**Exhibit 10**

 

BOISE INC.

 

DIRECTORS DEFERREDCOMPENSATION PLAN

 

(Effective April 4,2008)

 

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BOISE INC.

DIRECTORS DEFERREDCOMPENSATION PLAN

 

1.             Purpose of thePlan. The purpose of the Boise Inc. Directors Deferred Compensation Plan(the “Plan”) is to further the growth and development of Boise Inc. (the “Company”)by providing directors the opportunity to defer a portion of their cashcompensation and thereby encourage their efforts on behalf of the Company. ThePlan is also intended to provide Participants with an opportunity to supplementtheir retirement income through deferral of current compensation. The Plan isan unfunded plan.

 

2.             Definitions.

 

2.1           Board. The Boardof Directors of Boise Inc.

 

2.2           Compensation. AParticipant’s fees, payable in cash, for services rendered by a Participant asa Director of the Company during a calendar year. Compensation shall notinclude any amounts paid by the Company to a Participant that are not strictlyin consideration for personal services, such as expense reimbursements. Compensationshall not include any taxable income realized by, or payments made to, adirector as a result of the grant, exercise, or payment of any equity awardissued by the Company or any subsidiary or affiliate or as a result of thedisposition of such equity award, unless the Board determines that the awardshall be included in Compensation for purposes of this Plan.

 

2.3           Deferral Election.A Participant’s election to defer all or part of his or her Compensation.

 

2.4           Deferred Account.The record maintained by the Company for each Participant of the cumulativeamount of Compensation deferred pursuant to this Plan and imputed interest,gains or losses on those amounts accrued as provided in Section 4.6.

 

2.5           DeferredCompensation Agreement. Collectively, a Participant’s Deferral Election andDistribution Election.

 

2.6           Director. Forpurposes of this Plan, an individual who is a member of the Board and whoreceives a cash retainer as part of such person’s compensation for services asa member of the Board.

 

2.7           DistributionElection. A Participant’s election of the method and timing of distributionof his or her Deferred Account.

 

2.8           Investment Account.Any of the accounts identified by the Board from time to time, described in Exhibit A,to which Participants may allocate all or any

 

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portion of their DeferredAccounts for purposes of determining the gains or losses to be assigned to theDeferred Accounts.

 

2.9           Participant. ADirector who has entered into a Deferred Compensation Agreement with theCompany in accordance with the provisions of the Plan.

 

2.10         Termination. TheParticipant’s ceasing to be a member of the Board for any reason whatsoever,whether voluntarily or involuntarily, provided that if the Participant is alsoproviding services to the Company or a subsidiary as an independent contractor,the Participant will not have a Termination until the Participant has bothceased to be a member of the Board and “separated from service” (within themeaning of Internal Revenue Code Section 409A) as an independentcontractor.

 

2.11         UnforeseeableEmergency. A severe financial hardship to the Participant resulting from (a) anillness or accident of the Participant or his or her spouse, beneficiarydesignated pursuant to Section 5.5, or dependent (as defined in InternalRevenue Code Section 152, without regard to Sections 152(b)(1), (b)(2) and(d)(1)(B)); (b) loss of the Participant’s property due to casualty; or (c) othersimilar extraordinary and unforeseeable circumstances arising as a result ofevents beyond the Participant’s control, such as medical expenses or funeralexpenses for the Participant’s spouse, beneficiary designated pursuant to Section 5.5,or dependent (as defined earlier in this subsection). The determination ofwhether an event constitutes an Unforeseeable Emergency shall be made based onthe facts and circumstances of the specific event.

 

3.             Administration andInterpretation. The Board shall have final discretion, responsibility, andauthority to administer and interpret the Plan. This includes the discretionand authority to determine all questions of fact, eligibility, or benefitsrelating to the Plan. The Board may also adopt any rules it deemsnecessary to administer the Plan. The Board may delegate its administrationresponsibilities to any committee of the Board, and if the Board does so,references to the Board in this Plan shall be deemed to be references to thedesignated committee. The Board’s responsibilities for day-to-dayadministration and interpretation of the Plan shall be exercised by employeesof the Company or a subsidiary who have been assigned those responsibilities bymanagement. Any employee exercising responsibilities relating to the Plan inaccordance with this section shall be deemed to have been delegated thediscretionary authority vested in the Board with respect to thoseresponsibilities, unless limited in writing by the Board. Claims for benefitsunder the Plan and appeals of claim denials shall be in accordance withSections 9 and 10.

 

4.             ParticipantDeferral and Distribution Elections.

 

4.1           Execution ofAgreement. A Director who wishes to participate in the Plan must execute aDeferred Compensation Agreement either (a) for newly eligible individuals,within 30 days after first becoming eligible to participate in the Plan, or

 

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(b) prior to January 1of the calendar year for which the Deferred Compensation Agreement will beeffective.

 

4.2           Deferral Election.When a Director first becomes eligible to participate, he or she shall have theopportunity to make a Deferral Election which shall apply to Compensationearned beginning the first calendar quarter after such election is made. Eachyear thereafter, the Director shall have the opportunity to make a DeferralElection with respect to his or her Compensation earned in the followingcalendar year. Deferral Elections shall be made either by submission of awritten Deferral Election Form in substantially the form provided inAppendix A or by completion of an online enrollment process, as designated bythe Company. The Compensation otherwise earned by a Participant during thecalendar year beginning after receipt of the Participant’s Deferral Electionshall be reduced by the amount elected to be deferred. Deferral Elections areirrevocable as of the end of the period for executing the Deferred CompensationAgreement under Section 4.1 with respect to initial Deferral Elections,and as of the end of the annual enrollment period established by the Companypursuant to Section 4.3 with respect to subsequent Deferral Elections,except as otherwise provided in this Plan.

 

4.3           Change of DeferralElection. A Participant who wishes to change an election to deferCompensation for a future year may do so at any time by submitting a newDeferral Election during the annual enrollment period established by theCompany prior to January 1 of the year for which the change in election isto be effective.

 

4.4           DistributionElection. At the time a Participant first elects to defer Compensationunder Section 4.2, he or she must elect a distribution option for his orher Deferred Account either by submission of a written Distribution Election Form insubstantially the form provided in Appendix A or by completion of an onlineenrollment process, as designated by the Company. Distribution Elections areirrevocable when made except as otherwise provided in this Plan.

 

4.5           Change ofDistribution Election. A Participant may request, in writing, a change ofhis or her Distribution Election at any time. The new election must (a) defercommencement of distribution for at least 5 years from the date distributionwould have commenced under the original Distribution Election and (b) bereceived by the Board at least 12 months prior to the commencement ofdistribution of the Participant’s Deferred Account under the originalDistribution Election. The Board shall approve the request if it meets therequirements of this section. Approved requests shall not take effect until 12months after the date the request was submitted.

 

4.6           Deferred AccountAllocations and Adjustments. The Company shall maintain a record of eachParticipant’s Deferred Account balance, including deferrals and adjustments. EachParticipant’s Deferred Account shall be adjusted on a monthly basis to reflectthe imputed interest, gains or losses attributable to the applicable InvestmentAccount(s). Imputed interest will be credited to a Participant’s

 

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account on the last dayof each month. Computation of the imputed interest, gains or losses withrespect to any Investment Account shall be at the Company’s sole discretion.

 

4.7           Investment Accounts.If the only Investment Account offered is the Stable Value Account,Participants’ deferrals will be automatically allocated to the Stable ValueAccount. If more than one Investment Account is offered, the following termsapply:

 

4.7.1        Each Participant mustallocate his or her current deferrals of Compensation to one or more of theoffered Investment Accounts, either by submission of a written allocation formor by completion of an online allocation process, as designated by the Companyand subject to any restrictions established by the Company.

 

4.7.2        Participants who areactive Directors may from time to time change the allocation of prospectivedeferrals to or from any Investment Account on any business day, with anychange effective as of the first calendar quarter beginning after the date ofthe change.

 

4.7.3        Participants who areactive Directors may move all or any portion of their Deferred Account balanceamong any of the Investment Accounts, other than the Stable Value Account, onany business day, with any change effective as of the next business day.

 

4.7.4        Deferred Account balancesallocated to the Stable Value Account may not be moved to any other InvestmentAccount.

 

4.7.5        After Termination, aParticipant may not change the allocation of his or her Deferred Account amongInvestment Accounts.

 

5.             Distributions.

 

5.1           Distributions inGeneral. The Company shall distribute a Participant’s Deferred Accountbalance according to the Participant’s Distribution Election, except asotherwise provided in this Section 5. The designated payment date forpurposes of Internal Revenue Code Section 409A shall be the date stated inthe Participant’s Distribution Election, except as otherwise provided in this Section 5.

 

5.2           Interest, Gains andLosses after Termination. Unpaid balances shall continue to be creditedwith imputed interest, gains or losses based on the applicable InvestmentAccount prospectively from the date of Termination until such amounts aredistributed from the Plan.

 

5.3           HardshipDistribution. If an Unforeseeable Emergency occurs, a Participant mayrequest a lump-sum distribution of an amount reasonably necessary to

 

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satisfy the emergencyneed plus amounts necessary to pay taxes reasonably anticipated as a result ofthe distribution, after taking into account the extent to which such hardshipis or may be relieved through reimbursement or compensation by insurance orotherwise or by liquidation of the Participant’s assets (to the extent theliquidation of such assets would not itself cause severe financial hardship). Determinationof the amount reasonably necessary to satisfy the emergency need must take intoaccount any additional compensation available due to the cancellation of theParticipant’s Deferral Election pursuant to this Section 5.3. TheParticipant shall document, to the Board’s satisfaction, that distribution ofall or part of his or her account is necessary to satisfy the UnforeseeableEmergency. A Participant requesting a distribution under this Section mustnot have access to other funds, including proceeds of any loans, sufficient tosatisfy the need. Upon receipt of a request under this Section, the Board may,in its sole discretion, direct the distribution of all or a portion of theParticipant’s account balance in a lump sum, to the extent necessary to satisfythe financial need. Any distribution will be made within 90 days of the Board’sreceipt of such request. The Participant shall sign all documentation requestedby the Board relating to the distribution. If a Participant receives adistribution from the Plan under this Section, his or her current DeferralElection shall be cancelled, and he or she shall not be eligible to participatein this Plan or any other nonqualified deferred compensation plan maintained bythe Company or any subsidiary for a period of 12 months following the dateof the distribution. The Participant may make a new Deferral Election duringthe next annual enrollment period following the conclusion of the 12-monthperiod.

 

5.4           Small AccountDistributions. If a Participant’s Deferred Account balance is less than$10,000 on the date of Termination, the Company shall promptly distribute theentire Deferred Account balance in a lump sum to the Participant within 90 daysfollowing the date of Termination, regardless of the Participant’s DistributionElection, and the Participant shall have no further rights or benefits underthis Plan.

 

5.5           DistributionsFollowing Participant Death; Designation of Beneficiary. The Company shallmake all payments to the Participant, if living. A Participant shall designatea beneficiary by filing a beneficiary designation in the form and mannerprescribed by the Board. A Participant may change his or her beneficiary at anytime by filing a new beneficiary designation in the form and manner prescribedby the Board. If a Participant dies either before benefit payments havecommenced under this Plan or after benefits have commenced but before his orher entire Deferred Account has been distributed, his or her designatedbeneficiary shall receive any benefit payments in accordance with theParticipant’s Distribution Election. If no designation is in effect when anybenefits payable under this Plan become due, the beneficiary shall be thespouse of the Participant, or if no spouse is then living, the Participant’sestate. The designated payment date for distributions under this Section shallbe the date of the Participant’s death.

 

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5.6           DistributionsPursuant to a Domestic Relations Order.

 

5.6.1        A domestic relations orderrelating to benefits under this Plan shall be reviewed by the Company’s seniorhuman resources officer or his or her delegate. The individual shall determinewhether the order satisfies the definition in Internal Revenue Code Section 414(p).The Company may establish procedures for reviewing and processing a domesticrelations order similar to the processing of domestic relations orders underthe Company’s qualified plans.

 

5.6.2        The order must specify thename and last known mailing address and social security number of theParticipant and each alternate payee. It must name the plan to which it applies.It must specify the percentage or amount of the Participant’s benefit which ispayable to an alternate payee and the date as of which the amount or percentageis determined. The order cannot require the Plan to (a) pay any form ofbenefit not permitted under the Plan, (b) provide a benefit greater thanthe benefit to which the Participant is entitled, or (c) affect the benefitsof another alternate payee with respect to whom a domestic relations order haspreviously been accepted by the Plan.

 

5.6.3        If the order isacceptable, a distribution to the alternate payee pursuant to the terms of theorder shall be authorized as soon as administratively practicable withoutregard to the time distribution would be made to the affected Participant. Ifthe order is not acceptable, that shall be communicated in writing to theParticipant and the alternate payee, including identification of the provisionsof the order that cause it to be unacceptable.

 

6.             Miscellaneous.

 

6.1           Assignability. AParticipant’s rights and interests under the Plan may not be assigned ortransferred except in the event of the Participant’s death, as described in Section 5.5.

 

6.2           Taxes. TheCompany shall deduct from all payments made under this Plan all applicablefederal or state taxes required by law to be withheld.

 

6.3           Form ofCommunication. Deferral Elections and Distribution Elections shall be madeas provided in Sections 4.1 through 4.5. Beneficiary designations shall be madeas provided in Section 5.5. Any other application, claim, notice, or othercommunication required or permitted to be made by a Participant to the Board orthe Company shall be made in writing and in such form as the Board or Companymay prescribe. Such communication shall be effective upon receipt by theCompany’s corporate secretary at 1111 West Jefferson Street, Suite 200,PO Box 990050, Boise, Idaho 83799-0050.

 

6.4           Service Providers.The Company may, in its sole discretion, retain one or more independententities to provide services to the Company in connection with

 

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the operation andadministration of the Plan. Except as specifically delegated or assigned to anysuch entity in writing, the Board shall retain all discretionary authorityunder this Plan. No Participant or other person shall be a third partybeneficiary with respect to, or have any rights or recourse under, any contractualarrangement between the Board, the Company or the Company’s subsidiary oraffiliate and any such service provider.

 

7.             Amendment andTermination. The Board may, at its sole discretion, amend or terminate thePlan at any time, provided that the amendment or termination shall notadversely affect the vested or accrued rights or benefits of any Participantwithout the Participant’s prior consent.

 

8.             Unsecured GeneralCreditor. Participants and their beneficiaries, heirs, successors, andassigns shall have no legal or equitable rights, interest, or claims in anyproperty or assets of the Company. The assets of the Company shall not be heldunder any trust for the benefit of Participants, their beneficiaries, heirs,successors, or assigns, or held in any way as collateral security for thefulfilling of the obligations of the Company under this Plan. Any and allCompany assets shall be, and remain, the general, unpledged, unrestrictedassets of the Company. The Company’s obligation under the Plan shall be an unfundedand unsecured promise of the Company to pay money in the future.

 

9.             Claims Procedure. Claims for benefits under the Plan shall befiled in writing, within 90 days after the event giving rise to a claim, withthe Company’s corporate secretary, who shall forward such claims to Boise PaperHoldings, L.L.C.’s compensation manager. The compensation manager shall havediscretion to interpret and apply the Plan, evaluate the facts andcircumstances, and make a determination with respect to the claim in the nameand on behalf of the Board. The claim shall include a statement of all factsthe claimant believes relevant to the claim and copies of all documents,materials, or other evidence that the claimant believes relevant to the claim. Writtennotice of the disposition of a claim shall be furnished to the claimant within90 days after the application is filed. This 90-day period may be extendedan additional 90 days by the compensation manager, in his or her solediscretion, by providing written notice of the extension to the claimant priorto the expiration of the original 90-day period.

 

10.           Claims Review Procedure. Any claimant who has been denied a benefitclaim shall be entitled, upon written request to the Board, to a review of thedenied claim. A request for review, together with a written statement of theclaimant’s position and any other comments, documents, records or informationthat the claimant believes relevant to his or her claim, shall be filed withthe Board no later than 60 days after receipt of the written notificationprovided pursuant to Section 9. The Board shall make its decision, inwriting, within 60 days after receipt of the claimant’s request for review.This 60-day period may be extended an additional 60 days if the Boardprovides written notice of the extension to the claimant prior to theexpiration of the original 60-day period. The written decision shall be finaland binding on all parties.

 

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11.           Lawsuits,Jurisdiction, and Venue. No lawsuit claiming entitlement to benefits underthis Plan may be filed prior to exhausting the claims and claims reviewprocedures described in Sections 9 and 10. Any such lawsuit must be initiatedno later than the earlier of (a) one year after the event(s) givingrise to the claim occurred or (b) 60 days after a final written decisionwas provided to the claimant under Section 10. Any legal action involvingbenefits claimed or legal obligations relating to or arising under this Planmay be filed only in Federal District Court in the city of Boise, Idaho. Federallaw shall be applied in the interpretation and application of this Plan and theresolution of any legal action. To the extent not preempted by federal law, thelaws of the state of Delaware shall apply.

 

12.           Effective Date ofPlan. This Plan shall become effective as of April 4, 2008.

 

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# EXHIBIT A

 

INVESTMENT ACCOUNTS

 

Stable Value Account. DeferredAccounts allocated to this account shall be credited with imputed interestaccording to the regular method and rate established for the Stable ValueAccount under the Boise Paper Holdings, L.L.C. 2008 Deferred Compensation Planor any successor to that plan (the “Employee Plan”), without taking intoaccount any changes to that method or rate caused by an event other thanamendment of the Employee Plan. If at any time the Employee Plan ceases to havean investment account designated as a Stable Value Account, the Board shalldesignate the method and rate for calculating imputed interest under thisaccount.

 

*Note: *Asof April 4, 2008, the interest crediting rate under the Stable ValueAccount of the Employee Plan is an annualized rate of interest equal to 130% ofMoody’s Composite Average of Yields on Corporate Bonds (“Moody’s”) asdetermined each month from Moody’s Bond Record (as published by Moody’sInvestor’s Service, Inc.) or any successor thereto, or, if such monthlyreport is no longer published, a substantially similar rate determined by theCompany, in its sole discretion. Moody’s, for purposes of this Plan, shall bebased for any given month on such published rate for the immediately precedingcalendar month. The Company shall inform Participants if the rate under theEmployee Plan changes at any time.

 

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**APPENDIXA**

## **Boise Inc.**

## **Form of Deferral Election Form**

## ** **

This form constitutes my election to participate inthe Boise Inc. Directors Deferred Compensation Plan, subject to the provisionsof that plan. I agree that my request to defer cash compensation into the planis irrevocable by me for compensation to be earned in 200_, except as providedin the plan.

 

I wish to receive my cash compensation (retainer andmeeting fees) as follows:

 

 
| ** **                            | ** ** | **200_ ELECTIONS** | ** ** | **NEW  200_ ELECTIONS** | ** ** |
|---------------------------------------|------------|--------------------|------------|-------------------------|------------|
|                                  |       |               |       |                    |       |
| Director  Deferred Compensation Plan* |       | __                 | %          | __                      | %          |
|                                  |       |               |       |                    |       |
| Cash                                  |       | __                 | %          | __                      | %          |
| ** **                            | ** ** | **100**            | **%**      | **100**                 | **%**      |

 

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*****Boisebelieves, but does not guarantee, that a deferral election made under the termsof the plan is effective to defer the receipt of taxable income. You areadvised to consult with your attorney or accountant regarding the federal andstate tax law implications of this deferral.

 

 
| Signed: |   |
|---------|--------|
|    |   |
|    |   |   |   |   |
| Date:   |   |   | Printed Name: |   |
|         |        |  |  |  |  |

 

 

***Thiscompleted and signed form must be returned before December 31, 200_,to:***

 

Karen E. Gowland

Corporate Secretary

Boise Paper Holdings,L.L.C.

P.O. Box 990050

Boise, ID 83799-0050

FAX:  208/384-4961

EMAIL:  KarenGowland@boiseinc.com

 

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**Boise Inc.**

## **Form of Distribution Election Form**

## ** **

THIS DISTRIBUTION ELECTION applies to my DeferredAccount balance under the Boise Inc. Directors Deferred Compensation Plan (the “Plan”),which is incorporated into this Agreement. I understand that this election isirrevocable except as provided in the Plan.

 

I elect the following **form of distribution**of my Deferred Account balance:

 

o     Lump-sumpayment.

 

o     Annualinstallment payments (in approximately equal amounts) over a period of (chooseone of the following):

 
|   | o  2  years | o  3  years |
|--------|-----------------------|-----------------------|

 

I elect the following **distribution beginningdate**:

 

o     February 1of the year following Termination.

 

o     February 1of the _______ (choose one: 2nd through 10th) yearfollowing Termination.

 

If I die *before*distributions from thePlan begin, the Company will pay my designated beneficiary the Deferred Accountbalance as:

 

o     Lump-sumpayment.

 

o     Annualinstallment payments (in approximately equal amounts) over a period of (chooseone of the following):

 
|   | o  2  years | o  3  years |
|--------|-----------------------|-----------------------|

 

If I choose installment payments and I die *after*installmentpayments have begun, the Company will pay my designated beneficiary:

 

o     Lumpsum of the remaining Deferred Account balance.

 

o     Theremaining installment payments.

 
| Signed: |   |
|---------|--------|
|    |   |   |   |   |
| Date:   |   |   | Printed Name: |   |
|         |        |  |  |  |  |

 

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