 1998 and $10,482,000 in 1997.
Advertising and Catalog Costs. We expense the cost of advertising the
first time the advertising takes place, except for catalog costs. The
costs of producing and distributing sales catalogs are capitalized and
charged to expense in the periods in which the related sales occur.
Advertising expense was $83,680,000 in 1999, $76,580,000 in 1998, and
$60,556,000 in 1997 and is recorded primarily in "Selling and distribution
expenses." Capitalized catalog costs, which are included in "Other current
assets," totaled $16,121,000 at December 31, 1999, and $14,636,000 at
December 31, 1998.
Subsidiary's Issuance of Stock. Changes in the company's proportionate
interest in its subsidiaries from the subsidiaries' issuance of stock to
third parties are recorded in income at the time the stock is issued by the
subsidiaries unless limited by stock repurchases. Because we purchased
shares of a subsidiary's stock in 1997, the change in our proportionate
interest was included in "Additional paid-in capital" in 1999, 1998, and
1997 rather than income.
Cumulative Effect of Accounting Change. As of January 1, 1998, we adopted
the provisions of a new accounting standard, AICPA Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities," which required the
write-off of previously capitalized preoperating costs. Adoption of this
standard resulted in a charge for the cumulative effect of accounting
change, net of tax, of $8,590,000, or 15 cents per basic and diluted loss
per share, for the year ended December 31, 1998.
Financial Instruments. At December 31, 1999, the estimated current market
value of the company's debt, based on then-current interest rates for
similar obligations with like maturities, was approximately $40,000,000
less than the amount of debt reported in the Balance Sheet. At
December 31, 1999, we had two interest rate swaps. If liquidated at
December 31, 1999, the value of the swaps, based on interest rates
available for instruments with similar characteristics, would have resulted
in a payment to us of approximately $1,592,000. The estimated fair values
of our other financial instruments, cash and cash equivalents, and short-
term borrowings are the same as their carrying values. In the opinion of
management, we do not have any significant concentration of credit risks.
Concentration of credit risks with respect to trade receivables is limited
due to the wide variety of customers and channels to and through which our
products are sold, as well as their dispersion across many geographic
areas. We have only limited involvement with derivative financial
instruments and do not use them for trading purposes. Financial
instruments such as interest rate swaps, rate hedge agreements, and forward
exchange contracts are used periodically to manage well-defined risks.
Interest rate swaps and rate hedge agreements are used to hedge underlying
debt obligations or anticipated transactions. For qualifying hedges, the
interest rate differential is reflected as an adjustment to interest
expense over the life of the swap or underlying debt. Gains and losses
related to qualifying hedges of foreign currency firm commitments and
anticipated transactions are deferred and recognized in income or as
adjustments of carrying amounts when the hedged transaction occurs. All
other forward exchange contracts are marked to market, and unrealized gains
and losses are included in current-period net income. At December 31,
1999, we had no material exposure to losses from derivative financial
instruments (see Note 4).
New Accounting Standards. In June 1998, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities." We plan to
adopt this statement in the first quarter of 2001. Adoption of this
statement is not expected to have a significant impact on our results of
operations or financial position.
2. Income Taxes
The income tax (provision) benefit shown in the Statements of Income (Loss)
includes the following:
Year Ended December 31
______________________________________
1999 1998 1997
__________ ________ ________
(expressed in thousands)
Current income tax
(provision) benefit
Federal $ (15,245) $ - $ -
State (2,077) - -
Foreign (13,477) (8,371) (9,333)
__________ ________ ________
(30,799) (8,371) (9,333)
__________ ________ ________
Deferred income tax
(provision) benefit
Federal (96,716) 410 12,597
State (18,035) 1,630 2,292
Foreign 3,174 7,290 3,704
__________ ________ ________
(111,577) 9,330 18,593
__________ ________ ________
Total income tax
(provision) benefit $ (142,376) $ 959 $ 9,260
========== ======== ========
During 1999 and 1998, we made cash payments, net of refunds received, of
$14,851,000 and $13,033,000. In 1997, we received income tax refunds, net
of cash payments, of $1,332,000.
A reconciliation of the statutory U.S. federal tax (provision) benefit and
our reported tax (provision) benefit is as follows:
Year Ended December 31
_____________________________________
1999 1998 1997
_________ _________ ________
(expressed in thousands)
Statutory tax (provision)
benefit $(124,579) $ 5,907 $ 10,128
Changes resulting from:
State taxes (13,073) 512 1,490
Foreign tax provision
different from
theoretical rate (4,407) (3,166) (4,599)
Other, net (317) (2,294) 2,241
_________ ________ ________
Reported tax (provision) benefit $(142,376) $ 959 $ 9,260
========= ======== ========
At December 31, 1999, we had $142,162,000 of alternative minimum tax
credits, which may be carried forward indefinitely.
The components of the net deferred tax liability in the Balance Sheets are
as follows:
December 31
________________________________________________
1999 1998
______________________ ______________________
(expressed in thousands)
Assets Liabilities Assets Liabilities
________ ___________ _________ ___________
Employee benefits $ 95,058 $ 16,507 $ 89,131 $ 22,974
Property and equipment
and timber and
timberlands 42,660 546,275 33,299 511,528
Net operating losses - - 63,268 -
Alternative minimum tax 142,162 - 138,649 -
Reserves 37,012 21,938 60,704 8,288
Inventories 11,176 331 13,555 -
State income taxes 17,758 44,028 23,490 37,043
Deferred charges 3,307 2,680 6,584 6,174
Differences in bases
of investments 4,568 9,123 3,365 959
Other 50,409 21,426 17,500 27,513
________ ________ ________ ________
$404,110 $662,308 $449,545 $614,479
======== ======== ======== ========
Pretax income (loss) from domestic and foreign sources is as follows:
Year Ended December 31
____________________________________
1999 1998 1997
________ _________ ________
(expressed in thousands)
Domestic $336,886 $ 2,348 $(26,189)
Foreign 19,054 (19,226) (2,741)
________ ________ ________
Pretax income (loss) $355,940 $(16,878) $(28,930)
======== ======== ========
At December 31, 1999, our foreign subsidiaries had $9,297,000 of
undistributed earnings which have been indefinitely reinvested. It is not
practical to make a determination of the additional U.S. income taxes, if
any, that would be due upon remittance of these earnings until the
remittance occurs.
Our federal income tax returns have been examined through 1993. Federal
income tax returns for 1994 and 1995 are under examination. Certain
deficiencies have been proposed, but we believe that we have adequately
provided for any such deficiencies and that settlements will not have a
material adverse effect on our financial condition or results of
operations.
3. Leases
Lease obligations for which we assume substantially all property rights and
risks of ownership are capitalized. All other leases are treated as
operating leases. The company did not have any material capital leases
during any of the periods presented. Rental expenses for operating leases,
net of sublease rentals, were $61,207,000 in 1999, $61,709,000 in 1998, and
$61,422,000 in 1997. For operating leases with remaining terms of more
than one year, the minimum lease payment requirements, net of sublease
rentals, are $45,449,000 for 2000, $34,273,000 for 2001, $24,226,000 for
2002, $19,704,000 for 2003, and $12,864,000 for 2004, with total payments
thereafter of $170,281,000.
Substantially all lease agreements have fixed payment terms based upon the
passage of time. Some lease agreements provide us with the option to
purchase the leased property. Additionally, certain agreements contain
renewal options averaging eleven years, with fixed payment terms similar to
those in the original lease agreements.
4. Debt
At December 31, 1999, we had a revolving credit agreement with a group of
banks. The agreement allows us to borrow as much as $600,000,000 at
variable interest rates based on customary indices and expires in June
2002. The revolving credit agreement contains financial covenants relating
to minimum net worth, minimum interest coverage ratio, and ceiling ratio of
debt to capitalization. Under this agreement, the payment of dividends by
the company is dependent upon the amount of net worth in excess of the
defined minimum. Our net worth at December 31, 1999, exceeded the defined
minimum by $218,095,000. Borrowings under this agreement were $185,000,000
at December 31, 1999.
BCOP has a revolving credit agreement with a group of banks that allows
them to borrow as much as $450,000,000 at variable interest rates based on
customary indices and expires in June 2001. The BCOP revolving credit
facility contains financial covenants including a negative pledge and
covenants specifying a minimum fixed charge coverage ratio and a maximum
leverage ratio. Borrowings under BCOP's agreement were $190,000,000 at
December 31, 1999.
In October 1998, we entered into an interest rate swap with a notional
amount of $75,000,000 and an effective fixed interest rate of 5.1% with
respect to $75,000,000 of our revolving credit agreement borrowings. BCOP
also entered into an interest rate swap with a notional amount of
$25,000,000 and an effective fixed interest rate of 5.0% with respect to
$25,000,000 of their revolving credit agreement borrowings. Both swaps
expire in October 2000. We are exposed to modest credit-related risks in
the event of nonperformance by counterparties to these swaps; however, we
do not expect the counterparties, who are all major financial institutions,
to fail to meet their obligations.
At December 31, 1999 and 1998, we had $52,500,000 and $57,412,000 of short-
term borrowings outstanding, and BCOP had $19,300,000 and $72,100,000 of
short-term borrowings outstanding. The maximum amounts of combined short-
term borrowings outstanding during the years ended December 31, 1999 and
1998, were $293,300,000 and $279,900,000. The average amounts of combined
short-term borrowings outstanding during the years ended December 31, 1999
and 1998, were $146,174,000 and $190,715,000. For 1999 and 1998, the
average interest rates for these borrowings were 5.5% and 5.8%.
In May 1998, BCOP issued $150,000,000 of 7.05% notes due in May 2005. In
February 1999, we redeemed our $100,000,000 9.875% notes that were due in
2001.
In March 2000, we will retire our $100,000,000 9.9% notes.
At December 31, 1999, we had $430,000,000 and BCOP had $150,000,000
registered with the Securities and Exchange Commission (SEC) for additional
debt securities.
In March 1999, we filed a registration statement covering $300,000,000 in
universal shelf capacity with the SEC. Once this registration statement is
refiled and approved, it will allow us to issue debt and/or equity
securities in one or more offerings.
The scheduled payments of long-term debt are $118,168,000 in 2000,
$232,081,000 in 2001, $311,649,000 in 2002, $125,949,000 in 2003, and
$55,152,000 in 2004. Of the total amount in 2001, $190,000,000 represents
the amount outstanding under BCOP's revolving credit agreement. Of the
total amount in 2002, $185,000,000 represents the amount outstanding under
our revolving credit agreement.
Cash payments for interest, net of interest capitalized, were $151,300,000
in 1999, $162,844,000 in 1998, and $129,794,000 in 1997.
We have guaranteed the debt used to fund an employee stock ownership plan
(ESOP) that is part of the Savings and Supplemental Retirement Plan for the
company's U.S. salaried employees (see Note 5). We have recorded the debt
in our Balance Sheets, along with an offset in the shareholders' equity
section that is titled "Deferred ESOP benefit." We have 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.
Long-term debt, almost all of which is unsecured, consists of the
following:
December 31
_________________________
1999(1) 1998
__________ __________
(expressed in thousands)
9.9% notes, due in 2000, net of
unamortized discount of $11,000 $ 99,989 $ 99,934
9.85% notes, due in 2002 125,000 125,000
7.05% notes, due in 2005, net of
unamortized discount of $252,000 149,748 149,701
9.45% debentures, due in 2009, net
of unamortized discount of $221,000 149,779 149,756
7.35% debentures, due in 2016, net
of unamortized discount of $86,000 124,914 124,909
Medium-term notes, Series A, with
interest rates averaging 8.2% and
8.1%, due in varying amounts
through 2019 383,005 383,100
Revenue bonds and other indebtedness,
with interest rates averaging 6.6%
and 6.7%, due in varying amounts
annually through 2029, net of
unamortized discount of $468,000 274,472 271,357
American & Foreign Power Company Inc.
5% debentures, due in 2030, net
of unamortized discount of $983,000 20,789 20,852
Revolving credit borrowings, with
interest rates averaging 6.4%
and 5.6% 375,000 315,000
Debt redeemed (2) - 100,000
__________ __________
1,702,696 1,739,609
Less current portion 118,168 161,473
__________ __________
1,584,528 1,578,136
Guarantee of ESOP debt, due in
installments through 2004 132,809 155,731
__________ __________
$1,717,337 $1,733,867
========== ==========
(1) The amount of net unamortized discount disclosed applies to long-term debt
outstanding at December 31, 1999.
(2) In February 1999, we redeemed our 9.875% notes.
5. Retirement and Benefit Plans
Substantially all of our employees are covered by noncontributory defined
benefit pension plans. The pension benefit for salaried employees is based
primarily on the employees' years of service and highest five-year average
compensation. The benefit for hourly employees is generally based on a
fixed amount per year of service. Our contributions to our pension plans
vary from year to year, but we have 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.
We also sponsor contributory savings and supplemental retirement plans for
most of our salaried and hourly employees. The program for salaried
employees includes an employee stock ownership plan. Under that plan, our
Series D ESOP convertible preferred stock (see Note 7) 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 $24,200,000 in 1999, compared with $22,197,000 in 1998 and
$20,910,000 in 1997.
The type of retiree health care benefits and the extent of coverage vary
based on employee classification, date of retirement, location, and other
factors. The portion of the cost of coverage we pay for salaried employees
retiring in each year since 1986 has decreased. Beginning in 1998, new
retirees are paying 100% of the cost of their health care coverage premium.
All of our postretirement health care plans are unfunded. We explicitly
reserve the right to amend or terminate our 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, our ability to amend or terminate
these plans. Amendment or termination may significantly impact the amount
of expense incurred.
For measurement purposes, a 6.75% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 1999. The initial
1992 trend rate for medical care costs was 8.5%, which was assumed to
decrease ratably over the subsequent ten years to 6%. A 1% increase in the
trend rate for medical care costs would have increased the December 31,
1999, benefit obligation by $1,629,000 and postretirement health care
expense for the year ended December 31, 1999, by $140,000. A 1% decrease
in the trend rate for medical care costs would have decreased the
December 31, 1999, benefit obligation by $1,592,000 and postretirement
health care expense for the year ended December 31, 1999, by $138,000.
The following table, which includes only company-sponsored plans,
reconciles the beginning and ending balances of our benefit obligation:
Pension Benefits Other Benefits
__________________ __________________
1999 1998 1999 1998
______ ______ ______ ______
(expressed in millions)
Change in benefit
obligation
Benefit obligation at
beginning of year $1,277 $1,179 $ 78 $ 83
Service cost 32 29 1 1
Interest cost 87 83 5 5
Amendments 7 10 - -
Actuarial (gain) loss (15) 32 - (1)
Closures and
curtailments(1) 1 12 - -
Benefits paid (88) (68) (10) (10)
______ ______ ____ ____
Benefit obligation
at end of year $1,301 $1,277 $ 74 $ 78
====== ====== ==== ====
(1) See Note 8.
The following table reconciles the beginning and ending balances of the
fair value of plan assets:
Pension Benefits Other Benefits
__________________ __________________
1999 1998 1999 1998
______ ______ _____ ____
(expressed in millions)
Change in plan assets
Fair value of
plan assets at
beginning of year $1,293 $1,227 $ - $ -
Actual return on
plan assets 126 128 - -
Employer contribution 1 3 - -
Benefits paid (86) (65) - -
______ ______ _____ ____
Fair value of plan
assets at end of year $1,334 $1,293 $ - $ -
====== ====== ===== ====
The following table shows the funded status of our pension plans, including
amounts not recognized and recognized in our Statements of Income (Loss).
Our other benefit plans are unfunded.
Pension Benefits
________________
1999 1998
____ ____
(expressed in millions)
Funded status $ 33 $ 16
Unrecognized actuarial gain (40) (16)
Unrecognized prior service cost 29 27
____ ____
Net amount recognized $ 22 $ 27
==== ====
The following table shows the amounts recognized in our Balance Sheets:
Pension Benefits Other Benefits
________________ _________________
1999 1998 1999 1998
____ ____ ____ ____
(expressed in millions)
Prepaid (accrued)
benefit cost $ 50 $ 58 $(86) $(92)
Accrued benefit liability (41) (48) - -
Intangible asset 9 11 - -
Accumulated other
comprehensive income 4 6 - -
____ ____ ____ ____
Net amount recognized $ 22 $ 27 $(86) $(92)
==== ==== ==== ====
The assumptions used by our actuaries in the accounting for our plans are
estimates of factors that will determine, among other things, the amount
and timing of future benefit payments.
The following table presents the assumptions used:
Pension Benefits Other Benefits
___________________ __________________
1999 1998 1997 1999 1998 1997
____ ____ ____ ____ ____ ____
Weighted average
assumptions as of
December 31
Discount rate 7.25% 7.00% 7.25% 7.25% 7.00% 7.25%
Expected return on
plan assets 9.75% 9.75% 9.75% - - -
Rate of compensation
increase 4.75% 4.50% 5.00% - - -
The components of net periodic benefit cost are as follows:
Pension Benefits Other Benefits
Year Ended December 31 Year Ended December 31
__________________________ _______________________
1999 1998 1997 1999 1998 1997
________ _______ _______ _______ _______ _______
(expressed in thousands) (expressed in thousands)
Service cost $ 32,167 $28,876 $25,845 $ 830 $ 790 $ 730
Interest cost 87,580 82,972 79,279 5,170 5,380 5,930
Expected return on
plan assets (119,046)(110,587) (98,739) - - -
Recognized net
initial asset - (611) (2,571) - - -
Recognized actuarial
(gain) loss 816 531 179 (260) (310) (310)
Amortization of prior
service costs 4,327 3,607 3,726 (2,320) (2,320) (2,320)
________ _______ _______ ______ ______ ______
Company-sponsored
plans 5,844 4,788 7,719 3,420 3,540 4,030
Multiemployer pension
plans 549 544 592 - - -
________ _______ _______ ______ ______ ______
Net periodic benefit
cost $ 6,393 $ 5,332 $ 8,311 $3,420 $3,540 $4,030
======== ======= ======= ====== ====== ======
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plans with accumulated benefit
obligations in excess of plan assets were $344,000,000, $332,000,000, and
$292,000,000 as of December 31, 1999, and $354,000,000, $338,000,000, and
$290,000,000 as of December 31, 1998.
6. Boise Cascade Office Products Corporation
On September 25, 1997, BCOP issued 2,250,000 shares of unregistered common
stock, all of which was purchased by Boise Cascade. The transaction was
completed at a price of $21.5495 per share, for a total of $48,486,375. At
December 31, 1999, we owned 53,398,724 shares, or 81.1%, of BCOP's
outstanding common stock.
In December 1999, we announced a proposal to acquire the minority public
shares of BCOP. We believe the reintegration of BCOP with Boise Cascade
would enhance BCOP's operating flexibility and allow management to
concentrate fully on its aggressive internal growth initiatives.
In 1999, 1998, and 1997, BCOP made various acquisitions, all of which were
accounted for under the purchase method of accounting. Accordingly, the
purchase prices were allocated to the assets acquired and liabilities
assumed based on their estimated fair values. The initial purchase price
allocations may be adjusted within one year of the date of purchase for
changes in estimates of the fair value of assets and liabilities. Such
adjustments are not expected to be significant to our results of operations
or financial position. The excess of the purchase price over the estimated
fair value of the net assets acquired was recorded as goodwill and is being
amortized over 40 years. The results of operations of the acquired
businesses are included in our operations subsequent to the dates of
acquisitions.
BCOP acquired two businesses during 1999, six businesses during 1998, and
eight businesses and entered into a joint venture during 1997. Amounts
paid, acquisition liabilities recorded, debt assumed, and stock issued for
these acquisitions were as follows:
1999 1998 1997
______ _______ ________
(expressed in thousands,
except share amounts)
Cash paid $9,369 $27,282 $254,025
Acquisition liabilities recorded $7,237 $49,062 $ 12,674
Debt assumed $ - $ 162 $ 10,137
Stock issued
Shares - - 135,842
Value $ - $ - $ 2,882
In January 1999, BCOP acquired the office supply business of Wallace
Computer Services, based in Lisle, Illinois. In September 1999, BCOP
acquired Supply West, based in Perth, Western Australia. The transactions
were completed for cash of $9,369,000 and the recording of $361,000 of
acquisition liabilities.
The 1998 amounts include the acquisition of three contract stationer
businesses, two direct-marketing businesses, and one computer consumables
business. These transactions were completed for cash of $19,897,000, debt
assumed of $162,000, and the recording of $8,062,000 of acquisition
liabilities.
The 1997 amounts include the acquisition of 100% of the shares of Jean-Paul
Guisset S.A. (JPG). JPG is a direct marketer of office products in France.
The negotiated purchase price was approximately FF850,000,000, which
translated to about US$144,000,000 at the time of purchase, plus a price
supplement payable in the year 2000 if certain earnings and sales growth
targets are reached. The maximum amount of the price supplement is
FF300,000,000, which translated to approximately US$46,000,000 at
December 31, 1999. In 1998, we made a partial payment of the price
supplement of FF27,000,000, which translated to approximately US$4,430,000
at the time of payment. In 1998, we also recorded a liability for the
estimated remaining amount of the price supplement of FF229,000,000, which
translated to about US$41,000,000 at December 31, 1998. The liability was
based on the results of 1998 and 1997 and was included in "Other long-term
liabilities." During 1999, we increased the liability for the price
supplement by an additional FF44,000,000, which translated to about
US$6,876,000. At December 31, 1999, we had a liability for the maximum
remaining amount of the price supplement, FF273,000,000, which translated
to approximately US$42,000,000. This amount is included in "Other accrued
liabilities." Approximately FF128,500,000 (US$20,500,000) was repatriated
to us from JPG during the third quarter of 1997. In 1997, in addition to
the cash paid, we recorded approximately US$5,800,000 of acquisition
liabilities and assumed US$10,137,000 of long-term debt.
Also in 1997, BCOP acquired the assets of the promotional products business
of OstermanAPI, Inc. (Osterman), based in Maumee, Ohio, for cash of
$56,000,000 and the recording of $882,000 of liabilities. In conjunction
with the acquisition of Osterman, BCOP formed a majority-owned subsidiary,
Boise Marketing Services, Inc. (BMSI), of which BCOP owns 88%. BCOP's
previously acquired promotional products company, OWNCO, also became part
of BMSI.
In January 1997, BCOP formed a joint venture with Otto Versand (Otto), of
which BCOP owned 50%, to direct market office products in Europe, initially
in Germany. In December 1997, Otto purchased a 10% interest in JPG for
approximately FF72,200,000 (US$13,000,000). The sale of BCOP's interest to
Otto was at book value. In December 1998, BCOP and Otto dissolved the
joint venture. Otto acquired BCOP's 50% interest in the joint venture. In
addition, BCOP repurchased Otto's 10% interest in JPG for $2,955,000 and
repaid a loan and accrued interest to Otto of approximately $13,700,000.
BCOP now owns 100% of JPG.
Unaudited pro forma results of operations reflecting the acquisitions, net
of the impact of minority interest, would have been as follows. If the
1999 acquisitions had occurred on January 1, 1999, our operating results
for 1999 would have been essentially unchanged. If the 1999 and 1998
acquisitions had occurred on January 1, 1998, sales for 1998 would have
increased approximately $94,000,000, while net loss and loss per share
would have been essentially unchanged. If the 1998 and 1997 acquisitions
had occurred on January 1, 1997, sales for 1997 would have increased
approximately $217,000,000 while net loss and loss per share would again
have been essentially unchanged. This unaudited pro forma financial
information does not necessarily represent the actual results of operations
that would have occurred if the acquisitions had taken place on the dates
assumed.
As a result of BCOP's acquisitions, short-term acquisition liabilities of
$48,310,000 at December 31, 1999, primarily for the JPG price supplement,
and $5,710,000 at December 31, 1998, were included in "Other accrued
liabilities." BCOP had no long-term acquisition liabilities at
December 31, 1999. BCOP had long-term acquisition liabilities of
$51,621,000, primarily for the JPG price supplement, at December 31, 1998,
which were included in "Other long-term liabilities."
7. Shareholders' Equity
Preferred Stock. At December 31, 1999, 4,982,209 shares of 7.375% Series D
ESOP convertible preferred stock were outstanding. The stock is shown in
the Balance Sheets at its liquidation preference of $45 per share. The
stock was sold in 1989 to the trustee of our Savings and Supplemental
Retirement Plan for 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 0.80357 share of
common stock. The ESOP preferred shares may not be redeemed for less than
the liquidation preference.
In February 1998, we redeemed 115,000 shares of our Series F Preferred
Stock at a price of $1,000 per preferred share ($25 per depositary share)
plus accrued but unpaid dividends.
By July 15, 1997, 8,625,000 of our depositary shares of Series G Preferred
Stock were converted or redeemed for 6,907,440 shares of our common stock.
Common Stock. We are authorized to issue 200,000,000 shares of common
stock, of which 57,157,558 shares were issued and outstanding at
December 31, 1999. Of the unissued shares, a total of 8,874,845 shares
were reserved for the following:
Conversion of Series D ESOP preferred stock 4,003,554
Issuance under Key Executive Stock Option Plan 4,692,673
Issuance under Director Stock Compensation Plan 84,118
Issuance under Director Stock Option Plan 94,500
We have a shareholder rights plan which was adopted in December 1988,
amended in September 1990, and renewed in September 1997. The renewed
rights plan became effective in December 1998. Details are set forth in
the Renewed Rights Agreement filed with the SEC on November 12, 1997.
Accumulated Other Comprehensive Income (Loss). At December 31, 1999, the
balance in the Statements of Shareholders' Equity for "Accumulated other
comprehensive income (loss)" consisted of a minimum pension liability
adjustment of $1,846,000 and a cumulative foreign currency translation
adjustment of $10,067,000. These amounts are net of income taxes
calculated at a rate of approximately 39%.
Stock Units. We have a deferred compensation program for our executive
officers that allows them to defer a portion of their cash compensation.
Beginning in 1999, they may purchase stock units with some or all of the
compensation they defer. Each stock unit is equal in value to one share of
our common stock. We match any deferrals used to purchase stock units with
a 25% company contribution of stock units. Deferred stock units accumulate
imputed dividends equal to dividends on common stock, which are assumed to
purchase more stock units for the executives' accounts and are charged to
compensation expense. We will pay out the deferred stock units in shares
of our common stock when an officer retires or terminates employment. At
December 31, 1999, there were 28,299 stock units held for the accounts of
these executive officers.
Stock Options. We have three stock option plans: the BCC Key Executive
Stock Option Plan (KESOP), the BCC Director Stock Compensation Plan (DSCP),
and the BCC Director Stock Option Plan (DSOP). In addition, BCOP has two
stock option plans: the BCOP Key Executive Stock Option Plan (KESOP) and
the BCOP Director Stock Option Plan (DSOP). Both the company and BCOP
account for these plans under Accounting Principles Board (APB) Opinion No.
25, "Accounting for Stock Issued to Employees." Under this opinion,
compensation cost recognized is for grants under the BCC DSCP and for
grants under the terms of which the number of options exercisable is based
on future performance. Compensation costs recognized in 1999, 1998, and
1997 were $298,000, $244,000, and $227,000.
Had compensation costs for these five plans been determined consistent with
SFAS No. 123, "Accounting for Stock-Based Compensation," our pro forma 1999
net income would have decreased by $6,785,000, and pro forma basic and
diluted income per share would have decreased by 12 cents and 11 cents.
The pro forma increase to net loss in 1998 would have been $7,661,000, and
basic and diluted loss per share would have increased 14 cents. The pro
forma increase to net loss in 1997 would have been $7,222,000, and basic
and diluted loss per share would have increased 14 cents. The pro forma
compensation cost may not be representative of that to be expected in
future years.
The BCC KESOP provides for the grant of options to purchase shares of our
common stock to key employees of the company. The exercise price is equal
to the fair market value of our common stock on the date the options are
granted. Options expire, at the latest, ten years and one day following
the grant date.
The 4,354,943 options outstanding at December 31, 1999, have exercise
prices between $18.125 and $43.875 and a weighted average remaining
contractual life of 6.9 years.
A summary of the status of the BCC KESOP at December 31, 1999, 1998, and
1997, and the changes during the years then ended is presented in the table
below:
<TABLE>
<CAPTION>
1999 1998 1997
___________________ _____________________ __________________
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
___________________ ___________________ ____________________
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
year 4,321,756 $32.47 3,649,966 $33.19 4,228,736 $32.55
Options
granted 1,016,200 37.37 841,890 28.88 751,100 36.88
Options
exercised (836,605) 31.46 (109,000) 25.30 (839,333) 28.25
Options
expired (146,408) 39.69 (61,100) 39.14 (490,537) 41.80
_________ _________ _________
Balance at
end of year 4,354,943 33.56 4,321,756 32.47 3,649,966 33.19
========= ========= =========
Exercisable at
end of year 3,338,743 32.40 3,479,866 33.33 2,898,866 32.24
Weighted average
fair value
of options
granted
(Black-Scholes) $10.95 $7.89 $10.88
</TABLE>
The fair value of each BCC option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1999, 1998, and 1997: risk-free
interest rates of 5.8%, 5.4%, and 6.0%; expected dividends of 60 cents for
each year; expected lives of 4.2 years for each year; and expected stock
price volatility of 30% for each year.
The BCC DSOP, available only to nonemployee directors, provides for annual
grants of options. The exercise price of these options is equal to the
fair market value of our common stock on the date the options are granted.
The options expire the earlier of three years after the director ceases to
be a director or ten years after the grant date. Total shares subject to
options at December 31, 1999, 1998, and 1997, were 84,000, 70,500, and
49,500, with weighted average exercise prices of $34.97, $34.07, and
$36.57.
The BCC DSCP permits nonemployee directors to elect to receive grants of
options to purchase shares of our common stock in lieu of cash
compensation. The difference between the $2.50-per-share exercise price of
DSCP options and the market value of the common stock subject to the
options is intended to offset the cash compensation that participating
directors have elected not to receive. Options expire three years after
the holder ceases to be a director. Total shares subject to options at
December 31, 1999, 1998, and 1997, were 45,091, 43,172, and 34,542.
The BCOP KESOP provides for the grant of options to purchase shares of
BCOP's common stock to key employees of BCOP. The exercise price is equal
to the fair market value of BCOP's common stock on the date the options are
granted. One-third of the options become exercisable in each of the three
years following the grant date. The options expire, at the latest, ten
years following the grant date.
The options outstanding at December 31, 1999, have exercise prices between
$12.50 and $26.625 and a weighted average remaining contractual life of 7.7
years.
A summary of the status of the BCOP KESOP at December 31, 1999, 1998, and
1997, and the changes during the years then ended is presented in the table
below:
<TABLE>
<CAPTION>
1999 1998 1997
___________________ ___________________ __________________
Wtd. Avg. Wtd. Avg. Wtd. Avg.
Shares Ex. Price Shares Ex. Price Shares Ex. Price
____________________ ___________________ __________________
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning of
year 2,021,105 $19.86 1,490,139 $20.10 1,059,442 $18.66
Options
granted 1,031,300 12.81 782,200 18.22 495,700 23.08
Options
exercised (6,400) 12.50 (152,334) 12.50 (24,468) 12.50
Options
expired (95,540) 17.78 (98,900) 21.92 (40,535) 22.38
_________ _________ _________
Balance at
end of year 2,950,465 17.48 2,021,105 19.86 1,490,139 20.10
========= ========= =========
Exercisable at
end of year 1,330,965 20.11 826,305 19.13 483,039 16.72
Weighted average
fair value
of options
granted
(Black-Scholes) $4.58 $6.78 $8.61
</TABLE>
The fair value of each BCOP option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in 1999, 1998, and 1997: risk-free
interest rates of 5.1%, 5.5%, and 6.1%; no expected dividends; expected
lives of 4.2 years for each year; and expected stock price volatility of
35% for each year.
The BCOP DSOP, available only to nonemployee directors, provides for annual
grants of options. The exercise price of options under this plan is equal
to the fair market value of BCOP's common stock on the date the options are
granted. Options expire the earlier of three years after the director
ceases to be a director or ten years after the grant date. Total shares
outstanding at December 31, 1999, 1998, and 1997, were 89,000, 64,000, and
39,000, with weighted average exercise prices of $15.31, $16.99, and
$18.58.
Under each of the plans, options may not, except under unusual
circumstances, be exercised until one year following the grant date.
8. Restructuring Activities
With the exception of a few small inventory-related items, the operating
income impact of restructuring activities is recorded in "Other (income)
expense, net" in the accompanying Statements of Income (Loss) (see Note 1).
Late in the second quarter of 1998, we adopted a plan to restructure our
wood products manufacturing business by permanently closing four
facilities, including sawmills in Elgin, Oregon; Horseshoe Bend, Idaho; and
Fisher, Louisiana; and a plywood plant in Yakima, Washington. We closed
the sawmills in Horseshoe Bend and Fisher in 1998. Restructuring charges
in 1998 related to these closures totaled $61,900,000. The Horseshoe Bend
and Fisher facilities had sales of $30,595,000 and $52,293,000 for the
years ended December 31, 1998 and 1997, and operating losses of $7,015,000
and $698,000 for the same years.
In late May 1999, we decided to continue operations at the Elgin and Yakima
mills. This decision was based on changes in wood supply and costs,
product prices, improved plant operations, and the impact of a fire at our
Elgin plywood plant in May 1999. As a result of this decision, in the
second quarter of 1999, our building products segment reversed to operating
income previously recorded restructuring charges totaling $35,500,000. Of
this amount, $23,500,000 reversed restructuring accruals and $12,000,000
related to the restoration of the net book value of these two facilities.
Also in the second quarter of 1998, our paper and paper products segment
recorded a pretax charge of $19,000,000 related to the revaluation of
paper-related assets. Included in the revaluation was the $8,000,000
write-down to zero of our investment in a now-terminated joint venture in
China that produced carbonless paper. Also written down by approximately
$5,000,000 were the fixed assets of a small corrugating facility that was
sold in March 1999 for its approximate remaining book value. We also wrote
off $6,000,000 in an investment in a joint venture and miscellaneous
equipment that had no future value.
In the fourth quarter of 1998, we announced a companywide cost-reduction
initiative and the restructuring of several operations. Specific actions
included the elimination of jobs in our paper and building products
manufacturing businesses and at our Boise headquarters through a
combination of early retirements, layoffs, attrition, and the closure of
our paper research and development facility in Portland, Oregon. These
charges totaled $26,900,000. Also in the fourth quarter of 1998, BCOP
announced the closure of eight facilities in the United Kingdom and
integration of selected functions of their United Kingdom operations.
These BCOP closures were completed during 1999. BCOP also dissolved an
unprofitable joint venture in Germany at a cost of approximately
$4,000,000. BCOP restructuring charges totaled $11,100,000.
During the second quarter of 1999, BCOP revised the amount of the
restructuring reserve established in the fourth quarter of 1998 for their
United Kingdom operations. The restructuring program was less costly than
originally anticipated due to lower legal and professional fees, a sublease
of one of the facilities, a decision to retain a small printing business,
and fewer terminations of employees. As a result, BCOP recorded an
increase to operating income of approximately $4,000,000 in the second
quarter of 1999.
In the first quarter of 1999, our corporate and other segment recorded
$4,400,000 of additional restructuring expense related to the early
retirement program announced in fourth quarter 1998. The noncash charge
was for the present value of unrecorded early retirement benefits. These
charges were accrued when the retiring individuals legally accepted the
early retirement offer. In late 1999, we decreased the amount of
retirement reserves related to this segment, increasing operating income by
$400,000 to reflect our actual experience.
Our paper and paper products segment also adjusted amounts recorded in
fourth quarter 1998 for the elimination of jobs and the closure of our
research and development facility in Portland, Oregon, to reflect our
actual retirement, severance, and asset disposal experience. These
adjustments increased this segment's 1999 operating income by $2,300,000.
Asset write-downs in 1998 were for plant and equipment and investment in
joint ventures. No intangible assets were written down. Employee-related
costs were primarily for severance payments and the present value of
unrecorded early retirement benefits. Approximately $13,400,000 of the
employee-related costs will be paid by our retirement plans and will
require no cash expenditures. Other exit costs included tear-down and
environmental cleanup costs related to the closing facilities, operating
lease costs after operations ceased, the write-down of contracts to their
net realizable value, and the cost to dissolve the BCOP joint venture.
Restructuring reserve liabilities are included in "Accrued liabilities,
other" in the accompanying Balance Sheets. Restructuring reserve liability
account activity related to these 1998 charges through December 31, 1999,
was as follows:
Asset Employee- Other
Write- Related Exit
Downs Costs Costs Total
________ _________ ________ ________
(expressed in thousands)
Second Quarter 1998
Building products
1998 expense recorded $ 27,200 $ 14,000 $ 20,700 $ 61,900
Assets written down (27,200) - - (27,200)
Pension liability
recorded - (1,300) - (1,300)
Charges against reserve - (3,200) (1,300) (4,500)
________ _________ ________ ________
Restructuring reserve at
December 31, 1998 - 9,500 19,400 28,900
Reserves credited to
income - (7,300) (16,200) (23,500)
Proceeds from sales
of assets - - 1,700 1,700
Charges against reserve - (1,700) (1,500) (3,200)
________ _________ ________ ________
Restructuring reserve
at December 31, 1999 $ - $ 500 $ 3,400 $ 3,900
======== ========= ======== ========
Paper and
paper products
1998 expense recorded $ 18,800 $ 200 $ - $ 19,000
Assets written down (18,800) - - (18,800)
________ _________ ________ ________
Restructuring reserve at
December 31, 1998 - 200 - 200
Charges against reserve - (200) - (200)
________ _________ ________ ________
Restructuring reserve at
December 31, 1999 $ - $ - $ - $ -
======== ========= ======== ========
Fourth Quarter 1998
Office products
1998 expense recorded $ 300 $ 1,400 $ 9,400 $ 11,100
Assets written down (300) - - (300)
Charges against reserve - (200) (3,300) (3,500)
________ _________ ________ ________
Restructuring reserve at
December 31, 1998 - 1,200 6,100 7,300
Reserves credited
to income - (500) (3,500) (4,000)
Charges against reserve - (700) (1,100) (1,800)
________ _________ ________ ________
Restructuring reserve at
December 31, 1999 $ - $ - $ 1,500 $ 1,500
======== ========= ======== ========
Building products
1998 expense recorded $ - $ 2,800 $ - $ 2,800
Pension liability
recorded - (2,200) - (2,200)
________ _________ _______ ________
Restructuring reserve at
December 31, 1998 - 600 - 600
Reclass from pension
liability - 1,000 - 1,000
Charges against reserve - (500) - (500)
________ _________ _______ ________
Restructuring reserve at
December 31, 1999 $ - $ 1,100 $ - $ 1,100
======== ========= ======= ========
Paper and
paper products
1998 expense recorded $ 7,200 $11,300 $ - $ 18,500
Assets written down (7,200) - - (7,200)
Pension liability
recorded - (4,500) - (4,500)
Charges against reserve - (800) - (800)
________ _________ _______ ________
Restructuring reserve at
December 31, 1998 - 6,000 - 6,000
Reserves credited
to income - (100) - (100)
Reclass from pension
liability - 200 - 200
Charges against reserve - (4,900) - (4,900)
________ _________ _______ ________
Restructuring reserve at
December 31, 1999 $ - $ 1,200 $ - $ 1,200
======== ======== ======= ========
Corporate and other
1998 expense recorded $ - $ 5,200 $ 400 $ 5,600
Pension liability
recorded - (3,200) - (3,200)
________ ________ _______ ________
Restructuring reserve at
December 31, 1998 - 2,000 400 2,400
Expense recorded - 4,400 - 4,400
Pension liability
recorded - (4,400) - (4,400)
Reclass from other
accounts - 500 - 500
Reclass from pension
liability - 1,000 - 1,000
Charges against reserve - (2,400) (100) (2,500)
________ ________ _______ ________
Restructuring reserve at
December 31, 1999 $ - $ 1,100 $ 300 $ 1,400
======== ======== ======= ========
Total Second and Fourth Quarter 1998
1998 expense recorded $ 53,500 $ 34,900 $30,500 $118,900
Assets written down (53,500) - - (53,500)
Pension liability
recorded - (11,200) - (11,200)
Charges against reserve - (4,200) (4,600) (8,800)
_________ ________ _______ ________
Restructuring reserve at
December 31, 1998 - 19,500 25,900 45,400
Expense recorded - 4,400 - 4,400
Pension liability recorded - (4,400) - (4,400)
Reclass from other
accounts - 500 - 500
Reclass from pension
liability - 2,200 - 2,200
Reserves credited to
income - (7,900) (19,700) (27,600)
Proceeds from sale of
assets - - 1,700 1,700
Charges against reserve - (10,400) (2,700) (13,100)
________ ________ _______ ________
Restructuring reserve at
December 31, 1999 $ - $ 3,900 $ 5,200 $ 9,100
======== ======== ======= ========
In addition to the 1998 and 1999 restructuring activities, we had other
small reserve balances from prior years. These balances primarily related
to the reconfiguration of our Vancouver, Washington, mill which began in
1995. An analysis of total restructuring reserve liability account
activity is as follows:
Year Ended December 31
___________________________________
1999 1998 1997
________ ________ ________
(expressed in thousands)
Balance at beginning of year $ 46,200 $ 1,400 $ 2,300
Current-year reserves
Charged to income - 55,500 1,000
Reclassed from other accounts 2,700 - -
Proceeds from sale of assets 1,700 - -
Charges against reserves (13,700) (10,700) (1,700)
Reserves credited to income (27,600) - (200)
________ ________ ________
Balance at end of year $ 9,300 $ 46,200 $ 1,400
======== ======== ========
The estimated number of employees affected by the 1998 restructuring
activities described above and the number who had left the company as of
December 31, 1999, are as follows:
Employees To
Be Terminated Employees
____________________ Terminated
Original Revised Through
Estimate Estimate December 31, 1999
________ ________ _________________
Second Quarter 1998
Building products 494 182 182
Fourth Quarter 1998
Office products 140 90 90
Building products 40 40 25
Paper and
paper products 212 212 172
Corporate and other 92 92 58
________ ________ _________________
978 616 527
======== ======== =================
9. Acquisition
On September 16, 1999, we completed the acquisition of Furman Lumber, Inc.,
a U.S. building materials distributor headquartered in Billerica,
Massachusetts, with 12 locations in the East, Midwest, and South. The
purchase price was approximately $92,652,000, including assumption of debt.
Cash payments totaled $90,222,000.
This acquisition was accounted for under the purchase method of accounting.
Accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based upon their estimated fair values.
The initial purchase price allocations may be adjusted within one year of
the date of purchase for changes in estimates of the fair value of assets
and liabilities. Such adjustments are not expected to be significant to
our results of operations or our financial position. The excess of the
purchase price over the estimated fair value of the net assets acquired was
recorded as goodwill and is being amortized over 40 years. The results of
operations of the acquired business are included in our operations
subsequent to the date of acquisition.
If this acquisition had occurred on January 1, 1999, pro forma sales for
the year ended December 31, 1999, would have increased $505,000,000, pro
forma net income would have increased $1,800,000, and pro forma basic and
diluted earnings per share would have increased 3 cents. If this
acquisition had occurred January 1, 1998, pro forma sales for the year
ended December 31, 1998, would have increased $570,000,000, pro forma net
loss would have decreased $1,340,000, and pro forma basic and diluted loss
per share would have decreased 2 cents. This unaudited pro forma financial
information does not necessarily represent the actual results of operations
that would have resulted if the acquisition had occurred on the dates
assumed.
10. Segment Information
In 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." We
adopted this statement at December 31, 1998. Adoption of the standard had
no impact on our net income. Previously reported segment information was
restated to conform to the new standard.
We operate our business using four reportable segments: office products,
building products, paper and paper products, and corporate and other.
These segments represent distinct businesses that are managed separately
because of the differing products and services. Each of these businesses
requires distinct operating and marketing strategies. Management reviews
the performance of the company based on these operating segments.
The office products segment markets and sells office and computer supplies,
paper, office furniture, and promotional products. All of the products
sold by this segment are purchased from manufacturers or from industry
wholesalers, except office papers, which are sourced primarily from our
paper operations. This segment has operations in Australia, Belgium,
Canada, France, Spain, the United Kingdom, and the United States.
The building products segment manufactures, markets, and distributes
various products that are used for construction. These products include
lumber, structural panels, particleboard, and engineered wood products.
Most of these products are sold to independent wholesalers and dealers and
through our own wholesale building materials distribution outlets.
The paper and paper products segment manufactures, markets, and distributes
uncoated free sheet, packaging papers, newsprint, corrugated containers,
and market pulp. These products are sold to distributors and industrial
customers primarily by our own sales personnel.
The corporate and other segment includes corporate support staff services
and related assets and liabilities.
The segments are measured on operating profits before interest expense,
income taxes, minority interest, extraordinary items, and cumulative effect
of accounting changes. Specified expenses are allocated to the operating
segments. For some of these allocated expenses, the related assets and
liabilities remain in the corporate and other segment.
The segments follow the accounting principles described in the Summary of
Significant Accounting Policies (see Note 1). Sales between the segments
are recorded primarily at market prices.
No single customer accounts for 10% or more of consolidated trade sales.
Boise Cascade's export sales to foreign unaffiliated customers were
$145,113,000 in 1999, $163,005,000 in 1998, and $177,071,000 in 1997.
During 1999, BCOP had foreign operations in Australia, Belgium, Canada,
France, Spain, and the United Kingdom. During 1998, BCOP had foreign
operations in Australia, Belgium, Canada, France, Germany, Spain, and the
United Kingdom. During 1997, BCOP had foreign operations in Australia,
Canada, France, Germany, and the United Kingdom. For the years ended
December 31, 1999, 1998, and 1997, BCOP's foreign operations had sales of
$797,757,000, $695,688,000, and $517,202,000. Revenues are attributed to
geographic regions based on the location of the business. At December 31,
1999, 1998, and 1997, long-lived assets of BCOP's foreign operations were
$322,195,000, $344,099,000, and $290,966,000.
Segment sales to external customers by product line are as follows:
Year Ended December 31
____________________________________
1999 1998 1997
________ ________ ________
(expressed in millions)
Office products
Office supplies and paper $2,325.9 $2,269.0 $2,055.9
Computer supplies 554.8 313.5 180.9
Office furniture 401.1 378.3 284.2
Promotional products 97.9 105.4 74.1
________ ________ _________
3,379.7 3,066.2 2,595.1
________ ________ _________
Building products
Structural panels 745.1 620.3 539.6
Lumber 707.0 513.5 608.8
Engineered wood products 281.2 210.1 161.6
Particleboard 63.6 58.6 61.1
Building supplies and other 352.2 280.0 232.5
________ ________ _________
2,149.1 1,682.5 1,603.6
________ ________ _________
Paper and paper products
Uncoated free sheet 710.6 764.0 708.4
Containerboard and
corrugated containers 376.5 338.8 284.7
Newsprint 169.7 201.8 193.3
Market pulp and other 134.0 84.7 88.8
________ ________ _________
1,390.8 1,389.3 1,275.2
________ ________ _________
Corporate and other 33.1 24.1 19.9
________ ________ _________
Total $6,952.7 $6,162.1 $5,493.8
======== ======== =========
An analysis of our operations by segment is as follows:
<TABLE>
<CAPTION>
Selected Components of
Income (Loss)
_________________________
Income Depreciation,
(Loss) Amortization,
Sales Before Equity in and Cost of
__________________________ Taxes and Net Income Company Capital Investment
Inter- Minority (Loss) of Timber Expendi- in Equity
Trade segment Total Interest(1)(2) Affiliates Harvested tures(3) Assets Affiliates
_______ _______ _______ _________ _____________ ____________ ________ ________ __________
(expressed in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended
December 31, 1999
Office products $3,379.7 $ 2.0 $3,381.7 $154.6 $ - $ 60.7 $ 64.3 $1,536.3 $ .1
Building products 2,149.1 33.5 2,182.6 273.8 6.1 46.1 150.1 874.1 37.3
Paper and paper
products 1,390.8 358.8 1,749.6 117.7 - 174.8 116.2 2,590.5 -
Corporate and other 33.1 51.5 84.6 (45.4) - 7.4 6.2 215.6 -
________ _______ ________ ______ _____ _______ ______ _______ __________
Total 6,952.7 445.8 7,398.5 500.7 6.1 289.0 336.8 5,216.5 37.4
_______ _______ ________ ______ _____ _______ ______ _______ __________
Intersegment
eliminations - (445.8) (445.8) - - - - (78.1) -
Interest expense - - - (144.7) - - - - -
________ _______ ________ ______ _____ _______ ______ _______ __________
Consolidated totals $6,952.7 $ - $6,952.7 $356.0 $ 6.1 $289.0 $336.8 $5,138.4 $ 37.4
======== ======= ======== ====== ===== ======= ====== ======== ==========
Year Ended
December 31, 1998
Office products $3,066.2 $ 1.1 $3,067.3 $121.5 $(4.2) $ 51.2 $142.5 $1,461.3 $ -
Building products 1,682.5 40.0 1,722.5 57.7 1.9 41.3 45.7 611.6 27.2
Paper and paper
products 1,389.3 362.3 1,751.6 10.0 (1.5) 181.1 119.7 2,646.7 -
Corporate and other 24.1 55.7 79.8 (46.2) - 9.1 5.8 401.4 -
________ _______ ________ ______ _____ _______ ______ _______ __________
Total 6,162.1 459.1 6,621.2 143.0 (3.8) 282.7 313.7 5,121.0 27.2
________ _______ ________ ______ _____ _______ ______ ________ __________
Intersegment
eliminations - (459.1) (459.1) - - - - (154.3) -
Interest expense - - - (159.9) - - - - -
________ _______ ________ ______ _____ _______ ______ _______ __________
Consolidated totals $6,162.1 $ - $6,162.1 $(16.9) $(3.8) $282.7 $313.7 $4,966.7 $ 27.2
======== ======= ======== ====== ===== ====== ====== ======== ==========
Year Ended
December 31, 1997
Office products $2,595.1 $ 1.6 $2,596.7 $119.8 $(2.5) $ 41.1 $346.6 $1,291.5 $ 4.3
Building Products 1,603.6 41.6 1,645.2 45.0 (2.7) 42.0 53.2 653.7 23.6
Paper and paper
products 1,275.2 329.4 1,604.6 (11.6) - 166.2 173.0 2,760.0 4.9
Corporate and other 19.9 56.4 76.3 (44.8) - 7.3 5.8 330.0 -
________ _______ ________ ______ _____ _______ ______ _______ __________
Total 5,493.8 429.0 5,922.8 108.4 (5.2) 256.6 578.6 5,035.2 32.8
________ _______ ________ ______ _____ _______ ______ _______ __________
Intersegment
eliminations - (429.0) (429.0) - - - - (65.3) -
Interest expense - - - (137.3) - - - - -
________ _______ ________ ______ _____ _______ ______ _______ __________
Consolidated totals $5,493.8 $ - $5,493.8 $(28.9) $(5.2) $256.6 $578.6 $4,969.9 $32.8
======== ======= ======== ====== ===== ======= ====== ======== ==========
</TABLE>
(1) Interest income has been allocated to our segments in the amounts of
$2,323,000 for 1999, $2,274,000 for 1998, and $6,000,000 for 1997.
(2) See Note 1 "Other (Income) Expense, Net" and Note 8 "Restructuring
Activities" for an explanation of nonroutine items affecting our segments.
Significant noncash items are discussed in Note 8.
(3) Capital expenditures include acquisitions made through the issuance of
BCOP common stock, assumption of debt, and recording of liabilities.
11. Litigation and Legal Matters
We are involved in litigation and administrative proceedings primarily
arising in the normal course of our business. In the opinion of
management, our recovery, if any, or our liability, if any, under any
pending litigation or administrative proceeding would not materially affect
our financial condition or operations.
12. Quarterly Results of Operations (unaudited)
<TABLE>
<CAPTION>
1999 1998
________________________________________ ______________________________________________
Fourth(1) Third Second(2) First(3) Fourth(4) Third(5) Second(6) First(7)
_________ _______ _________ _______ ______ ______ __________ ____________
(expressed in millions, except per-share and stock price information)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $1,874 $1,789 $1,678 $1,611 $1,536 $1,598 $1,538 $1,490
Income (loss) from operations 168 120 141 70 19 111 (33) 44
Net income (loss) before cumulative
effect of accounting change 76 49 59 16 (8) 47 (64) (1)
Cumulative effect of accounting change,
net of tax - - - - - - - (8)
Net income (loss) 76 49 59 16 (8) 47 (64) (9)
Net income (loss) per share
before cumulative effect of
accounting change
Basic 1.26 .80 .98 .23 (.21) .77 (1.20) (.17)(9)
Diluted (8) 1.18 .74 .92 .22 (.21) .72 (1.20) (.17)(9)
Cumulative effect of accounting change,
net of tax - - - - - - - (.15)
Net income (loss) per share
Basic 1.26 .80 .98 .23 (.21) .77 (1.20) (.32)(9)
Diluted 1.18 .74 .92 .22 (.21) .72 (1.20) (.32)(9)
Common stock dividends
paid per share .15 .15 .15 .15 .15 .15 .15 .15
Common stock prices (10)
High 41-1/8 47-3/16 45-1/2 35-1/2 32-3/4 33-5/8 40-3/8 37-1/8
Low 30-1/4 33 32-1/16 28-3/4 22-1/4 23-1/8 30-7/8 27-13/16
</TABLE>
(1) Includes a pretax gain of $47.0 million for the sale of 56,000 acres
of timberland in central Washington (see Note 1). Also includes a pretax
gain of $1.5 million for the reversal of previously recorded restructuring
charges in our paper and paper products and corporate and other segments (see
Note 8).
(2) Includes pretax gains of $35.5 million, $4.0 million, and $1.2 million
for the reversal of previously recorded restructuring charges in our
building products, office products, and paper and paper products segments
(see Note 8).
(3) Includes a pretax charge of $4.4 million related to early retirements
in our corporate and other segment (see Note 8).
(4) Includes a pretax charge of $38.0 million for a companywide cost-
reduction initiative and the restructuring of several operations (see Note
8).
(5) Includes a pretax gain of $45.0 million related to an insurance
settlement for our Medford, Oregon, plywood plant, which was severely
damaged by fire (see Note 1).
(6) Includes a pretax charge of $61.9 million for the restructuring of our
wood products manufacturing business and a pretax charge of $19.0 million
for the revaluation of paper-related assets (see Note 8).
(7) Includes a charge of $8.6 million, net of tax, for the adoption of
AICPA Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" (see Note 1).
(8) Net income (loss) per share is calculated independently for each
quarter and year. The 1998 diluted quarters added together do not equal
the year.
(9) Includes a negative 7 cents related to the redemption of the Series F
Preferred Stock.
(10) Our common stock is traded principally on the New York Stock Exchange.
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,
1999 and 1998, and the related statements of income (loss), cash flows, and
shareholders' equity for the years ended December 31, 1999, 1998, and 1997.
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 significant estimates made by management, as well as evaluating
the overall financial 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1999, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
Boise, Idaho
January 28, 2000
REPORT OF MANAGEMENT
The management of Boise Cascade Corporation is primarily responsible for
the information and representations contained in this annual report. The
financial statements and related notes were prepared in conformity with
generally accepted accounting principles appropriate in the circumstances.
In preparing 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
transactions 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.
Our Internal Audit staff monitors our financial reporting system and the
related internal accounting controls, which are also selectively tested by
Arthur Andersen LLP, Boise Cascade's independent public accountants, for
purposes of planning and performing their audit of our financial
statements.
The Audit Committee of the board of directors, which is composed solely of
nonemployee directors, meets periodically with management, representatives
of our Internal Audit Department, and representatives of Arthur Andersen
LLP 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, any recommendations concerning the system of
internal accounting controls, and the quality of financial reporting.
EXHIBIT 13.2
STATEMENTS OF INCOME (LOSS) (Unaudited)
Boise Cascade Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
_______________________ ______________________
1999 1998 1999 1998
__________ __________ __________ __________
(expressed in thousands)
<S> <C> <C> <C> <C>
Revenues
Sales $1,874,264 $1,536,183 $6,952,662 $6,162,123
__________ __________ __________ __________
Costs and expenses
Materials, labor, and other
operating expenses 1,448,314 1,188,609 5,377,932 4,849,678
Depreciation, amortization, and
cost of company timber harvested 75,259 71,417 288,994 282,737
Selling and distribution expenses 198,974 179,969 745,927 666,759
General and administrative
expenses 30,963 38,934 125,273 150,455
Other (income) expense, net (46,803) 37,793 (77,707) 67,443
__________ __________ __________ __________
1,706,707 1,516,722 6,460,419 6,017,072
__________ __________ __________ __________
Equity in net income (loss) of
affiliates 91 (71) 6,115 (3,791)
__________ __________ __________ __________
Income from operations 167,648 19,390 498,358 141,260
__________ __________ __________ __________
Interest expense (37,142) (37,940) (144,740) (159,870)
Interest income 445 484 2,323 2,274
Foreign exchange gain (loss) (134) (242) (1) (542)
__________ __________ __________ __________
(36,831) (37,698) (142,418) (158,138)
__________ __________ __________ __________
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting change 130,817 (18,308) 355,940 (16,878)
Income tax (provision) benefit (51,201) 12,009 (142,376) 959
__________ __________ __________ __________
Income (loss) before minority
interest and cumulative effect
of accounting change 79,616 (6,299) 213,564 (15,919)
Minority interest, net of income tax (4,116) (2,043) (13,811) (9,773)
__________ __________ __________ __________
Income (loss) before cumulative
effect of accounting change 75,500 (8,342) 199,753 (25,692)
Cumulative effect of accounting
change, net of income tax - - - (8,590)
__________ __________ __________ __________
Net income (loss) $ 75,500 $ (8,342) $ 199,753 $ (34,282)
========== ========== ========== ==========
Net income (loss) per common share
Basic before cumulative effect
of accounting change $ 1.26 $ (.21) $ 3.27 $ (.81)
Cumulative effect of accounting
change - - - (.15)
__________ __________ __________ __________
Basic $ 1.26 $ (.21) $ 3.27 $ (.96)
========== ========== ========== ==========
Diluted before cumulative effect
of accounting change $ 1.18 $ (.21) $ 3.06 $ (.81)
Cumulative effect of accounting
change - - - (.15)
__________ __________ __________ __________
Diluted $ 1.18 $ (.21) $ 3.06 $ (.96)
========== ========== ========== ==========
Segment Information
Segment sales
Office products $ 893,256 $ 814,218 $3,381,724 $3,067,326
Building products 602,307 410,215 2,182,571 1,722,496
Paper and paper products 479,851 402,255 1,749,558 1,751,574
Intersegment eliminations and other (101,150) (90,505) (361,191) (379,273)
__________ __________ __________ __________
$1,874,264 $1,536,183 $6,952,662 $6,162,123
========== ========== ========== ==========
Segment income (loss)
Office products $ 44,160 $ 26,626 $ 154,590 $ 121,459
Building products 75,073 27,197 273,815 57,720
Paper and paper products 59,924 (17,193) 117,687 10,005
Corporate and other (11,198) (16,998) (45,412) (46,192)
__________ __________ __________ __________
Total 167,959 19,632 500,680 142,992
Interest expense (37,142) (37,940) (144,740) (159,870)
__________ __________ __________ __________
Income (loss) before income taxes,
minority interest, and cumulative
effect of accounting change $ 130,817 $ (18,308) $ 355,940 $ (16,878)
========== ========== ========== ==========
</TABLE>
Notes to Quarterly Financial Statements
Boise Cascade Corporation and Subsidiaries
FINANCIAL INFORMATION. The Statements of Income (Loss) and Segment
Information are unaudited statements which do not include all Notes to
Financial Statements and should be read in conjunction with the 1999
Annual Report of the company. The 1999 Annual Report will be available in
March 2000. Net income (loss) for the three months and years ended
December 31, 1999 and 1998, involved estimates and accruals.
FOURTH QUARTER 1999 NONROUTINE ITEMS. In October 1999, our building
products segment completed the sale of 56,000 acres of central Washington
timberland, resulting in a pretax gain of $47.0 million. The gain is
recorded in "Other (income) expense, net" in the three months and year
ended December 31, 1999, Statements of Income.
In December 1999, we adjusted restructuring charges recorded in 1998 to
reflect our actual retirement and severance experience. These adjustments
resulted in an increase in pretax income of $1.5 million, which is
recorded in "Other (income) expense, net" in the three months and year
ended December 31, 1999, Statements of Income. Approximately $1.1 million
of this adjustment was recorded in our paper and paper products segment
and $0.4 million was recorded in the corporate and other segment.
The impact of the above items increased net income $29.6 million and basic
and diluted income per share $0.51 and $0.48 for the three months ended
December 31, 1999.
FOURTH QUARTER 1998 NONROUTINE ITEMS. In December 1998, we announced a
companywide cost-reduction initiative and the restructuring of certain
operations as a result of the ongoing global financial crisis and the weak
business environment. These initiatives included restructuring work,
streamlining processes, and consolidating functions. Staff reductions
occurred through early retirements, layoffs, and attrition. Our paper
research and development facility in Portland, Oregon, was closed by
midyear 1999. Boise Cascade Office Products (BCOP), of which we own 81%,
announced that they would restructure certain of their European
operations. Related to these initiatives, we recorded a pretax loss in
the fourth quarter of 1998 of approximately $38.0 million. Of this
charge, all but $1.0 million for inventory write-offs was recorded in
"Other (income) expense, net" in the accompanying Statements of Income
(Loss).
The impact of the above items and related tax effects increased net loss
$15.9 million, or $0.29 per basic and diluted share, for the three months
ended December 31, 1998. Segment results decreased as follows: office
products, $11.1 million; building products, $2.8 million; paper and paper
products, $18.5 million; and corporate and other, $5.6 million.
The 1998 amounts shown above have been restated from those originally
presented in our fourth quarter 1998 earnings release. The company filed
an amended 1998 Form 10-K and amended first and second quarter 1999
Form 10-Qs in October 1999. The amendments (pretax $4.4 million)
decreased the previously reported net loss in the fourth quarter of 1998
by $2.7 million, or $0.04 per diluted share, and decreased reported net
income and diluted income per share in the first quarter of 1999 and year
ended 1999 by the same amounts. The company amended its filings following
discussions with the Securities and Exchange Commission concerning the
timing of charges related to the early retirement program announced in the
fourth quarter of 1998.
YEAR ENDED DECEMBER 31, 1999, NONROUTINE ITEMS. In addition to the fourth
quarter 1999 items previously discussed, the following nonroutine items
occurred in 1999.
Late in the second quarter of 1998, we adopted a plan to restructure our
wood products manufacturing business by permanently closing four
facilities, including sawmills in Elgin, Oregon; Horseshoe Bend, Idaho;
and Fisher, Louisiana; and a plywood plant in Yakima, Washington. We
closed the sawmills in Horseshoe Bend and Fisher in 1998 and planned to
close the other facilities in 1999. In late May 1999, we decided to
postpone the closures of Elgin and Yakima. This decision was based on the
impact of a fire at our Elgin plywood plant in May 1999 and recent changes
in wood supply and costs, product prices, and improved plant operations.
As a result of this decision, in second quarter 1999, our building
products segment reversed previously recorded restructuring charges
totaling $35.5 million. This adjustment is recorded in "Other (income)
expense, net" in the year ended December 31, 1999, Statement of Income.
Also in the second quarter of 1999, our office products segment adjusted
the restructuring charges established in fourth quarter 1998 for the
closing of facilities in their European operations. This restructuring
program was $4.0 million less costly than originally anticipated. Our
paper and paper products segment also adjusted charges recorded in fourth
quarter 1998 for the elimination of jobs and the closure of our research
and development facility in Portland, Oregon, to reflect our actual
experience. This adjustment increased the paper and paper products
segment's year-to-date income by $1.2 million. These adjustments are
reflected in "Other (income) expense, net" in the year ended December 31,
1999, Statement of Income except for approximately $0.8 million included
in "Materials, labor, and other operating expenses" related to inventory
items.
Pretax income in first quarter 1999 was reduced by $4.4 million as a
result of the previously discussed change in the timing of recording early
retirement expense.
The impact of all of the 1999 nonroutine items increased net income
$51.6 million and basic and diluted income per share $0.90 and $0.84 for
the year ended December 31, 1999.
YEAR ENDED DECEMBER 31, 1998, NONROUTINE ITEMS. In addition to the fourth
quarter 1998 items previously discussed, the following nonroutine items
occurred in 1998.
On September 6, 1998, our Medford, Oregon, plywood plant and lumber
storage area were severely damaged by fire. In the third quarter of 1998,
the building products segment recorded a pretax gain of $46.5 million, and
the corporate and other segment recorded a pretax loss of $1.5 million
related to an insurance settlement for this fire. This gain is recorded
in "Other (income) expense, net" in the accompanying Statements of Income
(Loss).
Results for the second quarter 1998 were negatively impacted
by the $61.9 million restructuring charge in the building products segment
described above and a $19.0 million charge in the paper and paper products
segment for the revaluation of paper-related assets.
As of January 1, 1998, we adopted the provisions of a new accounting
standard, AICPA Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities," which required the write-off of previously
capitalized preoperating costs. Adoption of this statement resulted in a
charge for the cumulative effect of accounting change, net of tax, of
$8.6 million, or $0.15 per basic and diluted share, for the year ended
December 31, 1998. Also in the first quarter of 1998, we redeemed our
Series F Preferred Stock. While this redemption had no impact on net
loss, it increased net loss per basic and diluted share $0.07 for the year
ended December 31, 1998.
The impact on the year ended December 31, 1998, of all the 1998 nonroutine
items described above reduced net income $55.0 million and basic and
diluted income per share $1.05.
OTHER. At December 31, 1998, we adopted Financial Accounting Standards
Board SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." Previously reported 1998 segment information has
been restated to conform to the new standard.
Our 1999 tax provision rate was 40.0%. Our actual 1998 benefit rate was
5.7%. Excluding nonroutine items in 1998, the annual tax provision rate
would have been approximately 46%. The changes in our tax rates were due
primarily to the sensitivity of the rate to changing income levels and the
mix of income sources.
NET INCOME (LOSS) PER COMMON SHARE. Net income (loss) per common share
was determined by dividing net income (loss), as adjusted, by applicable
shares outstanding. For the three months and year ended December 31,
1998, the computation of diluted net loss per share was antidilutive;
therefore, amounts reported for basic and diluted loss were the same.
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 December 31
__________________ ___________________
1999 1998 1999 1998
_______ _________ ________ _________
(expressed in thousands)
<S> <C> <C> <C> <C>
Basic
Net income (loss) as reported,
before cumulative effect of
accounting change $75,500 $ (8,342) $199,753 $(25,692)
Preferred dividends(1) (3,275) (3,484) (13,559) (15,578)
Excess of Series F Preferred Stock
redemption price over carrying value(2) - - - (3,958)
_______ ________ ________ ________
Basic income (loss) before cumulative
effect of accounting change 72,225 (11,826) 186,194 (45,228)
Cumulative effect of accounting change,
net of income tax - - - (8,590)
_______ ________ ________ ________
Basic income (loss) $72,225 $(11,826) $186,194 $(53,818)
======= ======== ======== ========
Average shares outstanding used to
determine basic income (loss) per
common share 57,141 56,335 56,861 56,307
======= ======== ======= ========
Diluted
Basic income (loss) before cumulative
effect of accounting change $72,225 $(11,826) $186,194 $(45,228)
Preferred dividends eliminated 3,275 - 13,559 -
Supplemental ESOP contribution (2,798) - (11,588) -
_______ ________ ________ ________
Diluted income (loss) before cumulative
effect of accounting change 72,702 (11,826) 188,165 (45,228)
Cumulative effect of accounting change,
net of income tax - - - (8,590)
_______ ________ ________ ________
Diluted income (loss) 72,702 $(11,826) $188,165 $(53,818)
======= ======== ======== ========
Average shares outstanding used to
determine basic income (loss) per
common share 57,141 56,335 56,861 56,307
Stock options and other 387 - 419 -
Series D Convertible Preferred Stock 4,022 - 4,139 -
_______ ________ ________ ________
Average shares used to determine
diluted income (loss) per common share 61,550 56,335 61,419 56,307
======= ======== ======== ========
(1) 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.
(2) Year ended December 31, 1998, included a negative 7 cents related to the
redemption of the Series F Preferred Stock. The loss used in the
calculation of loss per share was increased by the excess of the amount
paid to redeem the preferred stock over its carrying value.
</TABLE>
EXHIBIT 21
The significant subsidiaries of the Company are as follows:
State or Other
Jurisdiction
of Incorporation
or Organization
________________
Boise Cascade Office Products
Corporation Delaware
1EXH21.DOC
- -2-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
The data schedule contains summary financial information extracted from Boise
Cascade Corporation's Balance Sheet at December 31, 1999, and from its
Statement of Income for the year ended December 31, 1999. The
information presented is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 57,720
<SECURITIES> 9,215
<RECEIVABLES> 663,609
<ALLOWANCES> 11,289
<INVENTORY> 703,984
<CURRENT-ASSETS> 1,531,108
<PP&E> 5,279,083
<DEPRECIATION> 2,427,415
<TOTAL-ASSETS> 5,138,414
<CURRENT-LIABILITIES> 1,124,679
<BONDS> 1,717,337
0
224,199
<COMMON> 142,894
<OTHER-SE> 1,247,020
<TOTAL-LIABILITY-AND-EQUITY> 5,138,414
<SALES> 6,952,662
<TOTAL-REVENUES> 6,952,662
<CGS> 5,666,926
<TOTAL-COSTS> 6,460,419
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 144,740
<INCOME-PRETAX> 355,940
<INCOME-TAX> 142,376
<INCOME-CONTINUING> 213,564
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199,753
<EPS-BASIC> 3.27
<EPS-DILUTED> 3.06
</TABLE>
