Document:

Exhibit 10.1

 

EXECUTION COPY

 

SEPRACOR INC.

 

0% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE
2024

 

 

PURCHASE AGREEMENT

 

 

September 17, 2004

 

 

September 17,
2004

 

 

Morgan Stanley & Co.
Incorporated

1585 Broadway

New York, New York 10036

 

Dear Sirs and Mesdames:

 

Sepracor Inc.,
a Delaware corporation (the “Company”), proposes to issue and sell to
Morgan Stanley & Co. Incorporated (the “Initial Purchaser”)
$500,000,000 aggregate principal amount of its 0% Convertible Senior
Subordinated Notes Due 2024 (the “Firm Securities”) to be issued pursuant to
the provisions of an Indenture dated as of September 22, 2004 (the “Indenture”)
between the Company and JPMorgan Chase Bank, as Trustee (the “Trustee”).  The Company also proposes to issue and sell
to the Initial Purchaser not more than an additional $100,000,000 aggregate
principal amount of its 0% Convertible Senior Subordinated Notes Due 2024 (the
“Additional
Securities”) if and to the extent that the Initial Purchaser shall
have determined to exercise the right to purchase such 0% Convertible Senior
Subordinated Notes Due 2024 granted to the Initial Purchaser in Section 2
hereof.  The Firm Securities and the
Additional Securities are hereinafter collectively referred to as the “Securities”.  The Securities will be convertible into
shares of common stock, par value $.10 per share, of the Company (the “Underlying
Securities”).

 

The Securities
and the Underlying Securities will be offered without being registered under
the Securities Act of 1933, as amended (the “Securities Act”), only to
qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act.

 

The Initial
Purchaser and its direct and indirect transferees will be entitled to the
benefits of a Registration Rights Agreement to be dated as of the Closing Date
(as defined in Section 4) between the Company and the Initial Purchaser (the “Registration
Rights Agreement”).

 

In connection
with the sale of the Securities, the Company has prepared a preliminary
offering memorandum (the “Preliminary Memorandum”) and will prepare a
final offering memorandum (the “Final Memorandum” and, with the Preliminary
Memorandum, each a “Memorandum”) including or incorporating by
reference a description of the terms of the Securities and the Underlying
Securities, the terms of the offering and a description of the Company.  As used herein, the term “Memorandum”
shall include in each case the documents

 

 

incorporated by reference
therein. The terms “supplement”, “amendment” and “amend”
as used herein with respect to a Memorandum shall include all documents deemed
to be incorporated by reference in the Preliminary Memorandum or Final
Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the “Commission”) pursuant to the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).

 

1.                             Representations
and Warranties. The Company represents and warrants to, and agrees
with, you that:

 

(a)                    (i) Each document, if any, filed or
to be filed pursuant to the Exchange Act and incorporated by reference in
either Memorandum complied or will comply when so filed, as the case may be, in
all material respects with the applicable requirements of the Exchange Act and
the applicable rules and regulations of the Commission thereunder and (ii) the
Preliminary Memorandum does not contain and the Final Memorandum, in the form
used by the Initial Purchaser to confirm sales and on the Closing Date (as
defined in Section 4), will not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in this
paragraph do not apply to statements or omissions in either Memorandum based
upon information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein.

 

(b)                   The Company has been duly
incorporated, is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has the corporate power and
authority to own, lease and operate its property and to conduct its business as
described in each Memorandum and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be
in good standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.

 

(c)                    Each subsidiary of the Company
listed on Schedule I hereto (each, a “Significant Subsidiary” and collectively,
the “Significant Subsidiaries”) has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property

 

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and to conduct its business as described in each Memorandum and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; all of
the issued shares of capital stock of each Significant Subsidiary of the
Company have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.

 

(d)                   This Agreement has been duly
authorized, executed and delivered by the Company.

 

(e)                    The authorized capital stock of the
Company conforms as to legal matters to the description thereof contained in
the Final Memorandum under the caption “Description of Capital Stock”.

 

(f)                      The shares of common stock
outstanding prior to the issuance of the Securities have been duly authorized
and are validly issued, fully paid and non-assessable and not subject to any
preemptive or similar rights.

 

(g)                   The Securities have been duly
authorized and, when executed and authenticated in accordance with the
provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, will constitute valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, equitable principles of general
applicability, including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity), and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement pursuant to which such Securities are to be
issued.

 

(h)                   The Underlying Securities reserved
for issuance upon conversion of the Securities have been duly authorized and
reserved and, when issued upon conversion of the Securities in accordance with
the terms of the Securities, will be validly issued, fully paid and
non-assessable, and the issuance of the Underlying Securities will not be
subject to any preemptive or similar rights.

 

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(i)                       Each of the Indenture and the
Registration Rights Agreement has been duly authorized, executed and delivered
by the Company, and (assuming the due authorization, execution and delivery of
the Indenture by the Trustee and the due authorization, execution and delivery
of the Registration Rights Agreement by the Initial Purchaser) will constitute
the valid and binding agreement of, the Company, enforceable against the
Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally and equitable principles of
general applicability including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), and except as rights to indemnification and
contribution under the Registration Rights Agreement may be limited under
applicable law. Each of the Indenture and the Registration Rights Agreement
will conform in all material respects to the description thereof in the Final
Memorandum.

 

(j)                       The issuance and sale by the
Company of the Securities and the execution and delivery by the Company of, and
the performance by the Company of its obligations under, this Agreement, the
Indenture, the Registration Rights Agreement and the Securities will not
contravene any provision of applicable law or the articles of organization or
by-laws of the Company or any of its Significant Subsidiaries or any agreement
or other instrument binding upon the Company or any of its Significant
Subsidiaries that is material to the Company and its subsidiaries, taken as a
whole, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any Significant Subsidiary, and
no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company of its
obligations under this Agreement, the Indenture, the Registration Rights
Agreement or the Securities, except such as may be required by the securities
or Blue Sky laws of the various states in connection with the offer and sale of
the Securities and by Federal and state securities laws with respect to the
Company’s obligations under the Registration Rights Agreement.

 

(k)                    There has not occurred any material
adverse change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Preliminary Memorandum provided to prospective purchasers of
the Securities.

 

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(l)                       Neither the Company nor any of
its Significant Subsidiaries is in violation of its respective charter or
by-laws or in default in the performance of any obligation, agreement, covenant
or condition contained in any indenture, loan agreement, mortgage, lease or
other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound.

 

(m)                 There are no legal or governmental
proceedings pending or, to the knowledge of the Company, threatened to which
the Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject other than (i)
proceedings described in each Memorandum and (ii) proceedings that would not
reasonably be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company to
perform its obligations under this Agreement, the Indenture, the Registration
Rights Agreement or the Securities or to consummate the transactions
contemplated by the Final Memorandum.

 

(n)                   The Company and its subsidiaries (i)
are in compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses, (iii) are in compliance with all terms and
conditions of any such permit, license or approval, (iv) are in compliance with
any provisions of the Employee Retirement Income Security Act of 1974, as
amended, (“ERISA”) or the rules and regulations promulgated thereunder
and (v) are in compliance with any provisions of the Foreign Corrupt Practices
Act or the rules and regulations promulgated thereunder, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals, or noncompliance with ERISA or the
Foreign Corrupt Practices Act would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

 

(o)                   The Company is not, and after giving
effect to the offering and sale of the Securities and the application of the
proceeds thereof as described in the Final Memorandum will not be, required to
register as an

 

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“investment
company” as such term is defined in the Investment Company Act of
1940, as amended.

 

(p)                   Neither the Company nor any
affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act,
an “Affiliate”)
of the Company has directly, or through any agent (provided that no
representation is made as to the Initial Purchaser or any person acting on its
behalf), (i) sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) which
is or will be integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or (ii)
offered, solicited offers to buy or sold the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.

 

(q)                   Assuming the accuracy of the
representations of the Initial Purchaser contained in Section 3 hereof and its
compliance with the agreements set forth therein, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchaser in the manner contemplated by this Agreement to register the
Securities under the Securities Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended.

 

(r)                      The Securities satisfy the
requirements set forth in Rule 144A(d)(3) under the Securities Act.

 

(s)                    The Company has established and
maintained disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) that are adequate and effective and designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to its chief executive officer and chief financial
officer by others within those entities.

 

(t)                      The Company maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

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(u)                   To the Company’s knowledge, the
Company owns or possesses, or can acquire on reasonable terms, all patents,
patent rights, licenses, inventions, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(collectively, “Intellectual Property”) currently employed by it in commerce,
in connection with the business now operated by it, except where the failure to
own or possess or otherwise be able to acquire such Intellectual Property would
not, singly or in the aggregate, have a material adverse effect on the Company
and its subsidiaries taken as a whole; and to the Company’s knowledge, the
Company is not infringing or conflicting with asserted rights of others with
respect to any of such Intellectual Property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
material adverse effect on the Company and its subsidiaries taken as a whole.

 

(v)                   Each of the Company and its
Significant Subsidiaries has such permits, licenses, consents, exemptions,
franchises, authorizations and other approvals (each, an “Authorization”) of, and has
made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including, without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except to the extent the failure to
have any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a material adverse effect on the Company and
its subsidiaries, taken as a whole. 
Each such Authorization is valid and in full force and effect and each
of the Company and its Significant Subsidiaries is in compliance with all the
terms and conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect thereto; and
no event has occurred (including, without limitation, the receipt of any notice
from any authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would
result in any other material impairment of the rights of the holder of any such
Authorization; except to the extent such failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a whole.

 

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(w)                 There are no outstanding
subscriptions, rights, warrants, options, calls, convertible securities,
commitments of sale or liens granted or issued by the Company or any of its
subsidiaries relating to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of the Company or any of its
subsidiaries, except options granted by the Company subsequent to June 30,
2004, pursuant to its employee benefit plans and except as otherwise disclosed
in the Final Memorandum.

 

(x)                     The consolidated financial
statements incorporated by reference in each Memorandum, together with related
schedules and notes, present fairly in all material respects the consolidated
financial position, results of operations and changes in financial position of
the Company and its subsidiaries on the basis stated therein at the respective
dates or for the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical
information and data set forth in the Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.

 

2.                             Agreements
to Sell and Purchase.  The
Company hereby agrees to sell to the Initial Purchaser, and the Initial
Purchaser, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees to purchase
from the Company the Firm Securities at a purchase price of 97.25% of the
principal amount thereof (the “Purchase Price”).

 

On the basis
of the representations and warranties contained in this Agreement, and subject
to its terms and conditions, the Company agrees to sell to the Initial
Purchaser the Additional Securities, and the Initial Purchaser shall have the
right to purchase, up to $100,000,000 aggregate principal amount of Additional
Securities at the Purchase Price. You may exercise this right in whole or from
time to time in part by giving written notice not later than 30 days after the
date of this Agreement.  Any exercise
notice shall specify the principal amount of Additional Securities to be
purchased by the Initial Purchaser and the date on which such Additional
Securities are to be purchased.  Each
purchase date must be at least one business day after the written notice is
given and may not be earlier than the closing date for the Firm Securities nor
later than ten business days after the date of such notice.  On each day, if any, that Additional
Securities are to be purchased (an “Option Closing Date”), the Initial
Purchaser agrees to purchase the principal amount of Additional Securities set
forth in such notice.

 

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The Company
hereby agrees that, without the prior written consent of Morgan Stanley &
Co. Incorporated, it will not, during the period ending 60 days after the date
of the Final Memorandum, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the common
stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of common stock or such other securities, in cash or
otherwise.  The foregoing sentence shall
not apply to (A) the sale of the Securities under this Agreement, (B) the
issuance of the Underlying Securities upon conversion of the Securities in
accordance with the provisions of the Indenture, (C) the grant by the Company
of any options, restricted stock or other awards pursuant to benefit plans
existing on the date of this Agreement, (D) the issuance by the Company of any
shares of common stock in respect of any acquisition by the Company of the
assets or capital stock of another person or entity, provided, however,
that any such shares so issued shall be subject to the restrictions on offers,
sales and dispositions of shares set forth in this Section 2 for the remainder
of the 60-day period referenced above (E) the issuance by the Company of any
shares of common stock upon the exercise of an option or warrant or the
conversion of a security outstanding on the date hereof or (F) the issuance by
the Company of shares of common stock in connection with the repurchase of
convertible securities outstanding on the date hereof, provided that the number
of shares of common stock so issued does not exceed the number of shares of
common stock that would then be issuable upon conversion of such securities.

 

3.                                       Terms of
Offering. The Initial Purchaser has advised the Company that the
Initial Purchaser will make an offering of the Securities purchased by the
Initial Purchaser hereunder on the terms to be set forth in the Final
Memorandum, as soon as practicable after this Agreement is entered into as in
your judgment is advisable.

 

4.                                       Payment and
Delivery. Payment for the Firm Securities shall be made to the
Company in Federal or other funds immediately available in New York City
against delivery of such Firm Securities for the account of the Initial
Purchaser at 10:00 a.m., New York City time, on September 22, 2004, or at such
other time on the same or such other date, not later than September 29, 2004,
as shall be designated in writing by you. 
The time and date of such payment are hereinafter referred to as the “Closing Date”.

 

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Payment for
any Additional Securities shall be made to the Company in Federal or other
funds immediately available in New York City against delivery of such
Additional Securities for the account of the Initial Purchaser at 10:00 a.m.,
New York City time, on the date specified in the corresponding notice described
in Section 2 or at such other time on the same or on such other date, in any
event not later than 13 days after the Closing Date, as shall be designated in
writing by you.

 

Certificates
for the Securities shall be in definitive form or global form, as specified by
you, and registered in such names and in such denominations as you shall
request in writing not later than one full business day prior to the Closing
Date or the applicable Option Closing Date, as the case may be. The
certificates evidencing the Securities shall be delivered to you on the Closing
Date or an Option Closing Date, as the case may be, for the account of the
Initial Purchaser, with any transfer taxes payable in connection with the
transfer of the Securities to the Initial Purchaser duly paid, against payment
of the Purchase Price therefor.

 

5.                                       Conditions
to the Initial Purchaser’s Obligations. The obligations of the
Initial Purchaser to purchase and pay for the Firm Securities on the Closing
Date is subject to the following conditions:

 

(a)                    Subsequent to the execution and
delivery of this Agreement and prior to the Closing Date:

 

(i)                                 there shall not have
occurred any downgrading, nor shall any notice have been given of any intended
or potential downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating, if any, accorded
the Company or any of the Company’s securities or in the rating outlook for the
Company by any “nationally recognized statistical rating organization,” as such
term is defined for purposes of Rule 436(g)(2) under the Securities Act; and

 

(ii)                              there shall not have
occurred any change, or any development involving a prospective change, in the
condition, financial or otherwise, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that set forth in
the Preliminary Memorandum provided to prospective purchasers of the Securities
that, in your judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.

 

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(b)                   The Initial Purchaser shall have
received on the Closing Date a certificate, dated the Closing Date and signed
by an executive officer of the Company, to the effect that the representations
and warranties of the Company contained in this Agreement are true and correct
as of the Closing Date and that the Company has, in all material respects,
complied with all of the agreements and satisfied all of the conditions on its
part to be performed or satisfied hereunder on or before the Closing Date.

 

The officer signing and delivering such
certificate may rely upon the best of his or her knowledge as to proceedings
threatened.

 

(c)                    The Initial Purchaser shall have
received on the Closing Date an opinion of Wilmer Cutler Pickering Hale and
Dorr LLP, outside counsel for the Company, dated the Closing Date, to the
effect set forth in Exhibit A.  Such
opinion shall be rendered to the Initial Purchaser at the request of the
Company and shall so state therein.

 

(d)                   The Initial Purchaser shall have
received on the Closing Date an opinion of Davis Polk & Wardwell, counsel
for the Initial Purchaser, dated the Closing Date, to the effect set forth in
Exhibit B.

 

(e)                    The Initial Purchaser shall have
received on each of the date hereof and the Closing Date a letter, dated the
date hereof or the Closing Date, as the case may be, in form and substance
reasonably satisfactory to the Initial Purchaser, from PricewaterhouseCoopers
LLP, independent public accountants, containing statements and information of
the type ordinarily included in accountants’ “comfort letters” to underwriters
with respect to the financial statements and certain financial information
contained in or incorporated by reference into each Memorandum; provided that
the letter delivered on the Closing Date shall use a “cut-off date” not earlier
than the date hereof.

 

(f)                      The “lock-up” agreements, each
substantially in the form of Exhibit C hereto, between you and certain of the
Section 16 officers and directors of the Company relating to sales and certain
other dispositions of shares of common stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.

 

The obligations of the Initial Purchaser to purchase Additional
Securities hereunder are subject to the delivery to you on the applicable
Option Closing Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due authorization, execution
and authentication of

 

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the Additional
Securities to be sold on such Option Closing Date and other matters related to
the execution and authentication of such Additional Securities.

 

6.                             Covenants of
the Company. In further consideration of the agreements of the
Initial Purchaser contained in this Agreement, the Company covenants with the
Initial Purchaser as follows:

 

(a)                    To furnish to you in New York City,
without charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c), as many copies of the Final Memorandum, any documents
incorporated by reference therein and any supplements and amendments thereto as
you may reasonably request.

 

(b)                   Before amending or supplementing
either Memorandum, to furnish to you a copy of each such proposed amendment or
supplement for your review and not to use any such proposed amendment or
supplement to which you reasonably object by written notice to the Company
within 3 business days after receipt of such copy.

 

(c)                    If, during such period after the
date hereof and prior to the date on which all of the Securities shall have
been sold by the Initial Purchaser, any event shall occur or condition exist as
a result of which it is necessary to amend or supplement the Final Memorandum
in order to make the statements therein, in the light of the circumstances when
the Final Memorandum is delivered to a purchaser, not misleading, or if, in the
reasonable opinion of counsel for the Initial Purchaser, it is necessary to
amend or supplement the Final Memorandum to comply with applicable law,
forthwith to prepare and furnish, at its own expense, to the Initial Purchaser,
either amendments or supplements to the Final Memorandum so that the statements
in the Final Memorandum as so amended or supplemented will not, in the light of
the circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented, will
comply with applicable law.

 

(d)                   To endeavor to qualify the
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request; provided, however,
that neither the Company nor its subsidiaries shall be obligated to qualify as
a foreign corporation in any jurisdiction where it is not then qualified or to
take any action which would subject it to general service of process or to
taxation in any such jurisdiction where it is not then so subject.

 

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(e)                    Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
to pay or cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements and
expenses of the Company’s counsel and the Company’s accountants in connection
with the issuance and sale of the Securities and all of its other fees or
expenses in connection with the preparation of each Memorandum and all
amendments and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Initial Purchaser, in
the quantities herein above specified, (ii) all costs and expenses related to
the transfer and delivery of the Securities to the Initial Purchaser, including
any transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with the
qualification of the Securities for offer and sale under state securities laws
as provided in Section 6(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Initial Purchaser in connection with
such qualification and in connection with the Blue Sky memorandum, (iv) any
fees charged by rating agencies for the rating of the Securities, (v) the fees
and expenses, if any, incurred in connection with the admission of the
Securities for trading in PORTAL or any appropriate market system, (vi) the
costs and charges of the Trustee and any transfer agent, registrar or
depositary, (vii) the cost of the preparation, issuance and delivery of the
Securities, (viii) the costs and expenses of the Company relating to investor
presentations on any “road show” undertaken in connection with the marketing of
the offering of the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, (ix) the document production charges and expenses associated with
printing this Agreement and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section.  It
is understood, however, that except as provided in this Section, Section 8, and
the last paragraph of Section 10, the Initial Purchaser will pay all of its
costs and expenses, including fees and disbursements of its counsel, transfer
taxes payable on resale of any of the Securities by it and any advertising
expenses connected with any offers it may make.

 

(f)                      Neither the Company nor any
Affiliate will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any

 

13

 

security (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require the registration
under the Securities Act of the Securities.

 

(g)                   Not to solicit any offer to buy or
offer or sell the Securities or the Underlying Securities by means of any form
of general solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.

 

(h)                   While any of the Securities or the
Underlying Securities remain “restricted securities” within the meaning
of the Securities Act, to make available, upon request, to any seller of such
Securities the information specified in Rule 144A(d)(4) under the Securities
Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.

 

(i)                       If requested by you, to use its
reasonable best efforts to permit the Securities to be designated PORTAL
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
Market.

 

(j)                       During the period of two years
after the Closing Date or any Option Closing Date, if later, the Company will
not, and will not permit any of its affiliates (as defined in Rule 144 under
the Securities Act) to resell any of the Securities or the Underlying Securities
which constitute “restricted securities” under Rule 144 that
have been reacquired by any of them.

 

(k)                    Not to take any action prohibited
by Regulation M under the Exchange Act in connection with the distribution of
the Securities contemplated hereby.

 

7.                             Offering of
Securities; Restrictions on Transfer.  The Initial Purchaser represents and warrants that it is a
qualified institutional buyer as defined in Rule 144A under the Securities Act
(a “QIB”).  The Initial Purchaser, agrees with the
Company that (i) it will not solicit offers for, or offer or sell, such
Securities by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
and will offer such Securities only to, persons that it reasonably believes to
be QIBs and that in purchasing such Securities are deemed to have represented
and agreed as provided in the Final Memorandum under the caption “Transfer
Restrictions”.

 

14

 

8.                             Indemnity
and Contribution.  (a)  The Company agrees to indemnify and hold
harmless the Initial Purchaser, each person, if any, who controls the Initial
Purchaser within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, and each affiliate of the Initial Purchaser
within the meaning of Rule 405 under the Securities Act from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue statement of a material fact contained in either Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except insofar
as such losses, claims, damages or liabilities are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use therein; provided, however, that the foregoing indemnity with respect to any Preliminary
Memorandum shall not inure to the benefit of the Initial Purchaser or any
person controlling or who is an affiliate of the Initial Purchaser, if a copy
of the Final Memorandum (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of the Initial Purchaser to the person asserting any such losses,
claims, damages or liabilities, at or prior to the written confirmation of the
sale of the Securities to such person, and if the Final Memorandum (as so
amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(a) hereof.

 

(b)                   The
Initial Purchaser agrees to indemnify and hold harmless the Company, its
directors, its officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to the Initial Purchaser, but only with reference to information relating to
the Initial Purchaser furnished to the Company in writing expressly for use in
either Memorandum or any amendments or supplements thereto.

 

(c)                    In
case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the “indemnified party”) shall
promptly notify the person against whom such indemnity may be sought (the “indemnifying
party”) in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party

 

15

 

may designate
in such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
It is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section
8(b). The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph,
the indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 90 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement (other than reimbursement for fees and expenses that the
indemnifying party is contesting in good faith).  No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.

 

(d)                   To
the extent the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a

 

16

 

result of such
losses, claims, damages or liabilities (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company on the one hand and
the Initial Purchaser on the other hand from the offering of the Securities or
(ii) if the allocation provided by clause 8(d)(i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause 8(d)(i) above but also the relative
fault of the Company on the one hand and of the Initial Purchaser on the other
hand in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchaser on the other hand in connection with the offering of
the Securities shall be deemed to be in the same respective proportions as the
net proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total discounts and commissions received by the
Initial Purchaser, in each case as set forth in the Final Memorandum, bear to
the aggregate offering price of the Securities. The relative fault of the
Company on the one hand and of the Initial Purchaser on the other hand shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Initial Purchaser and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

 

(e)                    The
Company and the Initial Purchaser agree that it would not be just or equitable
if contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in Section 8(d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in Section 8(d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities resold
by it in the initial placement of such Securities were offered to investors
exceeds the amount of any damages that the Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

 

17

 

(f)                      The
indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company contained in
this Agreement shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of the Initial Purchaser, any person controlling the Initial Purchaser
or any affiliate of the Initial Purchaser or by or on behalf of the Company,
its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Securities.

 

9.                             Termination.
The Initial Purchaser may terminate this Agreement by notice given to the
Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, any of the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a material disruption in securities settlement,
payment or clearance services in the United States shall have occurred, (iv) a
general moratorium on commercial banking activities shall have been declared by
Federal or New York State authorities or (v) there shall have occurred any
outbreak or escalation of hostilities, or any change in financial markets or
any calamity or crisis that, in your judgment, is material and adverse and
which, singly or together with any other event specified in this clause (v),
makes it, in your judgment, impracticable or inadvisable to proceed with the
offer, sale or delivery of the Securities on the terms and in the manner
contemplated in the Final Memorandum.

 

10.                       Effectiveness.  This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.

 

If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of the Company to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Initial Purchaser for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by
the Initial Purchaser in connection with this Agreement or the offering
contemplated hereunder.

 

11.                       Counterparts.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

 

12.                       Applicable
Law.  This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York.

 

18

 

13.                       Headings.  The headings of the sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed a part of this Agreement.

 

19

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  SEPRACOR
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  David P. Southwell

  
	
   

  	
   

  	
  Name:David
  P. Southwell

  
	
   

  	
   

  	
  Title:Chief
  Financial Officer

  

 

 

	
  Accepted as
  of the date hereof

  	
   

  
	
   

  	
   

  
	
  MORGAN
  STANLEY & CO. INCORPORATED

  
	
   

  
	
   

  
	
  By:

  	
    /s/
  Kenneth G. Pott

  	
   

  
	
   

  	
  Name:Kenneth
  G. Pott

  	
   

  
	
   

  	
  Title:Managing
  Director

  	
   

  

 

 

SCHEDULE I

 

List of Significant
Subsidiaries:

 

NoneExhibit 4.1

 

EXECUTION COPY

 

BOISE CASCADE CORPORATION,

 

U.S. BANK TRUST NATIONAL ASSOCIATION

 

and

 

BNY WESTERN TRUST COMPANY

 

 

Fifth Supplemental Indenture

 

Dated as of September 16, 2004

 

 

Supplement to Indenture of Boise Cascade Corporation

dated as of October 1, 1985,

as amended as of December 20, 1989, August 1, 1990,

December 5, 2001 and October 21, 2003

 

 

TABLE OF CONTENTS

 

	
  ARTICLE
  I

  
	
   

  	
   

  	
   

  
	
  COVENANTS APPLICABLE TO THE DEBENTURES

  
	
   

  	
   

  	
   

  
	
  Section
  1.1

  	
  Applicability
  of Covenants

  	
   

  
	
  Section
  1.2

  	
  Restricted
  Payments

  	
   

  
	
  Section
  1.3

  	
  Incurrence
  of Indebtedness and Issuance of Preferred Stock

  	
   

  
	
  Section
  1.4

  	
  Liens

  	
   

  
	
  Section
  1.5

  	
  Dividend
  and Other Payment Restrictions Affecting Restricted Subsidiaries

  	
   

  
	
  Section
  1.6

  	
  Merger,
  Consolidation or Sale of Assets

  	
   

  
	
  Section
  1.7

  	
  Transactions
  with Affiliates

  	
   

  
	
  Section
  1.8

  	
  Designation
  of Restricted and Unrestricted Subsidiaries

  	
   

  
	
  Section
  1.9

  	
  Sale
  and Leaseback Transactions

  	
   

  
	
  Section
  1.10

  	
  Business
  Activities

  	
   

  
	
  Section
  1.11

  	
  Payments
  for Consent

  	
   

  
	
  Section
  1.12

  	
  Reports

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  II

  
	
   

  	
   

  	
   

  
	
  EVENTS OF DEFAULT WITH RESPECT TO THE
  DEBENTURES

  
	
   

  	
   

  	
   

  
	
  Section
  2.1

  	
  Applicability
  of Events of Default

  	
   

  
	
  Section
  2.2

  	
  Events
  of Default

  	
   

  
	
  Section
  2.3

  	
  Acceleration
  of Maturity; Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section
  3.1

  	
  Effectiveness

  	
   

  
	
  Section
  3.2

  	
  Successors
  and Assigns

  	
   

  
	
  Section
  3.3

  	
  Further
  Assurances

  	
   

  
	
  Section
  3.4

  	
  Trustee
  Disclaimer

  	
   

  
	
  Section
  3.5

  	
  Ratification
  of Indenture

  	
   

  
	
  Section
  3.6

  	
  Governing
  Law

  	
   

  
	
  Section
  3.7

  	
  Counterparts

  	
   

  

 

	
  Exhibit
  A

  	
  Definitions

  	
   

  
	
  Exhibit B

  	
  Form of Debenture

  	
   

  

 

i

 

THIS FIFTH
SUPPLEMENTAL INDENTURE, dated as of September 16, 2004 (this “Fifth
Supplemental Indenture”), to an Indenture, dated as of October 1,
1985, among BOISE CASCADE CORPORATION, a corporation duly organized and
existing under the laws of the State of Delaware, (the “Company”), U.S.
BANK TRUST NATIONAL ASSOCIATION (as successor in interest to Morgan Guaranty
Trust Company of New York) (the “Original Trustee”) and BNY WESTERN
TRUST COMPANY, a California banking corporation (the “Series Trustee”).  Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to them in Exhibit A
attached hereto, and if not defined therein, then such terms shall have the
meanings ascribed to them in the Indenture (as hereinafter defined).

 

WHEREAS, the
Company and the Original Trustee entered into an Indenture (the “Original
Indenture”), dated as of October 1, 1985, as amended by the First
Supplemental Indenture (the “First Supplement”), dated as of December
20, 1989, between the Company and the Original Trustee, by the Second
Supplemental Indenture (the “Second Supplement”), dated as of August 1,
1990 between the Company and the Original Trustee, by the Third Supplemental
Indenture (the “Third Supplement”), dated as of December 5, 2001, among
the Company, the Original Trustee and the Series Trustee, and by the Fourth
Supplemental Indenture (the “Fourth Supplement”), dated as of October
21, 2003, between the Company and the Original Trustee (the Original Indenture,
as amended and supplemented by the First Supplement, the Second Supplement, the
Third Supplement and the Fourth Supplement, the “Indenture”); and

 

WHEREAS,
Sections 901(2) and 901(7) of the Indenture provide that the Indenture may be
amended without the consent of any Holder of securities issued under the
Indenture; and

 

WHEREAS, the Series Securities are being remarketed
and the interest rate reset in accordance with the procedures set forth in the
Remarketing Agreement;

 

WHEREAS, the
Company has determined that the amendments set forth in Article I hereof are
authorized or permitted by Section 901 of the Indenture and has delivered to
the Original Trustee and the Series Trustee an Opinion of Counsel to that
effect and an Opinion of Counsel and an Officers’ Certificate pursuant to
Section 102 of the Indenture to the effect that all conditions precedent
provided for in the Indenture to the Original Trustee’s and the Series Trustee’s
execution and delivery of this Third Supplemental Indenture have been complied
with; and

 

WHEREAS, the
Company has requested that the Original Trustee and the Series Trustee execute
and deliver this Fifth Supplemental Indenture and satisfy all requirements
necessary to make this Fifth Supplemental Indenture a valid instrument in
accordance with its terms, and all acts and things necessary have been done and
performed to make this Fifth Supplemental Indenture enforceable in accordance
with its terms, and the execution and delivery of this Fifth Supplemental
Indenture has been duly authorized in all respects:

 

NOW,
THEREFORE, the Company, the Original Trustee and the Series Trustee agree as
follows:

 

 

ARTICLE I

 

COVENANTS APPLICABLE TO THE DEBENTURES

 

Section 1.1                                      Applicability
of Covenants.  The Company agrees with each Holder (each, a “Holder”) of the Company’s
Senior Floating Rate Debentures due December 16, 2006 (the “Debentures”) for so
long as any Debentures are outstanding as to the covenants contained in this
Article I.  The covenants contained in
this Article I shall apply to the Debentures and supersede Sections 801 and
1005 of the Indenture with respect to the Debentures; provided, however, that
if on any date following the date hereof (i) the Debentures have an Investment
Grade Rating from two or more Rating Agencies and no Default or Event of
Default has occurred and is continuing or (ii) the Company closes on a Tender
Offer to all Holders to purchase their Debentures at a premium declining over
their life (each, a “Fall Away Event”) then, beginning on that day and
continuing at all times thereafter regardless of any subsequent changes in the
rating of the Debentures, this Article I (except for the covenant contained in
the last paragraph of Section 1.3, the covenant contained in the second and
third paragraphs of Section 1.4, the covenants contained in Section 1.6 (other
than clause (4) of the first paragraph of Section 1.6), and the covenants
contained in the second and third paragraph of Section 1.9) will cease to be
applicable to the Debentures and, instead, the provisions contained in Sections
801 and 1005 of the Indenture will apply. 
The Company shall notify the Series Trustee as promptly as practicable
of the occurrence of a Fall Away Event.

 

Section
1.2                                      Restricted Payments.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly:

 

(1)                                  declare or pay
any dividend or make any other payment or distribution on account of the
Company’s Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving the Company) or to the
direct or indirect holders of the Company’s Equity Interests in their capacity
as such (other than dividends or distributions payable in Equity Interests
(other than Disqualified Stock) of the Company);

 

(2)                                  purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any Equity
Interests of the Company;

 

(3)                                  make any
payment on or with respect to, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated to the
Debentures, except a payment of interest or principal at the Stated Maturity
thereof (other than (x) intercompany Indebtedness permitted under clause (7) of
the second paragraph of Section 1.3 hereof and (y) the purchase, repurchase or
other acquisition of subordinated Indebtedness purchased in anticipation of
satisfying a payment of principal at the Stated Maturity thereof, in each case
within one year of such Stated Maturity); or

 

(4)                                  make any
Restricted Investment (all such payments and other actions set forth in these
clauses (1) through (4) above being collectively referred to as “Restricted
Payments”),

 

2

 

unless, at the time of and after giving effect to such
Restricted Payment:

 

(1)                                  no Default or Event of Default has
occurred and is continuing;

 

(2)                                  the Company could incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 1.3 hereof; and

 

(3)                                  such Restricted Payment, together with
the aggregate amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after October 1, 2003 (excluding Restricted
Payments permitted by clauses (2), (3), (4), (5), (6), (7), (8), (9) and (10)
of the next succeeding paragraph), is less than the sum, without duplication, of:

 

(a)                                  50% of the
Consolidated Net Income of the Company for the period (taken as one accounting
period) beginning October 1, 2003 to the end of the Company’s most recently
ended fiscal quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated Net Income for
such period is a deficit, less 100% of such deficit), provided that for the
purposes of this clause (a), in the event of a Permitted Spin-Off Transaction,
Consolidated Net Income shall thereafter be calculated on a pro forma basis, as
if such Permitted Spin-Off Transaction had been consummated on October 1, 2003,
plus

 

(b)                                 100% of the
aggregate net cash proceeds received by the Company since October 1, 2003 (i)
as a contribution to its common equity capital or from the issue or sale of
Equity Interests of the Company (other than Disqualified Stock) or (ii) from
the issue or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of the Company upon conversion into
or exchange for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the Company),
plus

 

(c)                                  100% of the
fair market value as of the date of issuance of any Equity Interests (other
than Disqualified Stock) issued by the Company as consideration for the
purchase by the Company or any of its Restricted Subsidiaries of all or
substantially all of the assets of, or a majority of the Voting Stock of,
another Permitted Business (including by means of a merger, consolidation or
other business combination permitted under the Indenture), other than Equity
Interests issued by the Company in connection with its acquisition of
OfficeMax, plus

 

(d)                                 to the extent
that any Restricted Investment that was made after October 1, 2003 is sold for
cash or otherwise liquidated or repaid for cash, the lesser of (i) the cash
return of capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of such Restricted Investment,
plus

 

(e)                                  to the extent
that any Unrestricted Subsidiary of the Company is redesignated as a Restricted
Subsidiary after October 1, 2003, the lesser of (i) the fair market value of
the Company’s Investment in such Subsidiary as of the date of such
redesignation or (ii) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted Subsidiary.

 

3

 

The preceding provisions
of this Section 1.2 will not prohibit:

 

(1)                                  the payment of
any dividend within 60 days after the date of declaration of the dividend, if
at the date of declaration the dividend payment would have complied with the
provisions hereof;

 

(2)                                  any Restricted
Payments required to complete a Permitted Spin-Off Transaction;

 

(3)                                  the redemption,
repurchase, retirement, defeasance or other acquisition of any subordinated
Indebtedness of the Company or any Restricted Subsidiary or of any Equity
Interests of the Company in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, Equity Interests of the Company (other than Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
will be excluded from clause (3)(b) of the preceding paragraph;

 

(4)                                  the defeasance,
redemption, repurchase or other acquisition of subordinated Indebtedness of the
Company or any Restricted Subsidiary with the net cash proceeds from an
incurrence of Permitted Refinancing Indebtedness;

 

(5)                                  so long as no
Default or Event of Default shall have occurred and be continuing, the
repurchase, redemption or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company
from employees, former employees, directors or former directors of the Company
or any of its Restricted Subsidiaries or their authorized representatives upon
the death, disability or termination of the employment of such employees or
former employees or termination of the term of such director or former
director; provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests may not exceed $5.0 million in
any twelve-month period; provided further that such amount in any calendar year
may be increased by an amount not to exceed the cash proceeds of key man life
insurance policies received by the Company and its Restricted Subsidiaries
after October 1, 2003 less the amount of any Restricted Payments previously
made pursuant to this proviso;

 

(6)                                  the repurchase,
redemption or other acquisition or retirement for value of the Company’s Series
D Preferred Stock held by the trustee for the Company’s 1989 Employee Stock
Ownership Plan;

 

(7)                                  repurchases of
Equity Interests deemed to occur upon (i) the exercise of stock options if such
Equity Interests represent a portion of the exercise price thereof and (ii) the
withholding of a portion of the Equity Interests granted or awarded to an
employee to pay taxes associated therewith;

 

(8)                                  the declaration
and payment of dividends to holders of any class or series of Disqualified
Stock of the Company issued in accordance with Section 1.3 hereof to the extent
such dividends are included in the definition of Fixed Charges;

 

4

 

(9)                                  so long as no
Default or Event of Default shall have occurred and be continuing, the declaration
and payment of dividends to holders of the Company’s common stock, provided
that any such dividends declared and paid pursuant to this clause (9) shall not
exceed $20.0 million in any fiscal quarter; or

 

(10) so long as no Default
or Event of Default shall have occurred and be continuing, other Restricted
Payments in an aggregate amount, when taken together with all other Restricted
Payments made pursuant to this clause (10), not to exceed $30.0 million.

 

The amount of all
Restricted Payments (other than cash) will be the fair market value on the date
of the Restricted Payment of the asset(s) or securities proposed to be
transferred or issued by the Company or such Restricted Subsidiary, as the case
may be, pursuant to the Restricted Payment. The fair market value of any assets
or securities that are required to be valued by this Section 1.2 will be
determined by the Board of Directors whose resolution with respect thereto will
be final and binding and will be delivered to the Series Trustee.

 

Section
1.3                                      Incurrence of Indebtedness
and Issuance of Preferred Stock.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, “incur”) any
Indebtedness (including Acquired Debt), and the Company will not issue any
Disqualified Stock and will not permit any of its Restricted Subsidiaries to
issue any shares of preferred stock; provided, however, that the Company may
incur Indebtedness (including Acquired Debt) or issue Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company’s most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock or preferred stock is issued would have
been at least 2.0 to 1 determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred or the preferred stock or Disqualified Stock had been issued,
as the case may be, at the beginning of such four-quarter period.

 

The first paragraph of
this Section 1.3 will not prohibit the incurrence of any of the following items
of Indebtedness, Disqualified Stock or preferred stock, as applicable
(collectively, “Permitted Debt”):

 

(1)                                  the incurrence
by the Company and the Restricted Subsidiaries of Indebtedness and letters of
credit under Credit Facilities in an aggregate principal amount at any one time
outstanding under this clause (1) (with letters of credit being deemed to have
a principal amount equal to the maximum potential liability of the Company and
the Restricted Subsidiaries thereunder) not to exceed the greater of:

 

(a)                                  the Designated
Facilities Amount; or

 

(b)                                 the Borrowing
Base as of the date of such incurrence;

 

(2)                                  the incurrence
by the Company and its Restricted Subsidiaries of the Existing Indebtedness;

 

5

 

(3)                                  the Debentures;

 

(4)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case, incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of property
(real or personal), plant or equipment (whether through the direct purchase of
assets or through the purchase of the Capital Stock of any Person owning such
assets) used in the business of the Company or such Restricted Subsidiary, in
an aggregate principal amount at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (4), not to exceed the greater of
(i) $75.0 million or (ii) 3.0% of the Consolidated Net Tangible Assets of the
Company and its Restricted Subsidiaries;

 

(5)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of Permitted Refinancing
Indebtedness in exchange for, or the net proceeds of which are used to refund,
refinance or replace Indebtedness (other than intercompany Indebtedness) that
was permitted by the Indenture to be incurred under the first paragraph of this
Section 1.3 or clause (2), (3), (4), (5), (12), (13), (16), (17) or (18) of
this paragraph;

 

(6)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of obligations with
respect to letters of credit securing obligations entered into in the ordinary
course of business to the extent such letters of credit are not drawn upon or,
if drawn upon, such drawing is reimbursed within five Business Days following
receipt of a demand for reimbursement;

 

(7)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Company and any of its Restricted
Subsidiaries; provided, however, that:

 

(a)                                  if the Company
is the obligor on such Indebtedness and such Indebtedness is held by a
Restricted Subsidiary, such Indebtedness must be expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
Debentures; and

 

(b)                                 (i) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary of the Company and (ii) any sale or other transfer of any such
Indebtedness to a Person that is not either the Company or a Restricted
Subsidiary of the Company will be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be, that was not permitted by this clause (7);

 

(8)                                  the issuance of
shares of preferred stock by a Restricted Subsidiary to the Company or another
Restricted Subsidiary; provided that any subsequent issuance or transfer of any
Capital Stock or any other event which, in either case, results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other
subsequent transfer of any such shares of preferred stock (except to the
Company or another Restricted Subsidiary) shall be

 

6

 

deemed in each case to be an
issuance of such shares of preferred stock that was not permitted by this
clause (8);

 

(9)                                  the incurrence
by the Company or any of its Restricted Subsidiaries of:

 

(a)                                  Hedging
Obligations incurred in the ordinary course of business and not for speculative
purposes;

 

(b)                                 Indebtedness in
respect of performance, surety or appeal bonds provided in the ordinary course
of business; and

 

(c)                                  Indebtedness
arising from agreements providing for indemnification, adjustment of purchase
price or similar obligations of the Company or any of its Restricted Subsidiaries
incurred in connection with the disposition of any business, assets or
Subsidiary of the Company in an aggregate amount not to exceed the gross
proceeds actually received by the Company or any Restricted Subsidiary in
connection with such disposition;

 

(10)                            the guarantee
by the Company or any of its Restricted Subsidiaries of Indebtedness of the
Company or a Restricted Subsidiary of the Company that was permitted to be
incurred by another provision of this Section 1.3, provided that, in the case
of a Restricted Subsidiary (other than the guarantee by Boise Cascade Office
Products Corporation or OfficeMax, Inc. of Indebtedness and letters of credit
under Credit Facilities), the Debentures are guaranteed equally and ratably
with such Indebtedness;

 

(11)                            the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers’ compensation claims, environmental remediation or other environmental
matters or payment obligations in connection with self-insurance or similar
requirements, in each case to the extent arising in the ordinary course of
business;

 

(12)                            the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness
represented by industrial revenue bonds incurred to finance the construction or
improvement of their respective operations in an aggregate principal amount at
any time outstanding pursuant to this clause (12), including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace Indebtedness
incurred pursuant to this clause (12), not to exceed the greater of (i) $50.0
million or (ii) 2.0% of the Consolidated Net Tangible Assets of the Company and
its Restricted Subsidiaries;

 

(13)                            the incurrence
by any Receivables Subsidiary of Indebtedness pursuant to a Receivables
Program; provided, however, that the aggregate principal amount of Indebtedness
incurred pursuant to this clause (13) at any one time outstanding does not
exceed the Designated Receivables Amount;

 

(14)                            the incurrence
by the Company or a Restricted Subsidiary of Indebtedness to the extent the net
proceeds thereof are promptly deposited to defease all outstanding Debentures
as described under Section 401 of the Indenture;

 

7

 

(15)                            the incurrence
by the Company or any of its Restricted Subsidiaries of Indebtedness arising
from the honoring by a bank or other financial institution of a check, draft or
similar instrument inadvertently drawn against insufficient funds in the
ordinary course of business;

 

(16)                            the incurrence
by any Restricted Subsidiary of Indebtedness in an aggregate principal amount
at any time outstanding, including all Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred pursuant to
this clause (16), not to exceed the excess of (i) $300.0 million over (ii) the
principal amount then outstanding of the 7.05% Notes due May 15, 2005 of Boise
Cascade Office Products Corporation and Permitted Refinancing Indebtedness
incurred to refund, refinance or replace such notes;

 

(17)                            Indebtedness of
OfficeMax existing at the time of the Company’s acquisition of OfficeMax;

 

(18)                            the incurrence
by the Company of additional Indebtedness or the issuance of Disqualified Stock
by the Company at any time outstanding, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (18), not to exceed $150.0 million.

 

For purposes of determining
compliance with this Section 1.3:

 

(1)                                  in the event
that an item of proposed Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (1) through (18) above,
or is entitled to be incurred pursuant to the first paragraph of this Section
1.3, the Company will be permitted to classify such item of Indebtedness on the
date of its incurrence, or, subject to clause (2) below, later reclassify all
or a portion of such item of Indebtedness, in any manner that complies with
this Section 1.3;

 

(2)                                  Indebtedness
under Credit Facilities outstanding on the date hereof will be deemed to have
been incurred on such date in reliance on the exception provided by clause (1)
of the definition of Permitted Debt and Indebtedness under a Receivables
Program outstanding on the date hereof will be deemed to have been incurred on
such date in reliance on the exception provided by clause (13) of the
definition of Permitted Debt, and the Company will not be permitted to
reclassify any portion of such Indebtedness thereafter;

 

(3)                                  the outstanding
principal amount of any particular Indebtedness shall be counted only once and
any obligations arising under any guarantee, Lien, letter of credit or similar
instrument supporting such Indebtedness shall not be double counted;

 

(4)                                  the accrual of
interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the
same terms, and the payment of dividends on Disqualified Stock in the form of
additional shares of the same class of Disqualified Stock will not be deemed to
be an incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this Section 1.3; provided, in each such case, that the amount
thereof is included in Fixed Charges of the Company as accrued; and

 

8

 

(5)                                  the maximum
amount of Indebtedness that the Company or a Restricted Subsidiary may incur
pursuant to this Section 1.3 will not be deemed to be exceeded, with respect to
any outstanding Indebtedness, due solely to the result of fluctuations in the
exchange rates of currencies.

 

After a Fall Away Event,
no Restricted Subsidiary shall, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to any Indebtedness (including Acquired
Debt) unless it Guarantees the Debentures; provided, however, that a Restricted
Subsidiary may incur Indebtedness (including Acquired Debt) in an aggregate
principal amount at any time outstanding not to exceed 5.0% of the Consolidated
Net Tangible Assets of the Company and its Restricted Subsidiaries.

 

Section
1.4                                      Liens.  Prior to a Fall Away Event, the Company will
not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly create, incur, assume or suffer to exist any Lien securing
Indebtedness, Attributable Debt or trade payables (other than Permitted Liens)
on any asset now owned or hereafter acquired, unless all payments due under the
Indenture and the Debentures are secured on an equal and ratable basis with (or
prior to) the obligations so secured until such time as such obligations are no
longer secured by a Lien.

 

After a Fall Away Event,
neither the Company nor any Restricted Subsidiary shall incur, issue, assume,
or guarantee any Indebtedness secured by a mortgage, pledge or lien (“Mortgage”)
on any Principal Property of the Company or any Restricted Subsidiary, or on
any stock or Indebtedness of any Restricted Subsidiary, unless either:

 

(1)                                  the Company
secures or causes the Restricted Subsidiary to secure the Debentures equally
and pro rata with, or at the Company’s option, prior to, the secured
Indebtedness; or

 

(2)                                  the total
amount of all such secured Indebtedness, plus all Attributable Debt of the
Company and its Restricted Subsidiaries with respect to Sale and Leaseback
Transactions involving Principal Properties (except Sale and Leaseback
Transactions permitted under Section 1.9 hereof) does not exceed 10% of
Consolidated Net Tangible Assets.

 

The restriction in the
paragraph above does not apply to, and computations under this restriction will
exclude from the total amount of secured Indebtedness, Indebtedness secured by:

 

(1)                                  Mortgages on
property, any shares of stock or Indebtedness of any corporation existing at
the time the corporation becomes a Restricted Subsidiary;

 

(2)                                  Mortgages in
favor of the Company or a Restricted Subsidiary;

 

(3)                                  Mortgages in
favor of governmental bodies to secure progress or advance payments;

 

9

 

(4)                                  Mortgages on
property, shares of capital stock or Indebtedness existing at the time the
property, stock or Indebtedness is acquired (including acquisition through
merger or consolidation);

 

(5)                                  purchase money
and construction Mortgages which are entered into within 180 days after the
later of the acquisition of the property, shares of capital stock or
Indebtedness or the completion of construction on any such acquired property;

 

(6)                                  Mortgages
securing industrial revenue or pollution control bonds;

 

(7)                                  Mortgages on
timberlands in connection with arrangements under which the Company or any
Restricted Subsidiary is obligated to cut or pay for timber; or

 

(8)                                  any extension,
renewal, or refunding of any Mortgage referred to in the foregoing clauses.

 

Section
1.5                                      Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or permit to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to:

 

(1)                                  pay dividends
or make any other distributions on its Capital Stock to the Company or any of
its Restricted Subsidiaries;

 

(2)                                  make loans or
advances to the Company or any of its Restricted Subsidiaries; or

 

(3)                                  transfer any of
its properties or assets to the Company or any of its Restricted Subsidiaries.

 

However, the preceding
restrictions will not apply to encumbrances or restrictions existing under or
by reason of:

 

(1)                                  agreements in
effect on the date hereof and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings of those
agreements and any new agreements, provided that the encumbrances or
restrictions contained in any such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements, refinancings or new
agreements, taken as a whole, are not materially more restrictive than the
encumbrances or restrictions contained in agreements in place on the date
hereof;

 

(2)                                  the Indenture
and the Debentures;

 

(3)                                  any applicable
law, rule, regulation or order;

 

(4)                                  any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such

 

10

 

acquisition (except to the
extent such Indebtedness or Capital Stock was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the property or assets of the Person so acquired, and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings of those instruments, provided that
the encumbrances or restrictions contained in any such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings, taken as a whole, are not materially more
restrictive than the encumbrances or restrictions contained in instruments in
effect on the date of acquisition;

 

(5)                                  customary
non-assignment provisions in leases or other agreements entered into in the
ordinary course of business and consistent with past practices;

 

(6)                                  purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions on that property of the nature described in clause (3) of
the preceding paragraph;

 

(7)                                  any agreement
for the sale or other disposition (including a Permitted Spin-Off Transaction)
of a Restricted Subsidiary or the assets of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending its sale or other
disposition (including a Permitted Spin-Off Transaction);

 

(8)                                  Permitted
Refinancing Indebtedness, provided that the restrictions contained in the
agreements governing such Permitted Refinancing Indebtedness, taken as a whole,
are not materially more restrictive than those contained in the agreements
governing the Indebtedness being refinanced;

 

(9)                                  Liens securing
Indebtedness otherwise permitted to be incurred under Section 1.4 or Section
1.9 hereof that limit the right of the debtor to dispose of the assets subject
to such Liens;

 

(10)                            provisions with
respect to the disposition or distribution of assets or property in joint
venture agreements, asset sale agreements, stock sale agreements and other
similar agreements entered into in the ordinary course of business;

 

(11)                            restrictions on
cash or other deposits or net worth imposed by customers or lessors under contracts
or leases entered into in the ordinary course of business; and

 

(12)                            with respect to
a Receivables Subsidiary, encumbrances and restrictions that are imposed
pursuant to a Receivables Program of such Receivables Subsidiary; provided that
such encumbrances and restrictions are customarily required by the
institutional sponsor or arranger or are necessary for customary
“non-consolidation” or “true sale” opinions at the time of entering into such
Receivables Program in similar types of documents relating to the purchase of
similar receivables in connection with the financing thereof.

 

Section
1.6                                      Merger, Consolidation or
Sale of Assets.  No
consolidation or merger of the Company with or into any other corporation and
no conveyance, transfer or lease

 

11

 

of its and its Restricted
Subsidiaries’ properties substantially as an entirety to another corporation
may be made unless:

 

(1)                                  the surviving
corporation or acquiring Person shall be a corporation organized and existing
under the laws of the United States of America, any state thereof, or the
District of Columbia and shall expressly assume by an indenture supplement in
form satisfactory to the Series Trustee the payment of principal of and any
premium and interest on the Debentures and the performance of covenants in the
Indenture;

 

(2)                                  immediately
after giving effect to such transaction, no Event of Default, and no event
which after notice or lapse of time, or both, would become an Event of Default,
shall have happened and be continuing;

 

(3)                                  the Company has
delivered to the Series Trustee an Officers’ Certificate and Opinion of Counsel
each stating that such consolidation, merger, conveyance or transfer complies
with this Section 1.6 and that all conditions precedent herein provided for
relating to such transaction have been complied with; and

 

(4)                                  prior to a Fall
Away Event, the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale, assignment,
transfer, conveyance or other disposition has been made, will, on the date of
such transaction after giving pro forma effect thereto and to any related
financing transactions as if the same had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant contained in Section 1.3;

 

provided, however, that the
Company may not consolidate with or merge into any other corporation or convey
its property substantially as an entirety to another corporation if any
Principal Property of the Company or any Restricted Subsidiary would become
subject to a Mortgage which is not expressly excluded from the restrictions or
permitted by the provisions of Section 1.5 hereof after a Fall Away Event,
unless all the outstanding debt securities under the Indenture are secured by a
lien upon such Principal Property equal with or, at the Company’s option, prior
to the Indebtedness secured by the Mortgage.

 

Notwithstanding the
foregoing clause (4), if

 

(a)                                  any Restricted
Subsidiary consolidates with, merges into or transfers all or part of its
properties and assets to the Company or to any other Restricted Subsidiary of
the Company, or

 

(b)                                 the Company
merges with an Affiliate incorporated in the United States primarily for the
purpose of reincorporating the Company in another jurisdiction,

 

then no violation of this Section 1.6 will be deemed
to have occurred, as long as the requirements of clauses (1), (2) and (3) of
this Section 1.6 are satisfied.

 

12

 

Except for clause (1) of the
preceding paragraph, this Section 1.6 will not apply to a sale, assignment,
transfer, conveyance or other disposition of assets between or among the
Company and its Restricted Subsidiaries or to a Permitted Spin-Off Transaction
or to any sale, assignment, transfer, conveyance or other disposition of assets
between or among the Company and any of its Subsidiaries required in connection
with a Permitted Spin-Off Transaction.

 

Section
1.7                                      Transactions with Affiliates.  The Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

 

(1)                                  the Affiliate
Transaction is on terms, when taken as a whole, that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person; and

 

(2)                                  the Company
delivers to the trustee:

 

(a)                                  with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, a resolution of the Board
of Directors set forth in an officers’ certificate certifying that such
Affiliate Transaction complies with this Section 1.7 and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the
Board of Directors; and

 

(b)                                 with respect to
any Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $25.0 million, an opinion as to the
fairness to the Company of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing.

 

The following items will not
be deemed to be Affiliate Transactions and, therefore, will not be subject to
the provisions of the prior paragraph:

 

(1)                                  any employment,
compensation, benefit or indemnification agreement or arrangement (and any
payments or other transactions pursuant thereto) entered into by the Company or
any of its Restricted Subsidiaries in the ordinary course of business with an
officer, employee or director and any transactions pursuant to stock option
plans, stock ownership plans and employee benefit plans or arrangements;

 

(2)                                  transactions
between or among the Company and/or its Restricted Subsidiaries (including any
Person that becomes a Restricted Subsidiary as a result of any such
transaction);

 

(3)                                  transactions
with a Person that is an Affiliate of the Company solely because the Company
owns an Equity Interest in, or controls, such Person;

 

13

 

(4)                                  payment of fees
to directors who are not otherwise employees of the Company;

 

(5)                                  sales of Equity
Interests (other than Disqualified Stock) to Affiliates of the Company;

 

(6)                                  Restricted
Payments that are permitted under Section 1.2 hereof;

 

(7)                                  loans or
advances to employees or consultants in the ordinary course of business of the
Company or its Restricted Subsidiaries;

 

(8)                                  transactions
between a Receivables Subsidiary and any Person in which the Receivables Subsidiary
has an Investment or any other transactions in connection with a Receivables
Program of the Company or a Restricted Subsidiary;

 

(9)                                  a Permitted
Spin-Off Transaction and actions taken and agreements entered into between or
among the Company and its Subsidiaries required to complete a Permitted
Spin-Off Transaction;

 

(10)                            transactions
pursuant to or contemplated by any agreement of the Company or any Restricted
Subsidiary as in effect as of the date hereof or any amendment thereto or any
replacement agreement so long as any such amendment or replacement agreement,
taken as a whole, is not materially more disadvantageous to the Holders than
the original agreement as in effect on the date hereof; and

 

(11)                            the provision
of administrative services by the Company to any Unrestricted Subsidiary, so
long as it does not result in an Investment in such Subsidiary.

 

Section
1.8                                      Designation of Restricted
and Unrestricted Subsidiaries.  The Board of Directors of the Company may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that
designation would not cause a Default. If a Restricted Subsidiary is designated
as an Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by the Company and its Restricted Subsidiaries in
the Subsidiary properly designated will be deemed to be an Investment made as
of the time of the designation and will reduce the amount available for
Restricted Payments under the first paragraph of Section 1.2 hereof or
Permitted Investments, as determined by the Company. That designation will only
be permitted if the Investment would be permitted at that time and if the
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
Notwithstanding the foregoing, the Company’s Chief Executive Officer may
designate any Restricted Subsidiary to be an Unrestricted Subsidiary, or vice
versa, if the Company’s Investment in such Subsidiary is $5.0 million or less
and the redesignation would not cause a Default.

 

Section
1.9                                      Sale and Leaseback
Transactions.  Prior to a
Fall Away Event, the Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale

 

14

 

and Leaseback Transaction;
provided that the Company or any Restricted Subsidiary may enter into a Sale
and Leaseback Transaction if:

 

(1)                                  the Company or that
Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in
an amount equal to the Attributable Debt relating to such Sale and Leaseback
Transaction under the Fixed Charge Coverage Ratio test in the first paragraph
of Section 1.3 hereof and (b) incurred a Lien to secure such Indebtedness
pursuant to the first paragraph of Section 1.4 hereof and

 

(2)                                  the gross cash
proceeds of that Sale and Leaseback Transaction are at least equal to the fair
market value, as determined in good faith by the Board of Directors, or the
Company’s Chief Executive Officer if less than or equal to $25.0 million, and
set forth in an Officers’ Certificate delivered to the Series Trustee, of the
property that is the subject of that Sale and Leaseback Transaction.

 

After a Fall Away Event,
neither the Company nor any Restricted Subsidiary may enter into any Sale and
Leaseback Transaction involving any Principal Property, unless the total amount
of all Attributable Debt of the Company and its Restricted Subsidiaries with
respect to such transaction plus all Indebtedness secured by liens on Principal
Properties (with the exception of secured Indebtedness excluded as described in
Section 1.4 hereof after a Fall Away Event) would not exceed 10% of
Consolidated Net Tangible Assets.

 

The restriction in the
paragraph above does not apply to, and computations of Attributable Debt under
that restriction shall exclude, a Sale and Leaseback Transaction if:

 

(1)                                  the lease,
including renewal rights, is for three years or less;

 

(2)                                  the Principal
Property is sold or transferred prior to, at the time of, or within 180 days
after the later of the acquisition of the Principal Property or the completion
of construction thereon;

 

(3)                                  the lease
secures or relates to obligations issued by a state, territory or possession of
the United States, or any political subdivision of any of the foregoing, or the
District of Columbia, to finance the acquisition or construction of property,
and on which the interest is not, in the opinion of tax counsel of recognized
standing or in accordance with a ruling issued by the Internal Revenue Service,
includible in gross income of the Holder by reason of Section 103(a)(1) of the
Internal Revenue Code (or any successor to such provision) as in effect at the time
of issuance of such obligations;

 

(4)                                  the transaction
is between the Company and a Restricted Subsidiary or between Restricted
Subsidiaries; or

 

(5)                                  within 180 days
after the sale, the Company or the Restricted Subsidiary uses an amount of
money at least equal to the greater of (i) the net proceeds of the sale of the
Principal Property leased or (ii) the fair market value of the Principal
Property leased, to retire Funded Debt of the Company or a Restricted
Subsidiary, or to purchase other property which will be Principal Property at
least equal in value to the Principal Property leased.

 

15

 

With respect to clause (5)
above, the amount used to retire Funded Debt shall be reduced by (a) the
principal amount of any Debentures or notes (including securities issued under
the Indenture) of the Company or a Restricted Subsidiary surrendered to the
trustee for retirement and cancellation within 180 days after the sale of the
Principal Property, and (b) the principal amount of Funded Debt, other than
items referred to in the preceding clause (a), voluntarily retired by the
Company or a Restricted Subsidiary within 180 days after the sale of the
Principal Property.

 

Section
1.10                                Business
Activities.  The Company
will not, and will not permit any Restricted Subsidiary to, engage in any
business other than a Permitted Business, except to such extent as would not be
material to the Company and its Restricted Subsidiaries taken as a whole.

 

Section
1.11                                Payments for
Consent.  The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, pay
or cause to be paid any consideration to or for the benefit of any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions hereof or the Debentures unless such consideration is offered to be
paid and is paid to all Holders, pro rata based on the principal amount of the
Debentures held by such Holders, that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.

 

Section
1.12                                Reports.  Whether or not required by the SEC, so long
as any Debentures are outstanding, the Company will furnish to the trustee,
within the time periods specified in the SEC’s rules and regulations:

 

(1)                                  all quarterly
and annual financial information that would be required to be contained in a
filing with the SEC on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and, with respect to the annual
information only, a report on the annual financial statements by the Company’s
certified independent accountants; and

 

(2)                                  all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports.

 

ARTICLE II

 

EVENTS OF
DEFAULT WITH RESPECT TO THE DEBENTURES

 

Section
2.1                                      Applicability of Events of
Default.  Sections 2.2 and 2.3 hereof will
apply to the Debentures and supersede Section 501 and the first two paragraphs
of Section 502 of the Indenture; provided, however, that after a Fall Away
Event with respect to the Debentures, beginning on that day and continuing at
all times thereafter regardless of any subsequent changes in the rating of the
Debentures, Section 501 and the provisions of the first two paragraphs of
Section 502 of the Indenture will apply.

 

Section
2.2                                      Events of Default.  With respect to the Debentures, each of the
following is an “Event of Default”:

 

16

 

(1)                                  default for 30
days in the payment when due of interest on the Debentures;

 

(2)                                  default in
payment when due of the principal of or premium, if any, on the Debentures;

 

(3)                                  default in the
performance, or breach, of any covenant or warranty of the Company in this
Fifth Supplemental Indenture and continuance of such default or breach for a
period of 90 days after there has been given, by registered or certified mail,
to the Company by the Series Trustee or to the Company and the Series Trustee
by the Holders of at least 25% in principal amount of the Debentures, a written
notice specifying such default or breach and requiring it to be remedied and
stating that such notice is a “Notice of Default” hereunder;

 

(4)                                  failure by the
Company or any of its Restricted Subsidiaries to comply with Section 1.6
hereof;

 

(5)                                  failure by the
Company or any of its Restricted Subsidiaries for 60 days after notice from the
trustee or the Holders of at least 25% in aggregate principal amount of the
Debentures outstanding to comply with any of the other agreements in the
Indenture;

 

(6)                                  default under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date hereof, if
that default:

 

(a)                                  is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness after the expiration of the grace period provided in such
Indebtedness on the date of such default (a “Payment Default”); or

 

(b)                                 results in the
acceleration of such Indebtedness prior to its express maturity,

 

and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more and has not been discharged in
full or such acceleration rescinded or annulled within 10 days of such Payment
Default or acceleration; provided, however, that the Series Trustee shall not
be deemed to have knowledge of such default unless either (i) an officer of the
Series Trustee assigned by the Series Trustee to administer its corporate trust
business shall have actual knowledge of such default or (ii) the Series Trustee
shall have received written notice thereof from the Company, from any Holder or
from the Trustee under any such mortgage, indenture or other instrument;

 

(7)                                  failure by the
Company or any of its Significant Subsidiaries to pay final, non-appealable
judgments aggregating in excess of $1.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; and

 

17

 

(8)                                  the institution
by the Company or any of its Restricted Subsidiaries of proceedings to be
adjudicated as bankrupt or insolvent, or the consent by the Company or any of
its Restricted Subsidiaries to the institution of bankruptcy or insolvency
proceedings against the Company or such Restricted Subsidiary, as the case may
be, or the filing by the Company or any of its Restricted Subsidiaries of a
petition or answer or consent seeking reorganization or relief under the
Federal Bankruptcy Act or any other applicable federal or state law, or the
consent by the Company or any of its Restricted Subsidiaries to the filing of
any such petition or the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Company or any of its
Restricted Subsidiaries of any substantial part of the property of the Company
or such Restricted Subsidiary, as the case may be, or the making by the Company
or any of its Restricted Subsidiaries of any assignment for the benefit of
creditors, or the admission by the Company or any of its Restricted
Subsidiaries in writing of the inability of the Company or such Restricted
Subsidiary, as the case may be, to pay its debts generally as they become due
and its willingness to be adjudicated a bankrupt, or the taking of corporate
action by the Company or any of its Restricted Subsidiaries in furtherance of
any such action.

 

Section
2.3                                      Acceleration of Maturity;
Remedies.  In the case
of an Event of Default described in clauses (1), (2) or (8) of Section 2.2
hereof, all outstanding Debentures will become due and payable immediately
without further action or notice. If any other Event of Default occurs and is
continuing, the trustee or the Holders of at least 25% in principal amount of
the then outstanding Debentures may declare the Debentures to be due and
payable immediately.

 

At any time after such a
declaration of acceleration with respect to the outstanding Debentures has been
made and before a judgment or decree for payment of the money due has been
obtained by the Series Trustee as provided in this Section 2.3, the Holders of
a majority in principal amount of all outstanding Debentures, by written notice
to the Company and the Series Trustee, may rescind and annul such declaration
and its consequences if (i) the Company has paid or deposited with the Series
Trustee a sum sufficient to pay (A) all overdue interest on all Debentures, (B)
the principal of (and premium, if any, on) any Debentures which have become
otherwise than by such declaration of acceleration and interest thereon at the
rate or rates prescribed therefor in such Debentures, (C) to the extent that
payment of such interest is lawful, interest upon overdue interest at the rate
prescribed therefor in such Debentures and (D) all sums paid or advanced by the
Series Trustee hereunder and the reasonable compensation, expenses,
disbursements and advances of the Series Trustee, its agent and counsel; and
(ii) all Events of Default with respect to the Debentures, other than the
nonpayment of the principal of Debentures which have become due solely by such
declaration of acceleration, have been cured or waived in accordance with the
terms hereof.

 

ARTICLE III

 

MISCELLANEOUS

 

Section
3.1                                      Effectiveness.  This Fifth Supplemental Indenture will become
effective upon its execution and delivery.

 

18

 

Section
3.2                                      Successors and Assigns.  All of the covenants, promises, stipulations
and agreements of the Company contained in the Indenture, as supplemented and
amended by this Fifth Supplemental Indenture, will bind the Company and its
successors and assigns and will inure to the benefit of the Original Trustee
and the Series Trustee and their respective successors and assigns.

 

Section
3.3                                      Further Assurances.  The Company will, at its own cost and
expense, execute and deliver any documents or agreements, and take any other
actions, which the Original Trustee or the Series Trustee or their respective
counsel may from time to time request in order to assure the Original Trustee
or the Series Trustee of the benefits of the rights granted to the Trustee or
the Series Trustee under the Indenture, as supplemented and amended by this
Fifth Supplemental Indenture.

 

Section
3.4                                      Trustee Disclaimer.  The recitals in this Fifth Supplemental
Indenture are made by the Company and not by the Original Trustee or the Series
Trustee, and neither the Original Trustee nor the Series Trustee shall be
responsible for the recitals or for the validity or sufficiency of this Fifth
Supplemental Indenture.

 

Section
3.5                                      Ratification of Indenture.  The Indenture as supplemented by this Fifth
Supplemental Indenture, is in all respects ratified and confirmed, and this
Fifth Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.

 

Section
3.6                                      Governing Law.  THIS FIFTH SUPPLEMENTAL INDENTURE AND EACH
SERIES SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAWS.

 

Section
3.7                                      Counterparts.  This Fifth Supplemental Indenture may be
executed in any number of separate counterparts each of which shall be an
original; but such separate counterparts shall together constitute but one and
the same instrument.

 

19

 

IN WITNESS WHEREOF, the parties hereto have caused
this Fifth Supplemental Indenture to be duly executed by their respective
officers thereunto duly authorized, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.

 

 

	
   

  	
  BOISE
  CASCADE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ A. B. Groce

  	
   

  
	
   

  	
  Name: A. B.
  Groce

  
	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK
  TRUST NATIONAL

  ASSOCIATION,

  
	
   

  	
  as Original
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Ignazio Tamburello

  	
   

  
	
   

  	
  Name:
  Ignazio Tamburello

  
	
   

  	
  Title:
  Assistant Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY WESTERN
  TRUST COMPANY,

  
	
   

  	
  as Series
  Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kathleen Gylland

  	
   

  
	
   

  	
  Name:
  Kathleen Gylland

  
	
   

  	
  Title:
  Assistant Vice President

  

 

 

EXHIBIT A

 

The following
definitions shall apply, and shall supersede any identical terms defined in the
Indenture, only with respect to the Debentures issued under this Fifth
Supplemental Indenture.  The definitions
in the Indenture shall continue to apply unmodified to Securities of other
series issued under the Indenture.

 

“Acquired Debt”
means, with respect to any specified Person:

 

(1)                                  Indebtedness of any other Person existing
at the time such other Person is merged with or into or became a Subsidiary of
such specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Subsidiary of, such specified Person; and

 

(2)                                  Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person,

 

but excluding
Indebtedness of such other Person that is extinguished, retired or repaid
concurrently with such other Person becoming a Restricted Subsidiary of, or at
the time it is merged into or consolidates with, such specified Person.

 

“Affiliate” of any
specified Person means any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person. For purposes of this definition, “control,” as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided
that beneficial ownership of 10% or more of the Voting Stock of a Person will
be deemed to be control. For purposes of this definition, the terms
“controlling,” “controlled by” and “under common control with” have correlative
meanings. Notwithstanding the foregoing, no Person (other than the Company or any
Subsidiary of the Company) in whom a Receivables Subsidiary makes an Investment
in connection with a Receivables Program shall be deemed to be an Affiliate of
the Company or any of its Subsidiaries solely by reason of such Investment.

 

“Asset Sale” means:

 

(1)                                  the sale, lease, conveyance or other
disposition of any assets or rights; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by the provisions
of Section 1.6 and

 

(2)                                  the issuance of Equity Interests by any
of the Company’s Restricted Subsidiaries.

 

Notwithstanding the
preceding, none of the following items will be deemed to be an Asset Sale:

 

 

(1)                                  any single transaction or series of
related transactions that involves Equity Interests or assets having a fair
market value of less than $10.0 million;

 

(2)                                  a transfer of assets between or among the
Company and one or more of its Restricted Subsidiaries (including any Person that
becomes a Restricted Subsidiary in connection with such transaction);

 

(3)                                  an issuance of Equity Interests by a
Restricted Subsidiary to the Company or to another Restricted Subsidiary;

 

(4)                                  the sale or lease of equipment, inventory
or accounts receivable in the ordinary course of business;

 

(5)                                  any sale or other disposition of
Receivables and Related Assets pursuant to or in connection with a Receivables
Program;

 

(6)                                  a Permitted Spin-Off Transaction and any
sale, lease, conveyance or other disposition of any assets or rights required
to complete a Permitted Spin-Off Transaction;

 

(7)                                  sales of assets received by the Company
or any Restricted Subsidiary upon the foreclosure on a Lien;

 

(8)                                  the lease, assignment or sublease of any
real or personal property in the ordinary course of business;

 

(9)                                  any sale, lease or other disposition in
the ordinary course of business of obsolete, worn out or damaged equipment no
longer being used by the Company or its Restricted Subsidiaries;

 

(10)                            any sale or disposition deemed to occur
in connection with creating or granting any Permitted Lien;

 

(11)                            the sale or other disposition of cash or
Cash Equivalents; and

 

(12)                            a Restricted Payment or Permitted
Investment that is permitted under Section 1.2.

 

“Attributable Debt”
in respect of a Sale and Leaseback Transaction means, at the time of
determination, the present value of the obligation of the lessee for net rental
payments during the remaining term of the lease included in such Sale and
Leaseback Transaction including any period for which such lease has been
extended or may, at the option of the lessor, be extended. Such present value
shall be calculated using a discount rate equal to the rate of interest
implicit in such lease, determined in accordance with GAAP.

 

“beneficial owner”
has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Securities Exchange Act, except that in calculating the beneficial

 

A-2

 

ownership of any
particular “person” (as that term is used in Section 13(d)(3) of the Securities
Exchange Act), such “person” will be deemed to have beneficial ownership of all
securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition.  The terms “beneficially owns” and
“beneficially owned” have a corresponding meaning.

 

“Board of Directors”
means:

 

(1)                                  with respect to a corporation, the board of
directors of the corporation or any committee thereof;

 

(2)                                  with respect to a partnership, the Board
of Directors of the general partner of the partnership; and

 

(3)                                  with respect to any other Person, the
board or committee of such Person serving a similar function.

 

“Borrowing Base”
means, as of any date, an amount equal to:

 

(1)                                  85% of the face amount of all accounts
receivable owned and not pledged by the Company and its Restricted Subsidiaries
as of the end of the most recent fiscal quarter preceding such date that were
not more than 180 days past due; plus

 

(2)                                  50% of the book value of all inventory
owned by the Company and its Restricted Subsidiaries as of the end of the most
recent fiscal quarter preceding such date; minus

 

(3)                                  the aggregate amount of trade payables of
the Company and its Restricted Subsidiaries outstanding as of the end of the
most recent fiscal quarter preceding such date, all calculated on a
consolidated basis in accordance with GAAP,

 

provided that in the
event of a Permitted Spin-Off Transaction, when calculating the Borrowing Base
as of the end of the most recent fiscal quarter preceding such Permitted
Spin-Off Transaction, the Borrowing Base shall be determined on a pro forma
basis, as if the Permitted Spin-Off Transaction had been consummated at the
beginning of such fiscal quarter.

 

“Business Day”
means each day other than a Saturday, a Sunday or a day on which commercial
banking institutions are authorized or required by law to close in New York
City.

 

“Capital Lease
Obligation” means, at the time any determination is to be made, the amount
of the liability in respect of a capital lease that would at that time be
required to be capitalized on a balance sheet in accordance with GAAP.

 

“Capital Stock”
means:

 

A-3

 

(1)                                  in the case of a corporation, corporate
stock;

 

(2)                                  in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;

 

(3)                                  in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited); and

 

(4)                                  any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person,

 

but excluding any debt
securities convertible into such equity securities.

 

“Cash Equivalents”
means:

 

(1)                                  United States dollars;

 

(2)                                  securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality of the United States government (provided that the full faith
and credit of the United States is pledged in support of those securities)
having maturities of not more than six months from the date of acquisition;

 

(3)                                  certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers’ acceptances with maturities not exceeding six months and
overnight bank deposits, in each case, with any domestic commercial bank having
capital and surplus in excess of $500.0 million;

 

(4)                                  repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clauses (2) and (3) above entered into with any financial institution meeting
the qualifications specified in clause (3) above;

 

(5)                                  commercial paper having the highest
rating obtainable from Moody’s or S&P and in each case maturing within six
months after the date of acquisition; and

 

(6)                                  money market funds at least 95% of the
assets of which constitute Cash Equivalents of the kinds described in clauses
(1) through (5) of this definition.

 

“Consolidated Cash
Flow” means, with respect to any specified Person for any period, the
Consolidated Net Income of such Person for such period plus:

 

(1)                                  an amount equal to any non-routine loss
plus any net loss realized by such Person or any of its Restricted Subsidiaries
in connection with an Asset Sale, to the extent such losses were deducted in
computing such Consolidated Net Income; plus

 

A-4

 

(2)                                  provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such
Consolidated Net Income; plus

 

(3)                                  Consolidated Interest Expense, to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus

 

(4)                                  depreciation, depletion, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash expenses or charges (excluding any such non-cash expense to the
extent that it represents an accrual of or reserve for cash expenses in any
future period or amortization of a prepaid cash expense that was paid in a
prior period) of such Person and its Restricted Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses or
charges were deducted in computing such Consolidated Net Income; plus

 

(5)                                  any unusual or nonrecurring charges or
expenses, including any nonrecurring charges or expenses incurred within six
months of a Permitted Spin-Off Transaction as a result of such Permitted Spin-Off
Transaction to the extent that such charges or expenses were deducted in
computing such Consolidated Net Income; minus

 

(6)                                  an amount equal to any non-routine gain
plus any net gain realized by such Person or any of its Restricted Subsidiaries
in connection with an Asset Sale, to the extent such gain was added in
computing such Consolidated Net Income; minus

 

(7)                                  non-cash items increasing such
Consolidated Net Income for such period, other than the accrual of revenue in
the ordinary course of business,

 

in each case, on a
consolidated basis and determined in accordance with GAAP.

 

“Consolidated Interest
Expense” means, for any period, the total interest expense of a Person and
its consolidated Restricted Subsidiaries determined in accordance with GAAP, net
of any interest income relating to the obligations giving rise to such interest
expense, plus, to the extent not included in such total interest expense and to
the extent incurred by such Person or its Restricted Subsidiaries, without
duplication:

 

(1)                                  interest expense attributable to Capital
Lease Obligations and imputed interest with respect to Attributable Debt;

 

(2)                                  amortization of debt discount;

 

(3)                                  capitalized interest;

 

(4)                                  non-cash interest expense;

 

(5)                                  commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financings;

 

A-5

 

(6)                                  net costs associated with interest rate
swap, cap or collar agreements and other agreements designed to protect such
Person against fluctuations in interest rates;

 

(7)                                  the interest component of any deferred
payment obligations; and

 

(8)                                  any premiums, fees, discounts, expenses
and losses on the sale of Receivables and Related Assets (and any amortization
thereof) payable in connection with a Receivables Program,

 

(in each case as
determined on a consolidated basis in conformity with GAAP), and less, to the
extent included in such total interest expense, (a) the amortization during
such period of capitalized financing costs associated with a Permitted Spin-Off
Transaction and (b) the amortization during such period of other capitalized
financing costs; provided, however, that the aggregate amount of amortization
relating to any such other capitalized financing costs deducted in calculating
Consolidated Interest Expense shall not exceed 5% of the aggregate amount of
the financing giving rise to such capitalized financing costs.

 

“Consolidated Net
Income” means, with respect to any specified Person for any period, the
aggregate of the Net Income of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that:

 

(1)                                  the Net Income (or loss) of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting will be included only to the extent of the amount of
dividends or distributions paid in cash (or to the extent converted into cash)
to or by the specified Person or a Restricted Subsidiary of the Person;

 

(2)                                  the Net Income of any Restricted
Subsidiary will be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Restricted Subsidiary or its stockholders, except to the extent that such
Net Income is actually paid to such Person or one of its Restricted
Subsidiaries through dividends, loans or otherwise;

 

(3)                                  the cumulative effect of a change in
accounting principles will be excluded;

 

(4)                                  any non-cash goodwill impairment charges
incurred subsequent to the date hereof resulting from the application of SFAS
No. 142 will be excluded;

 

(5)                                  any non-cash charges incurred subsequent
to the date hereof relating to the underfunded portion of any pension plans
will be excluded;

 

A-6

 

(6)                                  any non-cash charges incurred subsequent
to the date hereof resulting from the application of SFAS No. 123 and APB 25
will be excluded;

 

(7)                                  the Net Income of any Unrestricted
Subsidiary will be included to the extent distributed or otherwise paid in cash
(or to the extent converted into cash) to the specified Person or one of its
Restricted Subsidiaries; and

 

(8)                                  any restructuring charges in connection
with the Company’s acquisition of OfficeMax will be excluded.

 

“Consolidated Net
Tangible Assets” means the aggregate amount of assets (less applicable
reserves and other properly deductible items) after deducting therefrom (1) all
liabilities other than deferred income taxes, Funded Debt and shareholders’
equity, (2) any item representing investments in Unrestricted Subsidiaries and
(3) all goodwill, trade names, trademarks, patents, organization expenses and
other like intangibles, all as set forth on the most recent balance sheet of
the Company and its consolidated Restricted Subsidiaries and computed in
accordance with GAAP.

 

“Credit Agreement”
means the Credit Agreement, dated as of March 28, 2002, among the Company, the
financial institutions named therein and JPMorgan Chase Bank as Administrative
Agent, as such agreement may be amended, restated, refunded, renewed, replaced
or refinanced (including increasing the amount borrowed thereunder) in whole or
in part from time to time.

 

“Credit Facilities”
means one or more debt facilities (including, without limitation, the Credit
Agreement) or commercial paper facilities, in each case with banks or other
institutional lenders providing for revolving credit loans, term loans or
letters of credit, in each case, as amended, restated, refunded, renewed,
replaced or refinanced (including increasing the amount borrowed thereunder) in
whole or in part from time to time. Credit Facilities do not include any
arrangement which constitutes a Receivables Program.

 

“Default” means
any event that is, or with the passage of time or the giving of notice or both
would be, an Event of Default.

 

“Designated Facilities
Amount” means, with respect to any Person:

 

(1)                                  prior to a Permitted Spin-Off
Transaction, $850.0 million, less the aggregate amount of all Net Proceeds of
Asset Sales required to be applied pursuant to the terms of one or more Credit
Facilities by the Company or any of its Restricted Subsidiaries since the date
hereof to repay any term Indebtedness under any such Credit Facility or to
repay revolving credit Indebtedness under any such Credit Facility and to correspondingly
reduce commitments thereunder; and

 

(2)                                  following a Permitted Spin-Off
Transaction, the greater of:

 

A-7

 

(a)                                  the product of (x) $850.0 million, less
the aggregate amount of all Net Proceeds of Asset Sales required to be applied
pursuant to the terms of one or more Credit Facilities by the Company or any of
its Restricted Subsidiaries from the date hereof through the date of the
Permitted Spin-Off Transaction to repay any term Indebtedness under any such
Credit Facility or to repay revolving credit Indebtedness under any such Credit
Facility and to correspondingly reduce commitments thereunder, and (y) a
fraction:

 

(i)                                     the numerator of which is the
Consolidated Cash Flow of such Person for its most recently ended four fiscal
quarters for which internal financial statements are available immediately
preceding the date on which the Permitted Spin-Off Transaction occurred,
determined on a pro forma basis, as if the Permitted Spin-Off Transaction had been
consummated at the beginning of such four-quarter period, including, on a pro
forma basis, the Consolidated Cash Flow of any entity acquired during such
four-quarter period, and

 

(ii)                                  the denominator of which is the
Consolidated Cash Flow of the Company for its most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which the Permitted Spin-Off Transaction
occurred, including, on a pro forma basis, the Consolidated Cash Flow of any
entity acquired during such four-quarter period, and less the aggregate amount
of all Net Proceeds of Asset Sales required to be applied pursuant to the terms
of one or more Credit Facilities by the Company or any of its Restricted
Subsidiaries since the date of the Permitted Spin-Off Transaction to repay any
term Indebtedness under any such Credit Facility or to repay revolving credit
Indebtedness under any such Credit Facility and to correspondingly reduce
commitments thereunder; and

 

(b)                                 the aggregate amount available for
borrowing or otherwise committed as of the date of such Permitted Spin-Off
Transaction under all Credit Facilities of such Person entered into in
connection with such Permitted Spin-Off Transaction less the aggregate amount
of all Net Proceeds of Asset Sales required to be applied pursuant to the terms
of one or more Credit Facilities of such Person since the date of the Permitted
Spin-Off Transaction to repay any term Indebtedness under any such Credit
Facility or to repay revolving credit Indebtedness under any such Credit
Facility and to correspondingly reduce commitments thereunder.

 

“Designated
Receivables Amount” means, with respect to any Person:

 

(1)                                  prior to a Permitted Spin-Off
Transaction, $500.0 million; and

 

(2)                                  following a Permitted Spin-Off
Transaction, the product of $500.0 million and a fraction:

 

(a)                                  the numerator of which is the average
daily balance of receivables eligible for pledging or sale under a Receivables
Program held by such Person during its most recently ended four fiscal quarters
for which internal financial statements are available

 

A-8

 

immediately
preceding the date on which the Permitted Spin-Off Transaction occurred,
determined on a pro forma basis, as if the Permitted Spin-Off Transaction had
been consummated at the beginning of such four-quarter period, and

 

(b)                                 the denominator of which is the average
daily balance of receivables eligible for pledging or sale under a Receivables
Program held by the Company during its most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which the Permitted Spin-Off Transaction occurred.

 

“Disqualified Stock”
means any Capital Stock that, by its terms (or by the terms of any security
into which it is convertible, or for which it is exchangeable, in each case at
the option of the holder of the Capital Stock), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the holder of the
Capital Stock, in whole or in part, on or prior to the date that is 91 days
after the date on which the Debentures mature. Notwithstanding the preceding
sentence, any Capital Stock that would constitute Disqualified Stock solely
because the holders of the Capital Stock have the right to require the Company
to repurchase such Capital Stock upon the occurrence of a change of control or
an asset sale will not constitute Disqualified Stock if the terms of such
Capital Stock provide that the Company may not repurchase or redeem any such
Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with Section 1.2.

 

“Domestic Restricted
Subsidiary” means any Restricted Subsidiary of the Company formed under the
laws of the United States or any state of the United States or the District of
Columbia.

 

“Equity Interests”
means Capital Stock and all warrants, options or other rights to acquire
Capital Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).

 

“Equity Offering”
means any primary private or public offering of Equity Interests of the Company
(other than Disqualified Stock) to Persons who are not Affiliates of the
Company other than (1) public offerings with respect to the Company’s common
stock registered on Form S-8 and (2) issuances upon exercise of options by
employees of the Company or any of its Restricted Subsidiaries.

 

“Event of Default”
has the meaning set forth in Section 2.2.

 

“Existing Indebtedness”
means any Indebtedness of the Company and its Restricted Subsidiaries in
existence on the date hereof, other than the 7.05% Notes due May 15, 2005 of
Boise Cascade Office Products Corporation, until such amounts are repaid.

 

“Fall Away Event” has the meaning set forth in
Section 1.1

 

A-9

 

“First Supplement”  has the meaning in the recitals hereto.

 

“Fixed Charges”
means, with respect to any specified Person for any period, the sum, without
duplication, of:

 

(1)                                  the Consolidated Interest Expense of such
Person and its Restricted Subsidiaries for such period; plus

 

(2)                                  any interest expense on Indebtedness of
any Person other than such Person or any of its Restricted Subsidiaries that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries, whether or
not such Guarantee or Lien is called upon, but only to the extent of the
Guarantee or Lien on such Indebtedness; plus

 

(3)                                  all dividends, whether paid or accrued
and whether or not in cash, on any series of preferred stock of such Person or
any of its Restricted Subsidiaries, other than dividends on Equity Interests
payable solely in Equity Interests of the Company (other than Disqualified
Stock) or to the Company or a Restricted Subsidiary of the Company.

 

“Fixed Charge Coverage
Ratio” means, with respect to any specified Person for any four-quarter
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the specified
Person or any of its Restricted Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated and on or prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made (the
“Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom as if the
same had occurred at the beginning of the applicable four-quarter reference
period.

 

In addition, for purposes
of calculating the Fixed Charge Coverage Ratio:

 

(1)                                  acquisitions or dispositions that have
been made by the specified Person or any of its Restricted Subsidiaries,
including through the Permitted Spin-Off Transaction or mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date (including any acquisitions or dispositions made
during such reference period or subsequent to such reference period and on or
prior to the Calculation Date by any Person that became a Restricted Subsidiary
or was merged with and into the specified Person or any of its Restricted
Subsidiaries on or prior to such Calculation Date) will be given pro forma
effect as if they had occurred on the first day of the four-quarter

 

A-10

 

reference period and
Consolidated Cash Flow for such reference period will be calculated on a pro
forma basis in accordance with Regulation S-X under the Securities Act;

 

(2)                                  interest on Capital Lease Obligations and
Attributable Debt shall be deemed to accrue at an interest rate reasonably
determined by a responsible financial or accounting officer of the Company to
be the rate of interest implicit in such Capital Lease Obligation or
Attributable Debt in accordance with GAAP;

 

(3)                                  the consolidated interest expense
attributable to interest on (a) any Indebtedness computed on a pro forma basis
that was not outstanding during the period for which the computation is being
made but which bears, at the option of such Person, a fixed or floating rate of
interest, shall be computed by applying, at the option of such Person, either
the fixed or floating rate and (b) borrowings under a revolving credit facility
computed on a pro forma basis shall be computed based upon the average daily
balance of such borrowings during the applicable period;

 

(4)                                  the interest rate on any Indebtedness
that bears a floating rate of interest shall be calculated as if the weighted
average interest rate that would have been applicable to such Indebtedness over
the latest 12-month period ending on the last calendar month immediately prior
to the Calculation Date had been the applicable rate on such Indebtedness for
the entire reference period (taking into account any Hedging Obligation
designed to protect such Person or any of its Restricted Subsidiaries against
fluctuations in interest rates (including any agreement that exchanges a fixed
rate interest obligation for a floating rate interest obligation) applicable to
such Indebtedness if such Hedging Obligation has a remaining term in excess of
12 months);

 

(5)                                  the Consolidated Cash Flow attributable
to discontinued operations, as determined in accordance with GAAP, will be
excluded; and

 

(6)                                  the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, will be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the specified Person or any of its
Restricted Subsidiaries following the Calculation Date.

 

“Funded Debt”
means (1) all indebtedness for money borrowed having a maturity of more than 12
months from the date as of which the determination is made or having a maturity
of 12 months or less but by its terms being renewable or extendable beyond 12
months from such date at the option of the borrower and (2) rental obligations
payable more than 12 months from such date under leases which are capitalized
in accordance with GAAP (such rental obligations to be included as Funded Debt
at the amount so capitalized and to be included for the purposes of the
definition of Consolidated Net Tangible Assets both as an asset and as Funded
Debt at the amount so capitalized).

 

“GAAP” means
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial

 

A-11

 

Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, which are in
effect on the date hereof.

 

“Guarantee” means
a guarantee other than by endorsement of negotiable instruments for collection
in the ordinary course of business, direct or indirect, in any manner
including, without limitation, by way of a pledge of assets or through letters
of credit or reimbursement agreements in respect thereof, of all or any part of
any Indebtedness.

 

“Hedging Obligations”
means, with respect to any specified Person, the obligations of such Person
under:

 

(1)                                  currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity cap
agreements and currency exchange, interest rate or commodity collar agreements;
and

 

(2)                                  other agreements or arrangements designed
to protect such Person against fluctuations in currency exchange, interest
rates or commodity prices.

 

“Indebtedness” means,
with respect to any specified Person, any indebtedness of such Person, whether
or not contingent and without duplication:

 

(1)                                  in respect of borrowed money;

 

(2)                                  evidenced by bonds, notes, debentures or
similar instruments or letters of credit (or reimbursement agreements in
respect thereof);

 

(3)                                  in respect of bankers’ acceptances;

 

(4)                                  representing Capital Lease Obligations;

 

(5)                                  representing the balance deferred and
unpaid of the purchase price of any property, except any such balance that
constitutes an accrued expense or trade payable, or similar obligations to
trade creditors; or

 

(6)                                  representing any Hedging Obligations,

 

if and to the extent any
of the preceding items (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term “Indebtedness” includes
all Indebtedness of others secured by a Lien on any asset of the specified
Person (whether or not such Indebtedness is assumed by the specified Person)
and, to the extent not otherwise included, the Guarantee by the specified
Person of any indebtedness of any other Person.

 

The amount of any Indebtedness
outstanding as of any date will be:

 

A-12

 

(1)                                  the accreted value of the Indebtedness,
in the case of any Indebtedness issued with original issue discount; and

 

(2)                                  the principal amount of the Indebtedness,
in the case of any other Indebtedness.

 

Notwithstanding the
foregoing, “Indebtedness” shall not include (A) advance payments by customers
in the ordinary course of business for services or products to be provided or
delivered in the future or (B) deferred taxes.

 

“Investment Grade
Rating” means a rating of Baa3 or better by Moody’s (or its equivalent
under any successor rating categories of Moody’s), BBB- or better by S&P
(or its equivalent under any successor rating categories of S&P) or the
equivalent investment grade credit rating from any other Rating Agency.

 

“Investments”
means, with respect to any Person, all direct or indirect investments by such
Person in other Persons (including Affiliates) in the forms of loans (including
Guarantees of other obligations), advances or capital contributions (excluding
commission, travel and similar advances to officers and employees made in the
ordinary course of business), purchases or other acquisitions for value of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP. If the Company or any Restricted Subsidiary of the
Company sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or disposition, such Person is no longer a Restricted Subsidiary
of the Company, the Company will be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Company’s Investments in such Restricted Subsidiary that were not sold or
disposed of in an amount determined as provided in the final paragraph of the
covenant contained in Section 1.2. “Investments” shall exclude extensions of
trade credit by the Company or any of its Restricted Subsidiaries in the
ordinary course of business.

 

“Lien” means, with
respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law, including any conditional
sale or other title retention agreement, any lease in the nature thereof, any
option or other agreement to sell or give a security interest in and any filing
of or agreement to give any financing statement under the Uniform Commercial
Code (or equivalent statutes) of any jurisdiction, provided that in no event
shall an operating lease be deemed to constitute a Lien.

 

“Moody’s” means
Moody’s Investors Service, Inc. and its successors.

 

“Net Income”
means, with respect to any specified Person, the net income (loss) of such
Person, determined in accordance with GAAP and before any reduction in respect
of preferred stock dividends, excluding, however:

 

A-13

 

(1)                                  any gain or loss, together with any
related provision for taxes on such gain (but not loss), realized in connection
with: (a) any Asset Sale; or (b) the disposition of any securities by such
Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries; and

 

(2)                                  any extraordinary gain or loss, together
with any related provision for taxes on such extraordinary gain (but not loss).

 

“Net Proceeds”
means the aggregate cash proceeds received by the Company or any of its
Restricted Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of (1) costs relating
to such Asset Sale, including, without limitation, legal, accounting and
investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale, and taxes paid or payable as a result
of the Asset Sale, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, (2) amounts required to
be applied to the repayment of Indebtedness, other than Indebtedness under a
Credit Facility, secured by a Lien on the asset or assets that were the subject
of such Asset Sale, (3) any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP against any
liabilities associated with the asset disposed of in such transaction and
retained by the Company or any of its Restricted Subsidiaries after such sale
or other disposition thereof, including, without limitation, pension and other
post-employment benefit liabilities and liabilities related to environmental
matters or against any indemnification obligations associated with such
transaction and (4) all distributions or other payments made to minority
interest holders required in connection with the Asset Sale.

 

“Non-Recourse Debt”
means Indebtedness:

 

(1)                                  as to which neither the Company nor any
of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise
or (c) constitutes the lender; and

 

(2)                                  no default with respect to which
(including any rights that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon
notice, lapse of time or both any holder of any other Indebtedness (other than
the Debentures) of the Company or any of its Restricted Subsidiaries to declare
a default on such other Indebtedness or cause the payment of such other
Indebtedness of the Company or any of its Restricted Subsidiaries to be
accelerated or payable prior to its stated maturity.

 

“Obligations”
means any principal, interest, penalties, fees, taxes, costs, indemnifications,
reimbursements, damages and other liabilities payable under the documentation
governing, securing or relating to any Indebtedness, whether or not a claim in
respect thereof has been asserted.

 

A-14

 

“Permitted Business”
means any business conducted by the Company and its Restricted Subsidiaries on
the date hereof, any reasonable extension thereof, and any additional business
reasonably related, incidental, ancillary or complementary thereto.

 

“Permitted Investments”
means:

 

(1)                                  any Investment in the Company or in a
Restricted Subsidiary of the Company;

 

(2)                                  any Investment in Cash Equivalents;

 

(3)                                  any Investment by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment:

 

(a)                                  such Person becomes a Restricted
Subsidiary of the Company; or

 

(b)                                 such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of the
Company;

 

(4)                                  Reserved.

 

(5)                                  any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock)
of the Company;

 

(6)                                  any Investments received in compromise of
obligations of trade creditors or customers that were incurred in the ordinary
course of business, including pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of any trade creditor or
customer;

 

(7)                                  Hedging Obligations;

 

(8)                                  Investments constituting loans, advances
or extensions of credit to employees, officers and directors made in the
ordinary course of business;

 

(9)                                  Investments in existence on the date
hereof and an Investment in any Person to the extent such Investment replaces
or refinances an Investment in such Person existing on the date hereof in an
amount not exceeding the amount of the Investment being replaced or refinanced;
provided, however, that the new Investment is on terms and conditions no less
favorable to the Company than the Investment being renewed or replaced;

 

(10)                            an Investment in a trust, limited
liability company, special purpose entity or other similar entity in connection
with a Receivables Program; provided, however, that the only assets transferred
to such trust, limited liability company, special purpose entity or other
similar entity consist of Receivables and Related Assets of such Receivables
Subsidiary;

 

A-15

 

(11)                            Investments in any of the Debentures;

 

(12)                            Guarantees of Indebtedness of the Company
or any of its Restricted Subsidiaries issued in accordance with Section 1.3;

 

(13)                            Investments in Permitted Joint Ventures
having an aggregate market value (measured on the date such investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made and still in Permitted Joint Ventures pursuant
to this clause (13) since the date hereof, not to exceed 3.0% of the
Consolidated Net Tangible Assets of the Company and its Restricted Subsidiaries;
and

 

(14)                            other Investments in any Person having an
aggregate fair market value (measured on the date each such Investment was made
and without giving effect to subsequent changes in value), when taken together
with all other Investments made pursuant to this clause (14) since the date
hereof, not to exceed $50.0 million.

 

“Permitted Joint
Ventures” means, with respect to any Person, any corporation, partnership,
limited liability company or other business entity (1) of which at least 20%,
but not more than 50%, of the total voting power of shares of Capital 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 such Person or one or more of the
Restricted Subsidiaries (other than a Receivables Subsidiary) of that Person
and (2) which engages only in a Permitted Business.

 

“Permitted Liens”
means:

 

(1)                                  Liens on inventory or receivables of the
Company and its Restricted Subsidiaries and liens on Equity Interests of
Restricted Subsidiaries, in each case securing Indebtedness and other
Obligations under Credit Facilities that were permitted to be incurred by
clause (1) of the second paragraph of Section 1.3;

 

(2)                                  Liens in favor of the Company or a
Restricted Subsidiary;

 

(3)                                  Liens on property of a Person existing at
the time such Person is merged with or into or consolidated with the Company or
any Restricted Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company or the Restricted Subsidiary;

 

(4)                                  Liens on assets existing at the time of
acquisition of the assets by the Company or any Restricted Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition;

 

(5)                                  Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business;

 

A-16

 

(6)                                  Liens to secure Indebtedness (including
Capital Lease Obligations) permitted by clause (4) of the second paragraph of
Section 1.3 covering only the assets acquired with such Indebtedness;

 

(7)                                  Liens existing on the date hereof;

 

(8)                                  Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, provided that any reserve or other appropriate provision
as is required in conformity with GAAP has been made therefor;

 

(9)                                  Liens on Receivables and Related Assets
to reflect sales of receivables pursuant to a Receivables Program permitted by
clause (13) of the second paragraph of Section 1.3 covering only the sold
Receivables and Related Assets;

 

(10)                            Liens in favor of issuers of tender, bid,
surety, appeal or performance bonds or letters of credit or bankers’
acceptances issued pursuant to the request of and for the account of the
Company or any Restricted Subsidiary in the ordinary course of its business;
provided, however, that such letters of credit do not support Indebtedness;

 

(11)                            Liens securing Indebtedness or other
obligations of a Restricted Subsidiary owing to the Company or a Restricted
Subsidiary;

 

(12)                            Liens incurred in the ordinary course of
business of the Company or any Restricted Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any one time
outstanding;

 

(13)                            Liens securing Permitted Refinancing
Indebtedness incurred to refinance Indebtedness that was previously so secured,
provided that any such Lien is limited to all or part of the same property or
assets (plus assets or property affixed or appurtenant thereto or proceeds in
respect thereof) that secured (or, under the written arrangements under which
the original Lien arose, could secure) the Indebtedness being refinanced or is
in respect of property that is the security for a Permitted Lien;

 

(14)                            Liens securing Hedging Obligations so
long as such Hedging Obligations are permitted to be incurred under the
Indenture;

 

(15)                            Liens incurred in connection with a Sale
and Leaseback Transaction with respect to Attributable Debt that does not
exceed 10.0% of the Consolidated Net Tangible Assets of the Company and the
Restricted Subsidiaries; and

 

(16)                            Liens on assets of Unrestricted
Subsidiaries that secure Non-Recourse Debt of Unrestricted Subsidiaries.

 

“Permitted Refinancing
Indebtedness” means any Indebtedness of the Company or any of its
Restricted Subsidiaries issued in exchange for, or the net proceeds of which
are used to extend, refinance, renew, replace, defease or refund, other
Indebtedness of the

 

A-17

 

Company or any
of its Restricted Subsidiaries (other than intercompany Indebtedness); provided
that:

 

(1)                                  the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness
extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest on the Indebtedness and the amount of all expenses and premiums
incurred in connection therewith);

 

(2)                                  such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, except for the refinancing or refunding of
industrial revenue bonds so long as such refinancing or refunding bonds have a
Weighted Average Life to Maturity greater than the maturity of the Debentures;

 

(3)                                  if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Debentures, such Permitted Refinancing Indebtedness is
subordinated in right of payment to the Debentures on terms at least as
favorable to the Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and

 

(4)                                  such Indebtedness is incurred either by
the Company or by the Restricted Subsidiary that is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.

 

“Permitted Spin-Off
Transaction” means a spin-off, split-up, split-off or other transaction
involving the dividend, distribution or transfer by the Company of all or some
portion of one or more business units, as such unit or units are reported in
the Company’s audited financial statements on the date hereof (the entity comprising
such segment after giving effect to the dividend or distribution, “Newco”),
provided that each of the following two conditions has been met:

 

(1)                                  Newco shall have completed a registered
exchange offer in which it shall have offered to all Holders the opportunity to
exchange their Debentures for Spin-Off Notes, which offer shall have remained
open for at least 20 business days; provided, further, that:

 

(a)                                  Newco will, on the date of such Permitted
Spin-Off Transaction after giving pro forma effect thereto and to all related
transactions (including, without limitation, the incurrence by Newco of any
Indebtedness (including the assumption by Newco of any Indebtedness of the
Company or any of its subsidiaries) and the disposition by Newco of any assets)
as if the same had occurred at the beginning of the applicable four-quarter
period, be permitted to incur at least $1.00 of additional Indebtedness

 

A-18

 

pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 1.3;

 

(b)                                 each of the Rating Agencies shall have
given the applicable Spin-Off Notes a rating that is equal to or better than
such Rating Agency’s highest rating of the Debentures being exchanged for such
Spin-Off Notes during the one-year period immediately prior to the consummation
of the Permitted Spin-Off Transaction (it being understood that the ratings of
the Spin-Off Notes shall take into account all transactions relating to the
Permitted Spin-Off Transaction, including, without limitation, the incurrence
by Newco of any Indebtedness (including the assumption by Newco of any
Indebtedness of the Company or any of its Subsidiaries) and the disposition by
Newco of any assets);

 

(c)                                  immediately after such transaction, no
Default or Event of Default exists; and

 

(d)                                 Newco assumes all obligations of the
Company under the Debentures and the Indenture pursuant to agreements
reasonably satisfactory to the trustee, whereupon the Company’s obligation in
respect of the Debentures exchanged for such Spin-Off Notes shall be fully
satisfied and discharged; and

 

(2)                                  the Company shall have completed a cash
tender offer for the Debentures in which it shall have offered to purchase the
Debentures from the Holders on the terms set forth in the Indenture for a
purchase price in cash equal to 100% of the aggregate principal amount of
Debentures repurchased plus accrued and unpaid interest on the Debentures
repurchased, to the date of purchase, which offer shall have remained open for
at least 20 business days.

 

“Person” means any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, limited liability company or
government or other entity.

 

“Principal Property”
means (a) any mill, converting plant, manufacturing plant or other facility
owned by the Company and/or one or more Restricted Subsidiaries and located
within the continental United States of America having a gross book value
(including related land and improvements thereon and all machinery and
equipment included therein without deduction of any depreciation reserves) in
excess of 3.0% of the Consolidated Net Tangible Assets of the Company and its
Restricted Subsidiaries and (b) Timberlands, in each case other than (i) any
property which in the opinion of the Board of Directors of the Company is not
of material importance to the total business conducted by the Company as an
entirety or (ii) any portion of a particular property which is similarly found
not to be of material importance to the use or operation of such property or
(iii) any minerals or mineral rights.

 

“Rating Agency”
means a nationally recognized statistical rating organization within the
meaning of Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange Act.

 

A-19

 

“Realty Subsidiary”
means a Subsidiary of the Company engaged primarily in the development and sale
or financing of real property.

 

“Receivables and
Related Assets” means accounts receivable, instruments, chattel paper,
obligations, general intangibles and other similar assets, including interests
in merchandise or goods, the sale or lease of which give rise to the foregoing,
related contractual rights, guarantees, insurance proceeds, collections, other
related assets and proceeds of all the foregoing.

 

“Receivables Program”
means, with respect to any Person, any accounts receivable securitization
program pursuant to which such Person pledges, sells or otherwise transfers or
encumbers its accounts receivable, including a trust, limited liability
company, special purpose entity or other similar entity.

 

“Receivables
Subsidiary” means a Wholly-Owned Subsidiary of the Company or a Restricted
Subsidiary of the Company (or another Person in which the Company or any
Restricted Subsidiary of the Company makes an Investment and to which the
Company or any Restricted Subsidiary of the Company transfers Receivables and
Related Assets) which engages in no activities other than in connection with
the financing of Receivables and Related Assets and which is designated by the
Board of Directors of the Company as a Receivables Subsidiary. Loving Creek
Funding Corporation, a Delaware corporation, is a Receivables Subsidiary of the
Company on the date hereof.

 

“Remarketing Agreement”
means the Remarketing Agreement, dated September 10, 2004, among the Company,
Goldman, Sachs & Co., as remarketing agent, and BNY Western Trust Company,
as purchase contract agent.

 

“Replacement Assets”
means (1) long-term assets that will be used or useful in a Permitted Business,
(2) substantially all of the assets of another Permitted Business, or (3) a
majority of the Voting Stock of any Person engaged in a Permitted Business that
will become on the date of acquisition thereof a Restricted Subsidiary as a
result of such acquisition.

 

“Restricted Investment”
means an Investment other than a Permitted Investment.

 

“Restricted Payment”
has the meaning set forth in clause (4) under Section 1.2.

 

“Restricted Subsidiary”
of a Person means any Subsidiary of the referenced Person that is not an
Unrestricted Subsidiary; provided, however, that after a Fall Away Event, a
Restricted Subsidiary of the Company means only a Restricted Subsidiary (1)
substantially all the property of which is located, or substantially all the
business of which is carried on, within the present 50 States of the United
States of America and (2) which owns a Principal Property, but does not include
a Realty Subsidiary.

 

“S&P” means
Standard & Poor’s Ratings Service, a division of The McGraw Hill Companies,
and its successors.

 

A-20

 

“Sale and Leaseback
Transaction” means any arrangement with any Person providing for the
leasing by the Company or any Restricted Subsidiary of any properties or assets
of the Company and/or such Restricted Subsidiary (except for leases between the
Company and any Restricted Subsidiary, between any Restricted Subsidiary and
the Company or between Restricted Subsidiaries), which properties or assets
have been or are to be sold or transferred by the Company or such Subsidiary to
such Person with the intention of taking back a lease of such properties or
assets.

 

“Senior Notes”
means the Company’s 6.50% Senior Notes due 2010 and 7.00% Senior Notes due
2013.

 

“Series Securities”
means the Company’s Senior Floating Rate Debentures due December 16, 2006.

 

“Significant
Subsidiary” means any Subsidiary other than an Unrestricted Subsidiary that
would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof.

 

“Spin-Off Debentures”
means Debentures to be offered in a registered exchange offer by Newco on terms
and with covenants that are identical to those included in the Indenture (as
applicable), with such variations from the Debentures and the Indenture as the
trustee and Newco shall have mutually agreed.

 

“Stated Maturity”
means, with respect to any installment of interest or principal on any series
of Indebtedness, the date on which the payment of interest or principal was
scheduled to be paid (including with respect to sinking fund obligations) in
the original documentation governing such Indebtedness, and will not include
any contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.

 

“Subsidiary”
means, with respect to any specified Person:

 

(1)                                  any corporation, association or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees of the corporation,
association or other business entity 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); and

 

(2)                                  any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are that Person or one
or more Subsidiaries of that Person (or any combination thereof).

 

“Tender Offer”
means an offer complying with the federal securities laws by the Company to
purchase any and all Debentures for a cash purchase price of not less than

 

A-21

 

the following percentages of their principal
amount if purchased during the respective periods:

 

	
  On or
  After

  	
   

  	
  Percentage of Principal Amount

  
	
   

  	
   

  	
   

  
	
  Initial
  Price

  	
   

  	
  102.50

  
	
   

  	
   

  	
   

  
	
  December 16,
  2004

  	
   

  	
  102.25

  
	
   

  	
   

  	
   

  
	
  March 16,
  2005

  	
   

  	
  102.00

  
	
   

  	
   

  	
   

  
	
  June 16,
  2005

  	
   

  	
  101.75

  
	
   

  	
   

  	
   

  
	
  September
  16, 2005

  	
   

  	
  101.50

  
	
   

  	
   

  	
   

  
	
  December 16,
  2005

  	
   

  	
  101.25

  
	
   

  	
   

  	
   

  
	
  March 16,
  2006

  	
   

  	
  101.00

  
	
   

  	
   

  	
   

  
	
  June 16,
  2006

  	
   

  	
  100.75

  
	
   

  	
   

  	
   

  
	
  September
  16, 2006

  	
   

  	
  100.50

  
	
   

  	
   

  	
   

  
	
  December 15,
  2006

  	
   

  	
  100.25

  
	
   

  	
   

  	
   

  
	
  December 16,
  2006

  	
   

  	
  100

  

 

The Tender Offer Fall
Away Event shall be deemed to have occurred at the expiration of the Tender
Offer and the Company’s purchase of all Debentures properly tendered.

 

“Timberlands”
means any real property owned by the Company and/or one or more Restricted
Subsidiaries and located within the continental United States of America which
directly provides a material portion of the fiber required to operate any mill,
converting plant, manufacturing plant or other facility included in subsection
(a) of the definition of Principal Property and which contains standing timber
which is (or upon completion of a growth cycle then in process is expected to
become) of a commercial quantity and of merchantable quality, excluding,
however, any such real property which at the time of determination is held
primarily for development or sale, and not primarily for the production of any
lumber or other timber products.

 

“Unrestricted
Subsidiary” means each Subsidiary of the Company that is designated by the
Board of Directors, or the Company’s Chief Executive Officer if the Company’s
Investment in such Subsidiary is $5.0 million or less, as an Unrestricted
Subsidiary pursuant to a resolution of the Board of Directors or a Chief
Executive Officer’s Certificate, but only to the extent that each such
Subsidiary:

 

A-22

 

(1)                                  has no Indebtedness other than
Non-Recourse Debt;

 

(2)                                  is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company, unless any such agreement, contract, arrangement or
understanding is otherwise permitted by the “Transactions with Affiliates”
covenant;

 

(3)                                  is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (a) to subscribe for additional Equity Interests or (b) to maintain
or preserve such Person’s financial condition or to cause such Person to
achieve any specified levels of operating results; and

 

(4)                                  has not guaranteed or otherwise directly
or indirectly provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries.

 

Any designation of a
Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to
the trustee by filing with the trustee a certified copy of the Board Resolution
or Chief Executive Officer’s Certificate giving effect to such designation and
an officers’ certificate certifying that such designation complied with the
preceding conditions and was permitted under Section 1.2.  If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
will thereafter cease to be an Unrestricted Subsidiary for purposes hereof and
any Indebtedness of such Subsidiary will be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date and, if such Indebtedness
is not permitted to be incurred as of such date under Section 1.3, the Company
will be in default of such covenant. The Board of Directors may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary, and the
Company’s Chief Executive Officer may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the Company’s Investment in such Subsidiary is
$5.0 million or less; provided that such designation will be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
will only be permitted if (1) such Indebtedness is permitted under the Section
1.3 calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation. Cuban Electric
Company, a Florida corporation, is an Unrestricted Subsidiary of the Company on
the date hereof and will continue to be one for so long as the Debentures
remain outstanding.

 

“Voting Stock” of
any Person as of any date means the Capital Stock of such Person that is at the
time entitled to vote in the election of the Board of Directors of such Person.

 

“Weighted Average Life
to Maturity” means, when applied to any Indebtedness at any date, the
number of years obtained by dividing:

 

A-23

 

(1)                                  the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect of the Indebtedness, by (b) the number of years
(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment; by

 

(2)                                  the then outstanding principal amount of
such Indebtedness.

 

“Wholly-Owned
Subsidiary” of any specified Person means a Subsidiary of such Person all
of the outstanding Capital Stock or other ownership interests of which (other
than directors’ qualifying shares) will at the time be owned by such Person
and/or by one or more Wholly-Owned Subsidiaries of such Person.

 

A-24

 

This Series Security is a
Global Series Security within the meaning of the Indenture hereinafter referred
to and is registered in the name of the Depositary or a nominee of the
Depositary.  This Series Security is
exchangeable for Series Securities registered in the name of a person other
than the Depositary or its nominee only in the limited circumstances described
in the Indenture, and no transfer of this Series Security (other than a
transfer of this Series Security as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.

 

Unless this Series Security is
presented by an authorized representative of The Depository Trust Company (55
Water Street, New York, New York) to the issuer or its agent for registration
of transfer, exchange or payment, and any Series Security issued is registered
in the name of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment hereon is made
to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.

 

 

No.
               

 

	
  CUSIP No.
                     

  	
  $
                    

  

ISIN No.
                    

 

BOISE CASCADE CORPORATION

 

SENIOR FLOATING RATE DEBENTURES DUE DECEMBER 16, 2006

 

BOISE CASCADE
CORPORATION, a Delaware corporation (the “Company”, which term includes
any successor corporation under the Indenture hereinafter referred to) for
value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of
($                  )
on December 16, 2006 (such date is hereinafter referred to as the “Stated
Maturity Date”), and to pay interest on said principal sum on
March 16, June 16, September 16 and December 16 of each
year (each such date, an “Interest Payment Date”).  Interest will accrue at a floating rate per
annum, determined in advance for each quarter.  Subject to adjustments as described herein, the rate for each
quarter will be 2.75% over the average of the interbank offered rates for
three-month United States dollar deposits in the London market (LIBOR) as
published in The Wall Street Journal on the third business day before the prior
quarter’s interest payment date (each, a “LIBOR Determination Date”),
commencing on December 16, 2004, initially at the rate of 4.62% per annum,
until the principal hereof shall have become due and payable, and on any
overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment
of interest at the rate then in effect until the principal hereof shall have
become due and payable.  The Company
shall notify the Trustee of the interest rate on each LIBOR Determination
Date.  The amount of interest payable on
any Interest Payment Date shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.  In
the event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.  The interest installment so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the person in whose name this Debenture
is registered at the close of business on the regular record date for such
interest installment, which in the case of a Global Debenture shall be the
close of business on the Business Day next preceding such Interest Payment
Date; provided, however, if pursuant to the terms of the Indenture the
Debentures are no longer represented by a Global Debenture, the Company may
select such regular record date for such interest installment which shall be
more than one Business Day but less than 60 Business Days prior to an Interest
Payment Date.  Any such interest
installment not punctually paid or duly provided for shall forthwith cease to
be payable to the registered Holders on such regular record date and may be
paid to the Person in whose name this Debenture is registered at the close of
business on a special record date to be fixed by the Trustee for the payment of
such defaulted interest, notice whereof shall be

 

 

given to the registered
Holders of this series of Debentures not less than 10 days prior to such
special record date, or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Debentures may be listed, and upon such notice as may be required by such
exchange all as more fully provided in the Indenture.  The principal of and the interest on this Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of
payment is legal tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of the Company by check
mailed to the registered Holder at such address as shall appear in the Register
or by wire transfer to an account appropriately designated by the Holder
entitled thereto.  Notwithstanding the
foregoing, so long as the Holder of this Debenture is the Property Trustee or
the Collateral Agent, the payment of the principal of and interest on this
Debenture will be made at such place and to such account as may be designated
in writing by the Property Trustee.

 

The 2.75% over LIBOR rate
will be decreased (or increased) by 0.25% if both Standard & Poor’s
Corporation (“S&P”) and Moody’s Investors Service, Inc. (“Moody’s” and,
together with S&P, the “Rating Agencies”) have raised (or lowered) their
rating of the Debenture by one or more levels. 
The table below shows the percentage over LIBOR annual rate of interest
for the ratings expected at issuance and ratings at one level above and below.

 

	
   

  	
   

  	
  S&P

  	
   

  	
  Moody’s

  	
   

  	
  % over LIBOR

  
	
  Ratings at or above

  	
   

  	
   

  	
  BB+

  	
   

  	
  Ba1

  	
   

  	
  2.50

  
	
  Ratings at

  	
   

  	
   

  	
  BB

  	
   

  	
  Ba2

  	
   

  	
  2.75

  
	
  Ratings at or below

  	
   

  	
   

  	
  BB-

  	
   

  	
  Ba3

  	
   

  	
  3.00

  

 

If
the Rating Agencies’ changes are not simultaneous, any change in the percentage
rate over LIBOR will be made as of the announcement of a change by the second
Rating Agency and such percentage rate over LIBOR will remain in effect until both
Rating Agencies have changed their rate to another level reflected in the table
above.  In the event of any change in
the percentage rate over LIBOR, the Company shall notify the Trustee of such
change.  In no event shall the Trustee
be obligated to monitor the Debenture ratings.

 

This Debenture shall not be entitled to any benefit
under the within mentioned Indenture, be valid or become obligatory for any
purpose, until the Certificate of Authentication hereon shall have been
executed by the Trustee.

 

The provisions of this Debenture are continued on the
reverse side hereof and such continued provisions shall for all purposes have
the same effect as though fully set forth at this place.

 

 

IN WITNESS WHEREOF, the Company has caused this
instrument to be executed.

 

	
  Dated:
  September 16, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
  BOISE
  CASCADE

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
  Attest

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
							

 

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Series Securities of the series
designated therein referred to in the within-mentioned Indenture.

 

	
  Dated:
  September 16, 2004

  	
   

  
	
   

  	
   

  
	
   

  	
  BNY WESTERN
  TRUST

  COMPANY,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

 

(FORM OF REVERSE OF DEBENTURE)

 

This Debenture is one of a duly authorized series of
the Debentures of the Company (herein sometimes referred to as the “Series
Securities”), all issued or to be issued in one or more series under and
pursuant to an Indenture, dated as of October 1, 1985 (the “Original
Indenture”), between the Company and Morgan Guaranty Trust Company of New
York (the “Original Trustee”) as amended and supplemented by the First
Supplemental Indenture (the “First Supplement”), dated as of December
20, 1989 between the Company and the Original Trustee, the Second Supplemental
Indenture (the “Second Supplement”), dated as of August 1, 1990 between
the Company and the Original Trustee, the Third Supplemental Indenture (the “Third
Supplement”), dated as of December 5, 2001 among the Company, the Original
Trustee and BNY Western Trust Company (the “Series Trustee”), the Fourth
Supplemental Indenture (the “Fourth Supplement”), dated as of October
21, 2003 between the Company and the Original Trustee and the Fifth
Supplemental Indenture, dated as of September 16, 2004 among the Company, the
Original Trustee and the Series Trustee (the “Fifth Supplement”, and
together with the Original Indenture and the First Supplement, the Second
Supplement, the Third Supplement and the Fourth Supplement, the “Indenture”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the Holders of
the Securities.  By the terms of the
Indenture, the Series Securities are issuable in series that may vary as to
amount, date of maturity, rate of interest and in other respects as provided in
the Indenture.  This series of
Securities is limited in aggregate principal amount as specified in said Fifth
Supplement.

 

The Debentures are not entitled to the benefit of any
sinking fund.

 

In case an Event of Default, as defined in the
Indenture, shall have occurred and be continuing, the principal of all of the
Debentures may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.

 

The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the Holders of not less than a
majority in aggregate principal amount of the Series Securities of each series
affected at the time outstanding, as defined in the Indenture, to execute
supplemental indentures for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Series Securities; provided, however, that,
among other things, no such supplemental indenture shall (i) reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon without the consent of the Holder of each Series Security so affected,
or (ii) reduce the aforesaid percentage of Series Securities, the Holders of
which are required to consent to any such supplemental indenture, without the
consent of the Holders of each Series Security then outstanding and affected
thereby.  The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount
of the Series Securities of any series

 

 

at the time outstanding
affected thereby, on behalf of all of the Holders of the Series Securities of
such series, to waive a default or Event of Default with respect to such
series, and its consequences, except a default or Event of Default in the
payment of the principal of or interest on any of the Series Securities of such
series or a default in respect of a provision that under Article Nine of the
Indenture cannot be amended without the consent of each holder affected
thereby.  Any such consent or waiver by
the registered Holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such Holder and upon all future
Holders and owners of this Debenture and of any Debenture issued in exchange
for or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.

 

No reference herein to the Indenture and no provision
of this Debenture or of the Indenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.

 

As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by the registered
Holder hereof on the Security Register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Trustee
in The City of New York and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company or
the Trustee duly executed by the registered Holder hereof or his attorney duly authorized
in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees.  No service charge will be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax, assessment or
other governmental charge payable in relation thereto.

 

Prior to due presentment for registration of transfer
of this Debenture, the Company, the Trustee, any paying agent and the Security
Registrar may deem and treat the registered Holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Security
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and interest due hereon and for all other purposes, and
neither the Company nor the Trustee nor any paying agent nor any Security
Registrar shall be affected by any notice to the contrary.

 

No recourse shall be had for the payment of the
principal of or the interest on this Debenture, or for any claim based hereon,
or otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, shareholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.

 

 

The Indenture imposes certain limitations on the
ability of the Company to, among other things, merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially
all of its properties and assets.  All
such covenants and limitations are subject to a number of important
qualifications and exceptions.  The
Company must report periodically to the Series Trustee on compliance with the
covenants in the Indenture.

 

The Debentures of this series are issuable only in
registered form without coupons, in denominations of $50 and any integral
multiple thereof.  As provided in the
Indenture and subject to certain limitations therein set forth, Debentures of
this series so issued are exchangeable for a like aggregate principal amount of
Debentures of this series of a different authorized denomination, as requested
by the Holder surrendering the same.

 

All terms used in this Debenture that are defined in
the Indenture shall have the meanings assigned to them in the Indenture.

 

This Debenture shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflicts of laws.

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the
undersigned assigns and transfers this Debenture to:

 

 

 

 

 

(Insert assignee’s social security or tax identification number)

 

 

 

 

 

(Insert address and zip code of assignee)

 

agent to transfer this
Debenture on the books of the Security Registrar.  The agent may substitute another to act for him or her.

 

	
  Dated:

  	
  Signature:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature Guarantee:

  	
   

  

 

(Sign exactly as your name appears on the other side of this Debenture)

 

Signatures must be guaranteed by an “eligible
guarantor institution” meeting the requirements of the Registrar, which
requirements include membership or participation in the Security Transfer Agent
Medallion Program (“STAMP”) or such other “signature guarantee
program” as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange Act of
1934, as amended.

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