EXHIBIT 10.3


 


MANAGEMENT EQUITY AGREEMENT


 


BETWEEN


 


FOREST PRODUCTS HOLDINGS, L.L.C.


 


AND


 


DUANE MCDOUGALL


 


Dated as of November 20, 2008


 


THE
SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER STATE SECURITIES
LAWS.  THE SECURITIES ARE BEING SOLD IN
RELIANCE UPON EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION
REQUIREMENTS.  THE SECURITIES CANNOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
THE RESTRICTIONS ON TRANSFERABILITY SET FORTH IN THIS AGREEMENT AND APPLICABLE
FEDERAL AND STATE SECURITIES LAWS.


 

















 


Table of Contents


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Purchase
  and Sale of Series B Common Units

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Grant
  of 2008 Series C Common Units

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Representations
  and Warranties; Acknowledgments

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Repurchase
  Option

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Restrictions
  on Transfer

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Additional
  Restrictions on Transfer

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Sale of
  the Company

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Voting
  Agreement

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Definitions

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Dispute Resolution

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Notices

  	
   

  	
  17

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  General
  Provisions

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Code
  Section 280G

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Public
  Offering

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Joinder
  to LLC Agreement

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CONSENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 83(B) ELECTION

  	
   

  	
   

  
						



 

















 


MANAGEMENT EQUITY
AGREEMENT


 


THIS MANAGEMENT EQUITY AGREEMENT (this “Agreement”) is made as
of November 20, 2008, among Forest Products Holdings, L.L.C., a Delaware
limited liability company (the “Company”), Duane C. McDougall (the “2008
Employee Investor”) and Madison Dearborn Capital Partners IV, L.P. (the “Investor”).  Certain capitalized terms used herein are
defined in Section 9 hereof.


 


WHEREAS, the Company has a majority equity investment in Boise Cascade
Holdings, L.L.C., a Delaware limited liability company (“Boise Holdings”)
and OfficeMax Incorporated, a Delaware corporation (“OfficeMax”) has a
minority equity investment in Boise Holdings.


 


WHEREAS, the Company has established an incentive program under which
it has issued its Series B Common Units and its Series C Common Units
to certain employees and directors.


 


WHEREAS, the Company has been authorized to offer Series B Common
Units and 2008 Series C Common Units to the 2008 Employee Investor (the “2008
Offering”);


 


WHEREAS, the 2008 Offering is being implemented through an offering of
Units to the 2008 Employee Investor conducted in compliance with Rule 701
under the 1933 Act.


 


WHEREAS, the Company, the 2008 Employee Investor and the Investor
desire to enter into this Agreement to set forth the terms and conditions
relating to the issuance and sale by the Company of Series B Common Units
and the grant by the Company of 2008 Series C Common Units.  All Units issued hereunder or acquired
hereafter by the 2008 Employee Investor are referred to herein as the 2008
Employee Investor’s “Employee Units.”


 


NOW, THEREFORE, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement, intending to be legally bound,
hereby agree as follows:


 


1.                                       Purchase and Sale of Series B
Common Units.


 


(a)           Purchase and Sale.  If Executive elects to deliver the Election
Notice to the Company in accordance with this Section 1 (and, for the
avoidance of doubt, it shall be Executive’s option to deliver the Election
Notice and whether to purchase Series B Units in accordance with this Section 1)
not later than the fifth business day after receipt of the Election Notice, the
2008 Employee Investor shall purchase, and the Company shall sell, the number
of Series B Common Units (not to exceed that number of Series B
Common Units determined by dividing $2,000,000 by the FMV Price (the number of Series B
Common Units determined by such quotient, the “Maximum Units”))
specified in the Election Notice, at a price per Series B Common Unit
equal to the FMV Price.  On the date
selected for such purchase and sale, the 2008 Employee Investor shall pay to
the Company, by wire transfer of immediately available funds, an 


 

















 


aggregate amount equal to the product of (i) the number of Series B
Common Units elected to be purchased by the 2008 Employee Investor in the
Election Notice (not to exceed the Maximum Units) multiplied by (ii) the
FMV Price.  The Series B Common
Units acquired pursuant to this Section 1(a) shall be subject
to the vesting provisions set forth in Section 1(c) below.


 


(b)                                 Section 83(b) Election.  Within 30 days after the 2008 Employee
Investor purchases any Series B Common Units from the Company, the 2008
Employee Investor may make an effective election with the Internal Revenue
Service under Section 83(b) of the Code in the form of Annex A
attached hereto, if such election is available to him under the Code.


 


(c)                                  Vesting
of Series B Common Units.


 


(i)                                     Except
as otherwise provided in this Section 1(c), from and after the date
of purchase thereof in accordance with this Agreement, the 2008 Employee
Investor’s Series B Common Units will vest in accordance with the
following schedule if, as of each such date, the 2008 Employee Investor is and
has continued to be employed by the Company or any of its Subsidiaries:


 


	
  Vesting Date

  	
   

  	
  Cumulative Percentage of 

  Series B Common Units 

  That Shall Vest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 1, 2009

  	
   

  	
  50

  	
  %

  
	
  December 1, 2010

  	
   

  	
  100

  	
  %

  



 


(ii)                                  Series B
Common Units which have become vested are referred to herein as “Vested Series B
Common Units” (and, along with Vested 2008 Series C Common Units, as
defined below, are included within the meaning of the term “Vested Units”).  All other Series B Common Units are
referred to herein as “Unvested Series B Common Units” (and, along
with Unvested 2008 Series C Common Units, as defined below, are included
within the meaning of the term “Unvested Units”).  Without limiting the provisions of Section 1(c)(iv) below,
if the 2008 Employee Investor ceases to be employed by the Company or any of
its Subsidiaries prior to December 1, 2010 on any date other than a
Vesting Date set forth above, the cumulative percentage of the 2008 Employee
Investor’s Series B Common Units to become vested shall be determined on a
pro rata basis according to the number of days elapsed since the immediately
preceding Vesting Date (or in the case of a termination prior to December 1,
2009, since December 1, 2008).


 


(iii)                               Upon
the occurrence of a Sale of the Company or a Public Offering, all Unvested Series B
Common Units shall become immediately vested at the time of such event;
provided that in the event of a Sale of the Company, as a condition to the 2008
Employee Investor’s Unvested Series B Common Units becoming immediately
vested upon such event, the 2008 Employee Investor shall, if requested by the
purchaser of the Company and for no additional consideration therefor, agree
that, so long as the 2008 Employee Investor receives a Comparable Offer of
employment from the 


 

















 


purchasing or surviving entity (the “New Employer”)
prior to the Sale of the Company, the 2008 Employee Investor shall accept such
offer and shall not voluntarily resign prior to the date designated by the New
Employer (which may not be more than 6 months after the Sale of the Company)
absent a breach of the Comparable Offer by such New Employer.  The term “Comparable Offer” means an
offer of employment wherein the salary, bonus and overall compensation and
benefits package (other than with respect to equity participation), job
description and scope of duties (although not necessarily job title) are no
less favorable than those applicable to the 2008 Employee Investor’s employment
immediately prior to the Sale of the Company and pursuant to which the 2008
Employee Investor’s primary job location is within 25 miles of the individual’s
primary job location immediately prior to the Sale of the Company.


 


(iv)                              In
the event of termination of the 2008 Employee Investor’s employment due to the
death or Permanent Disability of the 2008 Employee Investor, all Unvested Series B
Common Units shall become immediately vested at the time of such event.  For purposes of this Agreement, the
determination of the 2008 Employee Investor’s Permanent Disability shall be
made in good faith by the Company’s board of directors or, in the absence of a
board of directors, by its managing member (the “Board”).


 


(d)                                 Determination
of TEV Price.  As promptly as
practicable after the date hereof, the Company shall at, its own cost and
expense, engage an independent third-party appraiser to determine the
enterprise valuation of Boise Holdings and, based on such valuation, shall
calculate the fair market value of a Series B Common Unit.  Within five business days after making such
determination, the Company shall deliver a copy of such appraisal to Executive
and shall provide written notice (the “Determination Notice”) to the
2008 Employee Investor of its determination of the fair market value of a Series B
Common Unit as of the date of such notice (the “FMV Price”), and the
Threshold Equity Value applicable to a new Series C Common Unit to be
issued as of such date (the “TEV Price”).  In the event that Executive determines to
purchase Series B Common Units at the FMV Price for each such unit and
otherwise in accordance with this Section 1, then on or prior to the fifth
(5th) business day after receipt of the Determination Notice, Executive shall
provide irrevocable written notice (the “Election Notice”) to the
Company of such election and the number of Series B Common Units (not to
exceed the Maximum Units) that Executive is electing to acquire at the FMV
Price per Series B Common Unit. 
Notwithstanding anything herein to the contrary, in the event that no
Election Notice is received by the Company on or prior to the fifth (5th)
business day after delivery of the Determination Notice, no Series B Units
shall be purchased hereunder.


 


2.                                       Grant of 2008 Series C
Common Units.


 


(a)                                  Grant.  Within five (5) business days after the
receipt of the Election Notice or, if no Election Notice is received, not
earlier than the sixth (6th) business day after, and not later than the tenth
(10th) business day after, delivery of the Determination Notice, the Company
shall grant the 2008 Employee Investor 8,972,980 2008 Series C Common
Units set 


 

















 


forth on the 2008 Employee Investor’s signature page attached
hereto.  The 2008 Series C Common
Units acquired pursuant to this Section 2(a) shall be subject
to the vesting provisions set forth in Sections 2(c) and (d) below.  The 2008 Series C Common Units being
issued hereunder are being issued with a Threshold Equity Value equal to the
TEV Price.


 


(b)                                 Section 83(b) Election.  Within 30 days after the 2008 Employee
Investor receives a grant of 2008 Series C Common Units from the Company,
the 2008 Employee Investor may make an effective election with the Internal
Revenue Service under Section 83(b) of the Code in the form of Annex
A attached hereto, if such election is available to him under the
Code.  The parties to this Agreement
agree that the 2008 Series C Common Units have a fair market value of $0
as of the date hereof and will be treated as such by the Company for tax
reporting purposes.


 


(c)                                  Time
Vesting 2008 Series C Common Units.


 


(i)                                     Except
as otherwise provided in this Section 2(c), from and after the date
of grant thereof in accordance with this Agreement, the 2008 Employee
Investor’s 2008 Series C Common Units (the “Time Vesting 2008 Series C
Common Units”) will vest in accordance with the following schedule, if as
of each such date, the 2008 Employee Investor is and has continued to be
employed by the Company or any of its Subsidiaries:


 


	
  Vesting Date

  	
   

  	
  Cumulative Percentage of

  Time Vesting 2008 Series C

  Common Units

  That Shall Vest

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  December 1, 2009

  	
   

  	
  50

  	
  %

  
	
  December 1, 2010

  	
   

  	
  100

  	
  %

  



 


(ii)                                  Time
Vesting 2008 Series C Common Units which have become vested are referred
to herein as “Vested 2008 Series C Common Units” (and, along with
Vested Series B Common Units are included within the meaning of the term “Vested
Units”) and all other Time Vesting 2008 Series C Common Units are
referred to herein as “Unvested 2008 Series C Common Units” (and,
along with Unvested Series B Common Units, are included within the meaning
of the term “Unvested Units”).  If
the 2008 Employee Investor ceases to be employed by the Company or any of its
Subsidiaries prior to December 1, 2010 on any date other than a Vesting
Date set forth above, the cumulative percentage of the 2008 Employee Investor’s
Time Vesting 2008 Series C Common Units to become vested shall be
determined on a pro rata basis according to the number of days elapsed since
the immediately preceding Vesting Date (or in the case of a termination prior
to December 1, 2009, since December 1, 2008).


 


(iii)                               Upon
the occurrence of a Sale of the Company, all Time Vesting Series C Common
Units which have not yet become vested shall become vested at the time of such
event; provided that in the event of a Sale of the Company, as a condition to 


 

















 


the 2008 Employee
Investor’s Time Vesting Series C Common Units becoming immediately vested
upon such event, the 2008 Employee Investor shall, if requested by the New
Employer and for no additional consideration therefor, agree that, so long as
the 2008 Employee Investor receives a Comparable Offer prior to the Sale of the
Company, the 2008 Employee Investor shall accept such offer and shall not
voluntarily resign prior to the date designated by the New Employer (which may
not be more than 6 months after the Sale of the Company) absent a  breach of the Comparable Offer by such New
Employer.


 


(iv)                              In
the event of termination of the 2008 Employee Investor’s employment due to the
death or Permanent Disability of the 2008 Employee Investor, there will time
vest the amount of Time Vesting Series C Common Units which were scheduled
to time vest within the 365 days following such termination.  For purposes of this Agreement, the
determination of the 2008 Employee Investor’s Permanent Disability shall be
made in good faith by the Board.


 


(v)                                 In
the event of a Public Offering, all Time Vesting Series C Common Units
will vest upon the consummation of such Public Offering.


 


(vi)                              The
Board shall provide to the 2008 Employee Investor, within 30 days of the 2008
Employee Investor’s written request, a reasonably detailed description of the
calculations and values employed in determining the IRR Fair Value and
Indebtedness, in each case to the extent relevant to the calculation of IRR
Fair Value for the 2008 Employee Investor. 
The Board shall also provide to the 2008 Employee Investor copies of or
access to all related underlying financial statements, third-party valuation
reports and accounting and business records subject to the 2008 Employee
Investor agreeing to appropriate confidentiality restrictions.


 


(vii)                           If the Series B
Common Units are publicly traded, the “IRR Fair Value” will be equal to
the Fair Market Value of the Series B Common Units.  If the Series B Common Units are not
publicly traded but the Company’s sole asset is an interest in a publicly
traded security (or an indirect interest in such a security through the
ownership of other equity securities), then the “IRR Fair Value” will be equal
to the aggregate Fair Market Value of such publicly traded security to the
holders of Series B Common Units, divided by the number of Series B
Common Units.  If the Series B
Common Units are not publicly traded and the Company has assets other than a
direct or indirect interest in a publicly traded security, then the IRR Fair
Value of the Series B Common Units will be determined as follows: (1) first,
the enterprise value of Boise Holdings will be determined utilizing the most
recent (relative to the Determination Date) third-party valuation for Boise Holdings
received by the Company or Boise Holdings and shall be determined without
regard to any valuation of the debt or equity securities of Boise Inc. then
owned or held by Boise Holdings or any of its Subsidiaries; (2) second,
the equity value of Boise Holdings will be determined by (x) without any
duplication to any amount used in computing enterprise value, increasing such
enterprise value by (a) the Fair Market Value of the Boise Inc. common
stock owned or held by Boise Holdings or any of its Subsidiaries, (b) the
aggregate principal amount plus accrued and unpaid 


 

















 


interest of any
promissory note of Boise Inc. owned or held by Boise Holdings (provided that if
any portion of such promissory note has been sold or transferred to a third
party, ascribing the value to the remainder of such promissory note implied by
such sale or transfer), and (c) the aggregate cash of Boise Holdings and
its Subsidiaries and (y) without any duplication to any amount used in
computing enterprise value, reducing such enterprise value by (a) the
total amount of Indebtedness of Boise Holdings and its Subsidiaries and (b) any
equity securities of any Subsidiaries of Boise Holdings as of the Determination
Date owned by any Person other than Boise Holdings or any of its wholly-owned
Subsidiaries; (3) third, by assuming the equity value of Boise Holdings is
distributed in accordance with the distribution provisions of the Boise
Holdings Operating Agreement, and (4) the value of a Series B Common
Unit will be determined by assuming an amount (the “Company Equity Value
Amount”) equal to (I) the distributions to the Company from Boise
Holdings as determined in accordance with clause (3) foregoing, plus (II) the
fair market value of any assets of the Company (as determined by the Board),
other than the equity securities of Boise Holdings, and minus (III) any
Indebtedness and other liabilities of the Company (as determined by the Board)
and assuming the Company Equity Value Amount was distributed to the holders of
Units in accordance with the LLC Agreement and determining the amount
distributed to each Series B Common Unit as a result of such distribution
(which will be determined on a fully diluted basis, assuming full vesting of
all of all Units that are or would become vested at the time of such IRR
calculation).


 


3.                                       Representations and Warranties;
Acknowledgments.


 


(a)                                  In
connection with the purchase and sale of Employee Units, the 2008 Employee
Investor represents and warrants as of the date of this Agreement and as of the
date of issuance of any Employee Units as follows:


 


(i)                                     Employee
Units to be acquired by the 2008 Employee Investor pursuant to this Agreement
shall be acquired for 2008 Employee Investor’s own account and not with a view
to, or intention of, distribution thereof in violation of the 1933 Act, or any
applicable state securities laws, and Employee Units acquired by the 2008
Employee Investor shall not be disposed of in contravention of the 1933 Act or
any applicable state securities laws.


 


(ii)                                  The
2008 Employee Investor is a management employee of the Company or its
Subsidiaries, is sophisticated in financial matters and is able to evaluate the
risks and benefits of decisions respecting the investment in the Employee
Units.


 


(iii)                               The
2008 Employee Investor is able to bear the economic risk of  the 2008 Employee Investor’s investment in
Employee Units acquired hereunder for an indefinite period of time because (A) Employee
Units have not been registered under the 1933 Act and, therefore, cannot be
sold unless subsequently registered under the 1933 Act or an exemption from
such registration is available and (B) Employee Units are subject to the
contractual restrictions on transfer set forth herein.


 

















 


(iv)                              The
2008 Employee Investor has had an opportunity to ask questions of and receive
answers concerning the terms and conditions of the offering of Employee Units,
and has had full access to such other information concerning the Company as he
or she has requested.   The 2008 Employee Investor has been advised of
certain risks associated with 2008 Employee Investor’s purchase of Employee
Units and has had full access to such other information concerning the Company
as he or she has requested.  2008
Employee Investor has reviewed, or has had an opportunity to review, the following
documents: (A) the LLC Agreement as in effect on the date hereof; (B) the
Form 10-K Annual Report for the year ended December 31, 2007 filed by
Boise Holdings with the Securities and Exchange Commission on February 20,
2008; (C) the Form 10-Q Quarterly Report filed by Boise Holdings with
the Securities and Exchange Commission on May 8, 2008, and (D) the Form 10-Q
Quarterly Report filed by Boise Holdings with the Securities and Exchange
Commission on November 6, 2008.


 


(v)                                 This
Agreement and the LLC Agreement constitute the legal, valid and binding
obligation of the 2008 Employee Investor, enforceable in accordance with their
respective terms, and the execution, delivery and performance of this Agreement
and the LLC Agreement by the 2008 Employee Investor do not and shall not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which 2008 Employee Investor is a party or any judgment, order or
decree to which the 2008 Employee Investor is subject.


 


(vi)                              The
2008 Employee Investor is a resident of the jurisdiction listed below 2008
Employee Investor’s signature on the signature page hereto.


 


(vii)                           2008
Employee Investor acknowledges that the Employee Units are being sold or
granted hereunder in “compensatory circumstances” within the meaning of Rule 701
under the 1933 Act.


 


(b)                                 As
an inducement to the Company to issue Employee Units hereunder to the 2008
Employee Investor, and as a condition thereto, the 2008 Employee Investor
acknowledges and agrees that:


 


(i)                                     neither
the issuance of the Employee Units hereunder to the 2008 Employee Investor nor
any provision contained herein shall entitle the 2008 Employee Investor to
remain in the employment of the Company or its Subsidiaries or affect the right
of the Company to terminate the 2008 Employee Investor’s employment at any
time; and


 


(ii)                                  the
Company shall have no duty or obligation to disclose to the 2008 Employee
Investor, and the 2008 Employee Investor shall have no right to be advised of,
any material information regarding the Company and its Subsidiaries at any time
prior to, upon or in connection with the repurchase of Employee Units upon the
termination of the 2008 Employee Investor’s employment with the Company and its
Subsidiaries, the transfer of Employee Units pursuant to this Agreement, the
vesting of Employee Units hereunder or in connection with any other action
taken as provided hereunder, subject to the provisions in Section 2(c)(vi) above.


 

















 


4.                                       Repurchase Option.


 


(a)                                  Repurchase
Option.  If the 2008 Employee Investor
ceases to be employed by the Company or any of its Subsidiaries for any reason
(the 2008 Employee Investor’s “Termination”), the 2008 Employee
Investor’s Employee Units (whether held by the 2008 Employee Investor or one or
more of his transferees) shall be subject to repurchase by the Company and the
Investor pursuant to the terms and conditions of this Section 4
(the “Repurchase Option”).


 


(b)                                 Purchase
Price.  In the case of any
Termination other than a Termination for Cause, (i) the repurchase price
for all Vested Units will be the Fair Market Value thereof as of the date of
Termination, (ii) the repurchase price for all Unvested Series B
Common Units will be the Original Cost thereof and (iii) with regard to
the Unvested Series C Common Units, no repurchase price shall be payable
and the Unvested Series C Common Units shall be deemed forfeited for no
consideration immediately upon such Termination without any further action
required on the part of the Company, the Investor or the 2008 Employee
Investor.  In the case of a Termination
for Cause, the repurchase price to be paid for all Series B Common Units
(whether or not vested) will be the lesser of Fair Market Value thereof as of
the date of Termination and the Original Cost thereof and all Series C Common
Units will be forfeited in the manner described above as if they were all
Unvested Series C Common Units.


 


(c)                                  Option
Exercise Procedures.  The Company may
elect to purchase all or any portion of the 2008 Employee Investor’s Employee
Units by delivering written notice (the “Repurchase Notice”) to the
holder or holders of such Employee Units within 90 days after the 2008 Employee
Investor’s Termination.  The Repurchase
Notice shall set forth the number of Unvested Units and Vested Units to be
acquired from each holder of the 2008 Employee Investor’s Employee Units, the
aggregate consideration to be paid for such Employee Units and the time and
place for the closing of the transaction. 
The number of Employee Units to be repurchased by the Company shall first
be satisfied to the extent possible from the Employee Units held by the 2008
Employee Investor at the time of delivery of the Repurchase Notice.  If the number of Employee Units then held by
the 2008 Employee Investor is less than the total number of Employee Units the
Company has elected to purchase, the Company shall purchase the remaining
Employee Units elected to be purchased from the other holder(s) of the
2008 Employee Investor’s Employee Units under this Agreement, pro rata
according to the number of the 2008 Employee Investor’s Employee Units held by
such other holder(s) at the time of delivery of such Repurchase Notice
(determined as close as practicable to the nearest whole units).  The number of Unvested Units and Vested Units
to be repurchased hereunder shall be allocated among the 2008 Employee Investor
and the other holders of the 2008 Employee Investor’s Employee Units (if any)
pro rata according to the number of the 2008 Employee Investor’s Employee Units
to be purchased from such persons in accordance with the preceding sentence.


 


(d)                                 Investor’s
Right to Exercise Option.  If for any
reason following the 2008 Employee Investor’s Termination, the Company does not
elect to purchase, or is not immediately able to purchase due to the restrictions
described in Section 5(h) below, all of the 2008 Employee
Investor’s Employee Units pursuant to the Repurchase Option, the Investor shall
be entitled to exercise the Repurchase Option for the Employee Units the
Company has not elected to purchase 


 

















 


in accordance with Section 4(c) (the “Available
Units”).  As soon as practicable
after the Company has determined that there will be Available Units, but in any
event within 45 days after the 2008 Employee Investor’s Termination, the
Company shall give written notice (the “Repurchase Option Notice”) to
the Investor setting forth the number of Available Units and the purchase price
for the Available Units.  The Investor
may elect to purchase any or all of the Available Units by giving written
notice to the Company within 35 days after the Repurchase Option Notice has
been given by the Company.  As soon as
practicable, and in any event within ten days after the expiration of the
35-day period set forth above, the Company shall notify each holder of Employee
Units as to the number of Employee Units being purchased from such holder
hereunder by the Investor (the “Supplemental Repurchase Notice”).  At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Employee Units, the
Company shall also deliver written notice to the Investor setting forth the
number of shares the Investor is entitled to purchase from each such holder,
the aggregate purchase price and the time and place of the closing of the
transaction.  The number of Unvested Units
and Vested Units to be repurchased under Section 4(c) and this
Section 4(d) shall be allocated among the Company and the
Investor pro rata according to the number of Employee Units to be purchased by
each of them in accordance with the preceding sentence.


 


(e)                                  Option
Closing.  The closing of the purchase
and sale of the Employee Units pursuant to the Repurchase Option as to either
the Company or the Investor shall take place on the date designated by the
Company in the Repurchase Notice, which date shall not be more than 60 days nor
less than five days after the delivery of such notice.  The Investor shall pay for the Employee Units
to be purchased by them pursuant to the Repurchase Option by delivery to the
holders of such Employee Units of a check or wire transfer of funds in the
aggregate amount of the purchase price for such Employee Units.  Subject to Section 4(f), the
Company shall pay for the Employee Units to be purchased by it pursuant to the
Repurchase Option by payment to the holders of such Employee Units of a wire
transfer of immediately available funds in the aggregate amount of the purchase
price for such Employee Units.  In
addition, the Company may pay the purchase price for such Employee Units by offsetting
any then existing documented bona fide monetary debts owed by 2008 Employee
Investor to the Company or guaranteed by the Company on behalf of 2008 Employee
Investor and any payments received by 2008 Employee Investor hereunder shall be
applied first to repayment of any such debts of 2008 Employee Investor (or his
affiliates or family members) to the Company or for which the Company may be
responsible.  The purchasers of Employee
Units hereunder shall be entitled to receive customary representations and
warranties from the sellers regarding such sale of Employee Units (including
representations and warranties regarding good title to such Employee Units,
free and clear of any liens or encumbrances).


 


(f)                                    Rights
of 2008 Employee Investor to Force Option Exercise.   If the 2008 Employee Investor’s Termination
is a result of (i) the 2008 Employee Investor’s death or Permanent
Disability or (ii) a Sale of a Division applicable to the 2008 Employee
Investor (the events described in (i) and (ii), “Put Events”), the
2008 Employee Investor (or his estate, guardian or other legal representative
in the case of death or Permanent Disability) shall have the right to require
the Company (but not the Investor) to exercise the Repurchase Option on the
terms of this Section 4 and subject to all limitations and
conditions hereof.


 
















 


(g)                                 Termination
of Option.  The right of the Company
and the Investor to repurchase Vested Units pursuant to this Section 4
shall terminate upon the first to occur of a Sale of the Company or a Public
Offering, but such right shall continue with respect to Unvested Series C
Common Units after any such occurrence until and unless they become Vested
Units.


 


(h)                                 Impact
of Certain Payment Restrictions. 
Notwithstanding anything to the contrary contained in this Agreement,
all repurchases of Employee Units by the Company (including the payments to be
made to OfficeMax) shall be subject to applicable restrictions contained in the
Company’s and its Subsidiaries’ debt and equity financing agreements or
contained in applicable law.  If any such
restrictions prohibit the repurchase of Employee Units hereunder which the
Company is otherwise entitled or required to make, the time periods provided in
this Section 4 shall be suspended, and the Company shall make such
repurchases as soon as it is permitted to do so under such restrictions;
provided, however, that if the Company is permitted under such restrictions to
do so, in lieu of a cash purchase price for the repurchase of the applicable
Employee Units, the Company shall issue a promissory note as such purchase
price for such Employee Units, which promissory note shall (i) be
subordinate to all other debt of the Company, (ii) be payable in full on
the earliest of (x) the consummation of a Sale of the Company, (y) the
third anniversary of the closing of such purchase and (z) the date on
which the Company is no longer subject to the restrictions prohibiting a cash
payment for the purchase of such Employee Units; and (iii) bear interest
(payable on maturity) at a rate per annum of 7% simple interest.


 


5.                                       Restrictions on Transfer.


 


(a)                                  Transfer
of Employee Units.  The 2008 Employee
Investor shall not sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law) (a “Transfer”) any interest in any Employee
Units, except pursuant to the provisions of Sections 4 and 7 hereof
or this Section 5.


 


(b)                                 Family
Group Transfers.  The restrictions
contained in this Section 5 shall not apply with respect to
Transfers of Employee Units (A) pursuant to applicable laws of descent and
distribution or (B) among the 2008 Employee Investor’s Family Group (as
defined below); provided that the restrictions contained in this Section shall
continue to be applicable to the Employee Units after any such Transfer, the
transferees of such Employee Units shall have agreed in writing to be bound by
the provisions of this Agreement with respect to the Employee Units so
transferred, and (prior to the death of the 2008 Employee Investor) each such
transferee of Employee Units shall have entered into proxies and other
agreements satisfactory to the holders of a majority of the Series B
Common Units pursuant to which the 2008 Employee Investor shall have the sole
right to vote such Employee Units for all purposes (subject to any applicable
voting agreements set forth herein).  For
purposes of this Agreement, “Family Group” with regard to the 2008
Employee Investor means (i) the 2008 Employee Investor’s spouse, siblings
and descendants (whether natural or adopted) and any of such descendants’
spouses; (ii) any trust which at the time of such Transfer and at all
times thereafter is and remains solely for the benefit of the 2008 Employee
Investor and/or the Persons described in clause (i) and/or the Persons
described in clause (iii); and (iii) any family limited partnership,
limited liability company, Subchapter S corporation, or other tax flow-through
entity, the partners, members or other equity owners of which at the time of
such Transfer and at all times thereafter consist 


 

















 


solely of the 2008 Employee Investor and/or the
Persons described in clause (i) and/or the trusts described in clause (ii) and/or
any other Person described in this clause (iii).


 


(c)                                  Participation
Rights.  At least 30 days prior to
any sale by the Investor of Series B Common Units (other than in a Public
Sale or any non-arm’s length Transfer to any Investor’s members or affiliates
or their members, partners, shareholders or affiliates), the Investor shall
deliver written notice (the “Sale Notice”) to the 2008 Employee Investor
specifying in reasonable detail the identity of the prospective transferee(s),
the number of Series B Common Units to be sold and the terms and
conditions of the proposed Transfer.  The
2008 Employee Investor may elect to participate in the contemplated Transfer at
the same price per Unit and on the same terms by delivering written notice to
the Investor within 30 days after delivery of the Sale Notice; it being
understood, however, that the price to be paid for any Series C Common
Unit included in such Transfer shall take into account the different
distribution rights of the Series C Common Units and Series B Common
Units.  If the 2008 Employee Investor has
elected to participate in such Transfer, each of the Investor and the 2008
Employee Investor shall be entitled to sell in the contemplated Transfer, at
the same price and on the same terms (less, in the case of each 2008 Series C
Common Unit issued with a Threshold Equity Value, the Threshold Equity Value
for such Series C Common Unit), a number of Employee Units equal to the
product of (i) the quotient determined by dividing the percentage of Units
owned by the Investor or the 2008 Employee Investor, as the case may be, by the
aggregate percentage of Units collectively owned by the Investor and the 2008
Employee Investor participating in such Transfer and (ii) the aggregate
number of Units to be sold in the contemplated Transfer.


 


For example,
if the Sale Notice contemplated a sale of 100 Units, and if the Investor at
such time owns 40% of all Units and if the 2008 Employee Investor who elects to
participate owns 2% of all Units elects to participate in the contemplated
sale, the Investors would be entitled to sell 95 Units ((40%  ÷ 42%) x 100 units) and the 2008 Employee
Investor would be entitled to sell 5 Units ((2% ÷ 42%) x 100 units).


 


The Investor shall use best efforts to obtain the agreement of the
prospective transferee(s) to the participation of the 2008 Employee
Investor in any contemplated sale of Units in accordance with this Section 5(c).  Each person transferring Units pursuant to
this Section 5(c) shall pay his pro rata share (based on the
number of Units to be sold) of the expenses incurred by the persons
transferring units in connection with such Transfer and shall be obligated to
join in any indemnification or other obligations that the Investor agrees to
provide in connection with such Transfer (other than any such obligations that
relate specifically to another Person such as indemnification with respect to representations
and warranties given by such other Person regarding such other Person’s title
to and ownership of Units).


 


(d)                                 Termination
of Restrictions.  The restrictions on
Transfer of Employee Units set forth in this Section 5 shall
continue with respect to the 2008 Employee Investor Unit following any Transfer
thereof.  Notwithstanding the
aforementioned continuation, the restrictions on transfer of Vested Units will
terminate upon the occurrence of a Sale of the Company or a Public Offering but
such restrictions shall continue with respect to Unvested  Series C Common Units after any such
occurrence until and unless they become Vested Units.


 

















 


6.                                       Additional Restrictions on
Transfer.


 


(a)                                  In
addition to the foregoing restrictions, the Employee Units issued or granted to
the 2008 Employee Investor will not be registered under the 1933 Act or any
applicable state securities laws.  As a
result, such Employee Units are “restricted securities” and may not be
transferred without compliance with all applicable federal or state securities
laws.


 


(b)                                 Each
holder of Employee Units agrees not to effect any public sale or distribution
of any Employee Units or other equity securities of the Company, or any
securities convertible into or exchangeable or exercisable for any of the
Company’s equity securities, during the seven days prior to and the 180 days
after the effectiveness of any underwritten public offering, except as part of
such underwritten public offering or if otherwise permitted by the Company.


 


7.                                       Sale of the Company.


 


(a)                                  If
the Board and the holders of a majority of the Series B Common Units  approve a Sale of the Company (an “Approved
Sale”), then, subject to Section 7(b) hereof, the holders
of Employee Units shall consent to and raise no objections against the Approved
Sale, and if the Approved Sale is structured as a sale of Units, the holders of
Employee Units shall agree to sell their Employee Units on the terms and
conditions approved by the Board and the holders of a majority of the Series B
Common Units.  The holders of Employee
Units shall take all necessary and desirable actions with respect to such
Employee Units in connection with the consummation of the Approved Sale, except
that the provisions of this Section 7(a) shall not be
construed to require such holders to take actions which would adversely affect
the rights of such holders with respect to such Employee Units unless the
holders of a majority of the Series B Common Units also take such action
with respect to the Series B Common Units held by such majority holders.


 


(b)                                 The
obligations of holders of Employee Units with respect to the Approved Sale are
subject to the conditions that (i) in connection with the Approved Sale
all holders of any class or series of Units shall receive the same form and
amount of consideration per Unit in such class (subject in the case of any Series C
Common Unit issued with a Threshold Equity Value to reduction for such Series C
Common Unit in an amount equal to the Threshold Equity Value for such Series C
Unit) and (ii) if any holders of any class or series of Units are given an
option as to the form and amount of consideration to be received, all holders
of such class or series of Units shall be given the same option with respect to
such Units (subject in the case of any Series C Common Unit issued with a
Threshold Equity Value to reduction for such Series C Common Unit in an
amount equal to the Threshold Equity Value for such Series C Unit).


 


(c)                                  If
the Company or the holders of the Company’s securities enter into any
negotiation or transaction for which Rule 506 (or any similar rule then
in effect) promulgated by the Securities Exchange Commission may be available
with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Employee Units shall, at
the request of the Company, appoint a “purchaser representative” (as such term
is 


 

















 


defined in Rule 501) reasonably acceptable to the Company, and the
Company shall pay the fees of such purchaser representative.


 


(d)                                 The
2008 Employee Investor and the other holders of Employee Units (if any) shall
bear their pro rata share (based upon the number of Units sold) of the costs of
any sale of Employee Units pursuant to an Approved Sale to the extent such costs
are incurred for the benefit of all holders of the Units and are not otherwise
paid by the Company or the acquiring party. 
Costs incurred by the 2008 Employee Investor and the other holders of
Employee Units on their own behalf shall not be considered costs of the
transaction hereunder.


 


8.                                       Voting Agreement.  Prior to a Public Offering or a Sale of the
Company, so long as the Investor and its affiliates and co-investors continue
to own a majority of the Series B Common Units, the 2008 Employee Investor
will vote all of his Company securities (and, in the event such holder is
entitled to vote any of the Company’s other securities for the election of
directors, such holder shall vote all such securities) as directed by the
Investor, including in connection with the appointment of members to the Board
except that the provisions of this Section 8 shall not be construed
to require the 2008 Employee Investor to vote in a manner which would adversely
affect the rights of the 2008 Employee Investor with respect to such securities
unless the holders of a majority of the Series B Common Units also vote in
the same manner with respect to the Series B Common Units held by such
majority holders.  In addition, each
holder shall not vote his Employee Units (or such other securities) in
connection with the removal of any of the Investor’s designees as a director
unless and until the Investors direct such holder how to vote on such removal.


 


9.                                       Definitions.


 


(a)                                  “1933
Act” means the Securities Act of 1933, as amended from time to time.


 


(b)                                 “2008
Employee Investor” has the meaning given it in the preamble to this
Agreement.


 


(c)                                  “2008
Offering” has the meaning given it in the preamble to this Agreement.


 


(d)                                 “2008
Series C Common Units” means the Series C Common Units of the Company
issued pursuant to the 2008 Offering.


 


(e)                                  “Cause”
means (i) the 2008 Employee Investor’s theft or embezzlement, or attempted
theft or embezzlement, of money or property of the Company or its Subsidiaries,
perpetration or attempted perpetration of fraud, or participation in a fraud or
attempted fraud, on the Company or its Subsidiaries or unauthorized
appropriation of, or attempt to misappropriate, any tangible or intangible
assets or property of the Company or its Subsidiaries, (ii) any act or
acts of disloyalty, misconduct or moral turpitude by the 2008 Employee Investor
materially injurious to the interest, property, operations, business or
reputation of the Company or its Subsidiaries or conviction (or a plea of
guilty or nolo contendre) of the 2008 Employee Investor of a crime the
commission of which results in injury to the Company or its Subsidiaries or (iii) 


 

















 


the 2008 Employee Investor’s insubordination as evidenced by a
substantial and repeated failure to carry out actions reasonably required by
the Board or by the 2008 Employee Investor’s immediate supervisor.


 


(f)                                    “Code”
means the Internal Revenue Code of 1986 and the regulations promulgated
thereunder, as it may be amended from time to time.


 


(g)                                 “Credit
Agreement” means that certain Amended and Restated Credit Agreement dated
as of April 18, 2005 among Boise Cascade Holdings, L.L.C., Boise Land &
Timber Holdings Corp., Boise Cascade, L.L.C., Boise Land & Timber
Corp., the lenders party thereto and JPMorgan Chase Bank, as Administrative Agent.


 


(h)                                 “Employee
Units” shall have the meaning set forth in the preamble to this
Agreement.  Employee Units shall continue
to be Employee Units in the hands of any holder other than the 2008 Employee
Investor (except for the Company, the Investor and except for transferees in a
Public Sale), and except as otherwise provided herein, each such other holder
of Employee Units shall succeed to all rights and obligations attributable to
the 2008 Employee Investor as a holder of Employee Units hereunder.  All Unvested Units shall remain Employee
Units after any Transfer thereof.


 


(i)                                     “Fair
Market Value” of any security means the average of the closing prices of
the sales of such security on all securities exchanges on which such security
may at the time be listed, or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such
security is not quoted in the NASDAQ System, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market Value is being determined and
the 20 consecutive business days prior to such day.  If at any time a security is not listed on
any securities exchange or quoted in the NASDAQ System or the over-the-counter
market, the Fair Market Value of the Series B Common Units shall be the
IRR Fair Value of such Units and the Fair Market Value of the Series C
Common Units shall be the IRR Fair Value of the Series B Common Units,
adjusted to reflect the different distribution rights of Series B Common
Units and Series C Common Units outstanding at the time of such
determination of Fair Market Value and taking into account any Threshold Equity
Value with respect to which any Series C Common Units (including the 2008 Series C
Common Units) were issued.


 


(j)                                     “Indebtedness” of any Person means, without
duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar
instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding accounts payable
due within one year and accrued expenses, in each case incurred in the ordinary
course of business), (f) all Indebtedness of others secured by (or for
which the holder of such 


 

















 


Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed; provided that if
recourse for such Indebtedness is limited to such property, the amount of
Indebtedness arising under this clause (f) shall be limited to the lesser
of (i) the outstanding principal amount thereof and (ii) the fair
market value of the property subject to such Lien, (g) all Capital Lease
Obligations of such Person, (h) all obligations, contingent or otherwise,
of such Person in respect of bankers’ acceptances and (i) all Receivables
Financing Debt.  The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.  Terms used in this definition which are
defined in the Credit Agreement shall have the meanings set forth in the Credit
Agreement unless otherwise defined in this Agreement.


 


 (k)                               “Independent Third
Party” means any person who, immediately prior to the contemplated
transaction, does not own in excess of 5% of the Units on a fully-diluted
basis, who is not controlling, controlled by or under common control with any
such 5% owner of Units and who is not the spouse or descendent (by birth or
adoption) of any such 5% owner of Units.


 


(l)                                     “LLC
Agreement” means the Amended and Restated Operating Agreement of the
Company dated as of November 10, 2006, as the same may be amended or
amended and restated from time to time.


 


(m)                               “Original
Cost” of each Series B Common Unit purchased hereunder shall be equal
to the price specified in Section 1(a) hereof.


 


(n)                                 “Person”
means an individual, a partnership, a corporation, an association, a limited
liability company, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.


 


(o)                                 “Permanent
Disability” means the 2008 Employee Investor’s inability to perform the
essential duties, responsibilities and functions of his position with the
Company and its Subsidiaries for six (6) consecutive months as a result of
any mental or physical disability or incapacity even with reasonable
accommodations of such disability or incapacity provided by the Company and its
Subsidiaries or if providing such accommodations would be unreasonable, all as
determined by the Board in its reasonable good faith judgment; provided,
however, that the Company shall provide 30 days notice of termination due to
Permanent Disability where such termination shall be effective if the 2008
Employee Investor does not return to full-time active employment within such
30-day period.  The 2008 Employee
Investor shall cooperate in all respects with the Company if a question arises
as to whether he or she has become disabled (including, without limitation,
submitting to an examination by a medical doctor or other health care
specialists selected by the Company and authorizing such medical doctor or such
other health care specialist to discuss the 2008 Employee Investor’s condition
with the Company).


 


(p)                                 “Public
Offering” means the sale, in an underwritten public offering registered
under the 1933 Act, of the Company’s Units.


 

















 


(q)                               “Public
Sale” means any sale pursuant to a registered public offering under the
1933 Act or any sale to the public pursuant to Rule 144 promulgated under
the 1933 Act effected through a broker, dealer or market maker.


 


(r)                                  “Sale
of the Company” means the sale of the Company to an Independent Third Party
or affiliated group of Independent Third Parties pursuant to which such party
or parties acquire (i) Units of the Company possessing the voting power to
elect a majority of the Board (whether by merger, consolidation or sale or
transfer of Units) or (ii) all or substantially all of the Company’s
assets determined on a consolidated basis by the Board.


 


(s)                                “Series B
Common Units” means the Series B Common Units of the Company from time
to time outstanding, including, without limitation, the Series B Common
Units of  the Company issued pursuant to
this Agreement.


 


(t)                                  “Series C
Common Units” means the Series C Common Units of the Company from time
to time outstanding, including, without limitation, the 2008 Series C
Common Units of the Company issued pursuant to this Agreement.


 


(u)                               “Subsidiary”
means, with respect to any Person, any corporation, partnership, association or
other business entity of which (i) if a corporation, a majority of the
total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Subsidiaries of that Person or a
combination thereof, or (ii) if a partnership limited liability company,
association or other business entity, a majority of the partnership or other
similar ownership interest thereof is at the time owned or controlled, directly
or indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof.  For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing director in the case of a
limited liability company, general partner in the case of a limited
partnership, or similar controlling Person in the case of a general
partnership, association or other business entity.


 


(v)                               “Threshold
Equity Value” has the meaning given to such term in the LLC Agreement.


 


(w)                             “Units”
means the Series B Common Units and the Series C Common Units
collectively.


 


10.                                 Dispute
Resolution.  Any determinations that
are necessary and advisable hereunder shall initially be made by the Board, in
good faith.  To the extent that the 2008
Employee Investor disputes any such determination, such determination shall be
reviewed, de novo, and decided
upon by an arbitrator mutually acceptable to the Company and the 2008 Employee
Investor, such arbitration to be held in Boise, Idaho, as the sole and
exclusive remedy of either party.  If no
such arbitrator can be agreed upon within 10 days, each of the Company and the
2008 Employee Investor shall nominate an arbitrator and together such
arbitrators shall 


 

















 


select an arbitrator to review the determination.  The arbitrator shall have the authority to
order expedited discovery, hearing and decision, including the ability to set
outside time limits for such discovery, hearing and decision.  All expenses of such arbitration shall be
borne by the Company, unless the 2008 Employee Investor’s claim is determined
to have been without a reasonable basis, in which case each party shall bear an
equal share of such expenses. The Company shall disclose to the 2008 Employee
Investor any material information regarding the Company and its Subsidiaries as
may reasonably be requested by the 2008 Employee Investor in connection with
such a dispute, it being understood that such disclosure shall be subject to
reasonable confidentiality restrictions. 
In the event of a dispute regarding the Fair Market Value of any
Employee Units hereunder determined by the Board in connection with a
repurchase by the Company or an Investor, if the Board did not use a valuation
prepared by an independent appraiser in making its determination of Fair Market
Value the 2008 Employee Investor shall be entitled to require the Company to
engage an independent appraiser acceptable to both the 2008 Employee Investor
and the Company in connection with an arbitration pursuant to this Section 10.   The determination of the arbitrator shall be
final and binding on the parties hereto and may be enforced by the applicable
party in any court of competent jurisdiction.


 


11.                                 Notices.  Any notice provided for in this Agreement
must be in writing and must be either personally delivered, mailed by first
class mail (postage prepaid and return receipt requested) or sent by reputable
overnight courier service (charges prepaid) to the recipient at the address
below indicated:


 


	
  To the Company:

  
	
   

  
	
  FOREST PRODUCTS HOLDINGS, L.L.C.

  
	
  c/o Madison Dearborn Partners, LLC

  
	
  Three First National Plaza

  
	
  Suite 3800

  
	
  Chicago, IL 60602

  
	
  Telephone: (312) 895-1000

  
	
  Fax: (312) 895-1056

  
	
  Attn: 

  	
  Samuel M. Mencoff

  
	
   

  	
  Thomas S. Souleles

  
	
   

  
	
  and

  
	
   

  
	
  Boise Cascade, L.L.C.

  
	
  1111 West Jefferson
  Street, Suite 300

  
	
  Boise ID 83728

  
	
  Telephone:
  (208) 384-4918

  
	
  Fax:  (208) 384-6566

  
	
  Attn:  General Counsel

  
	
   

  
	
  With copies to:

  
	
   

  
	
  KIRKLAND &
  ELLIS LLP

  
	
  200 East Randolph Drive

  



 

















 


	
  Chicago, IL 60601

  
	
  Telephone: (312)
  861-2000

  
	
  Fax: (312) 861-2200

  
	
  Attn: 

  	
  Richard J. Campbell, PC

  
	
   

  
	
  To 2008 Employee
  Investor:

  
	
   

  
	
  At the address listed
  below 2008 Employee Investor’s signature on the signature page attached
  hereto.

  
	
   

  
	
  To the Investor:

  
	
   

  
	
  MADISON DEARBORN PARTNERS, L.L.C.

  
	
  Three First National Plaza

  
	
  Suite 4600

  
	
  Chicago, IL 60602

  
	
  Telephone: (312) 895-1000

  
	
  Fax:  (312)
  895-1056

  
	
  Attn: 

  	
  Samuel M. Mencoff

  
	
   

  	
  Thomas S. Souleles

  



 


or
such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any notice under this Agreement shall be
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.


 


12.                                 General Provisions.


 


(a)                                  Transfers
in Violation of Agreement.  Any
Transfer or attempted Transfer of any Employee Units in violation of any
provision of this Agreement shall be void, and the Company shall not record
such Transfer on its books or treat any purported transferee of such Employee
Units as the owner of such units for any purpose.


 


(b)                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement shall
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.


 


(c)                                  Complete
Agreement.  Except as otherwise
specifically set forth herein, this Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way; provided that the execution and delivery of this Agreement
by the 2008 Employee Investor shall not amend or 


 

















 


supersede that certain Director Equity Agreement, dated as of April 3,
2006 (it being the intention of the parties that the Prior Agreement shall
continue in full force and effect and govern the Units acquired thereunder and
this Agreement shall govern the Employee Units acquired pursuant to this
Agreement).


 


(d)                                 Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.


 


(e)                                  Successors
and Assigns.  Except as otherwise
provided herein, this Agreement shall bind and inure to the benefit of and be
enforceable by 2008 Employee Investor, the Company, and their respective
successors and assigns (including subsequent holders of Employee Units);
provided that the rights and obligations of 2008 Employee Investor under this
Agreement shall not be assignable except in connection with a permitted
transfer of Employee Units hereunder.


 


(f)                                    Choice
of Law.  The corporate law of the
State of Delaware shall govern all questions concerning the relative rights of
the Company and the 2008 Employee Investor. 
All other questions concerning the construction, validity, enforcement
and interpretation of this Agreement and the exhibits hereto shall be governed
by the internal law, and not the law of conflicts, of the State of Delaware.


 


(g)                                 Remedies.  Each of the parties to this Agreement shall
be entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorney’s fees) caused by any breach
of any provision of this Agreement and to exercise all other rights existing in
its favor.  The parties hereto agree and
acknowledge that money damages would not be an adequate remedy for any breach
of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or deposit) for specific performance and/or other
injunctive relief in order to enforce or prevent any violations of the provisions
of this Agreement.


 


(h)                                 Amendment
and Waiver.  The provisions of this
Agreement may be amended and waived with respect to the 2008 Employee Investor
only with the prior written consent of the Company and the 2008 Employee
Investor.


 


(i)                                     Business
Days.  If any time period for giving
notice or taking action hereunder expires on a day which is a Saturday, Sunday
or legal holiday in the state in which the Company’s chief executive officer’s
office is located, the time period shall be automatically extended to the
business day immediately following such Saturday, Sunday or holiday.


 


(j)                                     Rights
of 2008 Employee Investor.  Nothing
in this Agreement shall interfere with or limit in any way the right of the
Company to terminate the 2008 Employee Investor’s employment at any time (with
or without cause), nor confer upon the 2008 Employee Investor any right to
continue in the employ of the Company or any of its Subsidiaries for any period
or to continue his present (or any other) rate of compensation.


 
















 


(k)                                  Adjustments.  In the event of a reorganization,
recapitalization, unit dividend or unit split, or combination or other change
in the Units, the Board may, in order to prevent the dilution or enlargement of
rights under the Units granted hereunder, make such adjustments in the number
and type of Units authorized hereunder.


 


(l)                                     Delivery
by Facsimile.  This Agreement, the
agreements referred to herein, and each other agreement or instrument entered
into in connection herewith or therewith or contemplated hereby or thereby, and
any amendments hereto or thereto, to the extent signed and delivered by means
of a facsimile machine, shall be treated in all manner and respects as an
original agreement or instrument and shall be considered to have the same binding
legal effect as if it were the original signed version thereof delivered in
person.  At the request of any party
hereto or to any such agreement or instrument, each other party hereto or
thereto shall reexecute original forms thereof and deliver them to all other
parties.  No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine as a defense
to the formation or enforceability of a contract and each such party forever
waives any such defense.


 


13.                                 Code Section 280G.  Notwithstanding any provision of this
Agreement to the contrary, if all or any portion of the payments or benefits
received or realized by the 2008 Employee Investor pursuant to this Agreement
either alone or together with other payments or benefits which 2008 Employee
Investor receives or realizes or is then entitled to receive or realize from
the Company or any of its affiliates would constitute an “excess parachute
payment” within the meaning of Section 280G of the Code and/or any
corresponding and applicable state law provision, such payments or benefits
provided to 2008 Employee Investor shall be reduced by reducing the amount of
payments or benefits payable to 2008 Employee Investor to the extent necessary
so that no portion of such payments or benefits shall be subject to the excise
tax imposed by Section 4999 of the Code and any corresponding and/or applicable
state law provision; provided that such reduction shall only be made if, by
reason of such reduction, 2008 Employee Investor’s net after tax benefit shall
exceed the net after tax benefit if such reduction were not made.  For purposes of this paragraph, “net after
tax benefit” shall mean the sum of (i) the total amount received or
realized by 2008 Employee Investor pursuant to this Agreement that would
constitute a “parachute payment” within the meaning of Section 280G of the
Code and any corresponding and applicable state law provision, plus (ii) all
other payments or benefits which 2008 Employee Investor receives or realizes or
is then entitled to receive or realize from the Company and any of its
affiliates that would constitute a “parachute payment” within the meaning of Section 280G
of the Code and any corresponding and applicable state law provision, less (iii) the
amount of federal or state income taxes payable with respect to the payments or
benefits described in (i) and (ii) above calculated at the maximum
marginal individual income tax rate for each year in which payments or benefits
shall be realized by 2008 Employee Investor (based upon the rate in effect for
such year as set forth in the Code at the time of the first receipt or realization
of the foregoing), less (iv) the amount of excise taxes imposed with
respect to the payments or benefits described in (i) and (ii) above
by Section 4999 of the Code and any corresponding and applicable state law
provision.  Notwithstanding any other agreements
or arrangements to the contrary, this Section 13 sets forth the
2008 Employee Investor’s sole and exclusive rights with regard to the Company
and its Subsidiaries relating to the potential tax treatment under Section 280G
and Section 4999 of the Code and any corresponding state law


 

















 


provisions of any payments or benefits
realized by the 2008 Employee Investor under this Agreement.


 


14.                                 Public Offering.  If the Board approves a Public Offering or an
underwritten public offering under the 1933 Act of any Subsidiary of the
Company, the 2008 Employee Investor shall take all necessary or desirable
actions with respect to the Employee Units in connection with the consummation
of the Public Offering as requested by the Company.  In the event that the managing underwriters
advise the Company in writing that in their opinion the capital structure would
adversely affect the marketability of the offering, the 2008 Employee Investor
shall consent to and vote for a recapitalization, reorganization and/or exchange
of the Units into securities that the managing underwriters and the Board find
acceptable, and the 2008 Employee Investor shall take all necessary or
desirable actions with respect to the Employee Units in connection with the
consummation of the recapitalization, reorganization and/or exchange as
requested by the Company.  In any such
case, the securities exchanged for or issued in respect of the Employee Units
shall be subject to all of the terms and conditions of this Agreement as if
they were Employee Units.  The provisions
of this Section 14 shall not be construed to require the 2008
Employee Investor to take any action which would adversely affect the rights of
the 2008 Employee Investor with respect to the 2008 Employee Investor’s
Employee Units unless the holders of a majority of the Series B Common
Units also take such action with respect to the Series B Common Units held
by such majority holders.


 


15.                                 Joinder to LLC Agreement.  By his execution hereof, the 2008 Employee
Investor agrees that he is hereby becoming party to the LLC Agreement as a “Member”
thereunder and is bound by such LLC Agreement as if originally party thereto
and that any Series B Common Units acquired by the 2008 Employee Investor
and any 2008 Series C Common Units granted to the 2008 Employee Investor
are governed by such LLC Agreement.


 


*  * 
*  *  *


 

















 


IN WITNESS WHEREOF, this
Management Equity Agreement has been executed as of the date first written
above.


 


 


	
   

  	
  Forest Products
  Holdings, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Thomas Carlile

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive
  Vice President &

  
	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Duane C. McDougall

  
	
   

  	
  Duane McDougall

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  876 Northshore Road

  
	
   

  	
  Lake Oswego, OR 97034

  
	
   

  	
  Fax No.: 503-635-1692

  
	
   

  	
  Tel No.: 503-635-1691

  



 


CONSENT


 


The undersigned spouse of 2008 Employee
Investor hereby acknowledges that I have read the foregoing Management Equity
Agreement and that I understand its contents. 
I am aware that the Agreement provides for the repurchase of my spouse’s
Units under certain circumstances and imposes other restrictions on the
transfer of such Units.  I agree that my
spouse’s interest in the Units is subject to this Agreement, and any interest I
may have in such Units shall be irrevocably bound by this Agreement, and
further that my community property interest, if any, shall be similarly bound
by this Agreement.


 


 


	
   

  	
  Spouse’s Signature

  	
  /s/
  Barbara A. McDougall

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Witness’ Signature

  	
  /s/
  illegible

  
	
   

  	
   

  



 


(Signature
Page to Management Equity Agreement)


 

















 


ANNEX A


 


ELECTION TO
INCLUDE UNITS IN GROSS


INCOME PURSUANT TO SECTION 83(b)OF THE
INTERNAL REVENUE CODE


 


The undersigned [purchased Series B Common Units
(“Series B Common Units”) of the Company on                     
and received a grant on such date of Series C Common Units of the Company
(the “2008 Series C Common Units” and together with the Series B
Common Units, the “Units”).  When
used herein, the “Company” means Forest Products Holdings, L.L.C., a
Delaware limited liability company. 
Under certain circumstances, the Company [has the right to repurchase
the Series B Common Units at cost, and] has the right to cause the
forfeiture of the 2008 Series C Common Units, in each case that are held
by the undersigned, (or from the holder of the Units, if different from the
undersigned) should the undersigned cease to be employed by the Company or any
of its subsidiaries.  Hence, the Units
are subject to a substantial risk of forfeiture and are nontransferable.  The undersigned desires to make an election
to have the Units taxed under the provision of Code §83(b) at the time he
or she purchased the Units.


 


Therefore, pursuant to Code §83(b) and Treasury
Regulation §1.83-2 promulgated thereunder, the undersigned hereby makes an
election, with respect to the Units (described below), to report as taxable
income for calendar year 200       the
excess (if any) of the Units’ Fair Market Value on                       over the purchase price thereof.


 


The following information is supplied in accordance
with Treasury Regulation §1.83-2(e):


 


1.                                       The
name, address and social security number of the undersigned:


 


	
   

  	
  Duane C. McDougall

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SSN:

  	
   

  	
   

  
					



 


2.                                       A
description of the property with respect to which the election is being made: [Series B
Common Units and] 2008 Series C Common Units of Forest Products Holdings,
L.L.C.


 


3.                                       The
date on which the property was transferred:                            .   The taxable year for which such election is
made: calendar year             .


 


4.                                       The
restrictions to which the property is subject: 
If the undersigned ceases to be employed by the Company or its
subsidiaries for any reason, the Company (or, to the extent the Company does
not wish to exercise its repurchase option, Madison Dearborn Capital Partners
IV, L.P.) will have the option (but will not be required) to repurchase any or
all of the undersigned’s Units (the “Repurchase Option”). The repurchase
price for all vested Units will be the Fair Market Value thereof, and the
repurchase price for all unvested Units will be the original price paid for
them by the undersigned.  However, if an
employee is terminated for cause, the 


 

















 


repurchase price to be paid for all Units (whether or not vested) will
be the lesser of Fair Market Value and original cost.


 


5.                                       The
Fair Market Value on                       ,
of the property with respect to which the election is being made, determined
without regard to any lapse restrictions: $          
per Series B Common Unit and $                  
per 2008 Series C Common Unit.


 


6.                                       The
amount paid for such property: $              
per Series B Common Unit and $0 per Series 2008 C Common Unit.


 

















 


A copy of this election has been furnished to the
Secretary of the Company pursuant to Treasury Regulations §1.83-2(e)(7).


 


	
   

  	
   

  	
   

  
	
  Dated:                                       ,
  200    

  	
   

  	
  Printed Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature