BOISE PAPER HOLDINGS, L.L.C. 2008 DEFERRED COMPENSATION PLAN

BOISE PAPER HOLDINGS, L.L.C.

2008 DEFERRED COMPENSATION PLAN

1.              Purpose of the Plan . The purpose of the Boise Paper Holdings, L.L.C. 2008 Deferred Compensation Plan (the “Plan”) is to further the growth and development of Boise Paper Holdings, L.L.C. (the “Company”) and its affiliates by providing a select group of senior management and highly compensated employees of the Company the opportunity to defer a portion of their cash compensation and thereby encourage their productive efforts on behalf of the Company. The Plan is also intended to provide Participants with an opportunity to supplement their retirement income through deferral of current compensation. The Plan is an unfunded plan.

2.              Definitions .

2.1            Bonus . The payout amount earned by a Participant under an incentive plan of the Company, but only to the extent the award is payable in cash.

2.2            Change in Control . A Change in Control shall be deemed to have occurred if:

(a)            Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Boise Inc. representing 35% or more of either the then outstanding shares of common stock of Boise Inc. or the combined voting power of Boise Inc.’s then outstanding securities; provided, however, if such Person acquires securities directly from Boise Inc., such securities shall not be included unless such Person acquires additional securities which, when added to the securities acquired directly from Boise Inc., exceed 35% of Boise Inc.’s then outstanding shares of common stock or the combined voting power of Boise Inc.’s then outstanding securities, and provided further that any acquisition of securities by any Person in connection with a transaction described in Section 2.2(c)(i) shall not be deemed to be a Change in Control; or

(b)            During any 24-month period, the following individuals cease for any reason to constitute at least a majority of the number of directors then serving:  individuals who, on the effective date hereof, constitute the board of directors of Boise Inc. and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of Boise Inc.) whose appointment or election by the Board or nomination for election by Boise Inc.’s shareholders was approved by a vote of at least 2/3rds of the directors then still in office who either were directors on the effective date hereof or whose appointment, election, or nomination for election was previously so approved (the “Continuing Directors”); or

(c)            The consummation of a merger or consolidation of Boise Inc. with any other corporation other than (i) a merger or consolidation which would result in

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both (a) Continuing Directors continuing to constitute at least a majority of the number of directors of the combined entity immediately following consummation of such merger or consolidation, and (b) the voting securities of Boise Inc. outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the combined voting power of the voting securities of Boise Inc. or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of Boise Inc. (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of Boise Inc. representing 35% or more of either the then outstanding shares of common stock of Boise Inc. or the combined voting power of Boise Inc.’s then outstanding securities; provided that securities acquired directly from Boise Inc. shall not be included unless the Person acquires additional securities which, when added to the securities acquired directly from Boise Inc., exceed 35% of Boise Inc.’s then outstanding shares of common stock or the combined voting power of Boise Inc.’s then outstanding securities; and provided further that any acquisition of securities by any Person in connection with a transaction described in Section 2.2(c)(i) shall not be deemed to be a Change in Control; or

(d)            The shareholders of Boise Inc. approve a plan of complete liquidation or dissolution of Boise Inc. or the consummation of an agreement for the sale or disposition by Boise Inc. of all or substantially all of Boise Inc.’s assets, other than a sale or disposition by Boise Inc. of all or substantially all of Boise Inc.’s assets to an entity, more than 50% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportions as their ownership of Boise Inc. immediately prior to such sale.

For purposes of this Section, “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act, and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that “Person” shall not include (i) Boise Inc. or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of Boise Inc. or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of Boise Inc. in substantially the same proportions as their ownership of stock of Boise Inc., (v) an individual, entity or group that is permitted to and does report its beneficial ownership of securities of Boise Inc. on Schedule 13G under the Exchange Act (or any successor schedule), provided that if the individual, entity or group later becomes required to or does report its ownership of Boise Inc.’s securities on Schedule 13D under the Exchange Act (or any successor schedule), then the individual, person or group shall be deemed to be a Person as of the first date on which the individual, person or group becomes required to or does report its ownership on Schedule 13D or (vi) any Exempt Person. For purposes of this definition, “Exempt Person” means (i) Forest Products Holdings, L.L.C. or (ii) Madison Dearborn. “Madison Dearborn” means Madison Dearborn Partners, L.L.C. and any investment fund controlled by or under common control with Madison Dearborn Partners, L.L.C., and any officer, director

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or employee of such persons, or any trust, corporation, partnership or other entity controlled by such persons or any combination of these identified relationships.

2.3            Committee . The Compensation Committee of the board of directors of Boise Inc.

2.4            Compensation . A Participant’s Salary and Bonus. Compensation (either Salary or Bonus) shall not include (a) any amounts paid by the Company to a Participant that are not strictly in consideration for personal services, such as expense reimbursement, cost-of-living allowance, education allowance, premium on excess group life insurance, or any Company contribution to the Pension Plan or any savings or 401(k) plan sponsored by the Company, (b) any amounts paid as the result of a Participant’s Separation from Service, such as pay for unused paid time off, severance, or pay in lieu of notice; the fact that an amount constitutes taxable income to the Participant shall not be controlling for this purpose, (c) any amount paid as a retention bonus, or (d) any taxable income realized by, or payments made to, an employee as a result of the grant, exercise, or payment of any equity award issued by the Company or any affiliate or subsidiary or as a result of the disposition of such equity award, except to the extent the award is payable in cash or the Committee determines that the award shall be included in Compensation for purposes of this Plan.

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

2.6            Deferred Account . The record maintained by the Company for each Participant of the cumulative amount of (a) Compensation deferred pursuant to this Plan, (b) the amount of any Company matching allocation, and (c) imputed gains or losses on those amounts accrued as provided in Section 4.8.

2.7            Deferred Compensation Agreement . Collectively, a Participant’s Deferral Election and Distribution Election.

2.8            Deferred Compensation and Benefits Trust . An irrevocable trust (the “DCB Trust”) which may be established by the Company with an independent trustee for the benefit of persons entitled to receive payments or benefits hereunder, the assets of which will be subject to claims of the Company’s creditors in the event of bankruptcy or insolvency.

2.9            Disability . A Participant will be deemed to have incurred a Disability where the Participant (a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan maintained by the

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Company, or (c) has been determined to be totally disabled by the Social Security Administration.

2.10          Distribution Election . A Participant’s election of the method and timing of his or her Deferred Account.

2.11          Investment Account . Any of the accounts identified by the Company from time to time, described in Exhibit A, to which Participants may allocate all or any portion of their Deferred Accounts for purposes of determining the gains or losses to be assigned to the Deferred Accounts.

2.12          Participant . A Key Employee (as defined in Section 4.1) who has entered into a written Deferred Compensation Agreement with the Company in accordance with the provisions of the Plan.

2.13          Rule of 70 . The attainment by a Participant of a number of Years of Service and age which, when added together, equal or exceed 70.

2.14          Salary . A Participant’s salary, commission, and other payments for personal services rendered by a Participant to the Company during a calendar year, determined prior to giving effect to any deferral election under this Plan, any before-tax contribution election under a 401(k) plan sponsored by the Company, and any before-tax contribution election under a Section 125 (cafeteria) plan sponsored by the Company.

2.15          Separation from Service . The Participant’s ceasing to be employed by the Company for any reason whatsoever, whether voluntarily or involuntarily, including by reason of early retirement, normal retirement, death or Disability, provided that transfer from the Company to a subsidiary or vice versa shall not be deemed a Separation from Service for purposes of this Plan. A Separation from Service shall also occur if (a) the Participant is on a leave of absence that exceeds 6 months and the Participant does not have a statutory or contractual right of reemployment, in which case, Separation from Service shall be deemed to have occurred on the first day following the 6-month period, (b) the Participant is on a leave of absence that exceeds 6 months and the Participant’s statutory or contractual right of reemployment ends, in which case Separation from Service shall be deemed to have occurred on the first day following the end of the right of reemployment, or (c) the Company and the Participant reasonably anticipate that the level of services the Participant will perform for the Company (whether as an employee or an independent contractor) will permanently decrease to 20% or less of the average level of services performed for the Company over the preceding 36 months. Determination of whether a Separation from Service has occurred will be made subject to the facts and circumstances of each situation and will comply with Internal Revenue Code Section 409A.

2.16          Specified Employee . A “specified employee” as defined in Treasury Regulation §1.409A-1(i) (or any successor regulation). For purposes of

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identifying Specified Employees, the specified employee identification date is December 31 st  of each year and the specified employee effective date is April 1 st  of each year.

2.17          Unforeseeable Emergency . A severe financial hardship to the Participant resulting from (a) an illness or accident of the Participant or his or her spouse, beneficiary or dependent (as defined in Internal Revenue Code Section 152, without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)); (b) loss of the Participant’s property due to casualty; or (c) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the Participant’s control, such as medical expenses or funeral expenses for the Participant’s spouse, beneficiary or dependent (as defined earlier in this subsection). The determination of whether an event constitutes an Unforeseeable Emergency shall be made based on the facts and circumstances of the specific event.

3.              Administration and Interpretation . The Company, acting through its senior human resources officer or his or her delegates, shall have final discretion, responsibility, and authority to administer and interpret the Plan. This includes the discretion and authority to determine all questions of fact, eligibility, or benefits relating to the Plan. The Company may also adopt any rules it deems necessary to administer the Plan. The Company’s responsibilities for administration and interpretation of the Plan shall be exercised by Company employees who have been assigned those responsibilities by the Company’s management. Any Company employee exercising responsibilities relating to the Plan in accordance with this section shall be deemed to have been delegated the discretionary authority vested in the Company with respect to those responsibilities, unless limited in writing by the Company. Any Participant may appeal any action or decision of these employees to the Company’s senior human resources officer. Any interpretation or decision by the Company’s senior human resources officer shall be final and binding on the Participants. Claims for benefits under the Plan and appeals of claim denials shall be in accordance with Sections 10 and 11.

4.              Participant Deferral and Distribution Elections .

4.1            Eligibility . The Company shall identify those employees of the Company or any of its subsidiaries who are eligible to participate in this Plan (“Key Employees”). Eligibility to participate in the Plan is entirely at the discretion of the Company and shall be limited to a select group of senior management or highly compensated employees. Eligibility to participate in this Plan for any calendar year shall not confer the right to participate during any subsequent year.

4.2            Execution of Agreement . A Key Employee who wishes to participate in the Plan must execute a Deferred Compensation Agreement either (a) for newly eligible individuals, within 30 days after first becoming eligible to participate in the Plan, to defer Salary to be earned during the remainder of that calendar year, and Salary and/or Bonus to be earned during subsequent years, or (b) prior to January 1 of

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the first calendar year for which the Deferred Compensation Agreement will be effective, provided that an election to defer Bonus which qualifies as “performance-based compensation” under Internal Revenue Code Section 409A and the regulations thereunder must be made no later than 6 months prior to the end of the period with respect to which the Bonus is earned.

4.3            Deferral Election . When a Key Employee first becomes eligible to participate, he or she shall have the opportunity to make a Deferral Election which, if the election is made at any time other than the annual enrollment period established by the Company pursuant to Section 4.4 shall apply to Salary earned and paid subsequent to the date of election, and if the election is made during such annual enrollment period, shall apply to Compensation earned in the following calendar year. Each year thereafter that the Participant remains eligible to participate, the Participant shall have the opportunity to make a Deferral Election with respect to his or her Compensation earned in the following calendar year. Deferral Elections shall be made either by submission of a written Deferral Election Form in substantially the form provided in Appendix A or by completion of an online enrollment process, as designated by the Company. The Compensation otherwise paid to a Participant during each calendar year beginning after receipt of the Participant’s Deferral Election shall be reduced by the amount elected to be deferred. Elections to defer Compensation are irrevocable as of the end of the period for executing the Deferred Compensation Agreement under Section 4.2 with respect to initial Deferral Elections, and as of the end of the annual enrollment period established by the Company pursuant to Section 4.4 with respect to subsequent Deferral Elections, except as otherwise provided in this Plan. The amount of Compensation to be deferred will be specified in the Deferral Election Agreement, must be at least 6% of the Participant’s Compensation, and will be limited to specified maximum percentages (designated by the Company’s senior human resources officer) of the Participant’s Compensation.

4.4            Change of Deferral Election . A Participant who wishes to change an election to defer Compensation may do so by submitting a new Deferral Election during the annual enrollment period established by the Company prior to January 1 of the year for which the change in election is to be effective. If a Participant does not request a change in his or her Deferral Election, the Participant’s current Deferral Election shall become irrevocable with respect to compensation to be earned during the following year on December 31 of the current year.

4.4A         Cessation of Deferrals . A Participant who takes a hardship distribution from a qualified 401(k) plan sponsored by the Company may not contribute to this Plan for at least 6 months after that hardship withdrawal. Deferrals will be automatically stopped upon such a hardship withdrawal. The Participant may make a new Deferral Election during the next annual enrollment period following the conclusion of the 6-month period.

4.5            Distribution Election . At the time a Participant first elects to defer Compensation under Section 4.3, he or she must elect a distribution option for his or her

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Deferred Account either by submitting a written Distribution Election Form in substantially the form provided in Appendix A or by completion of an online enrollment process, as designated by the Company. Elections regarding distribution of Deferred Accounts under this Plan are irrevocable when made except as otherwise provided in this Plan.

4.6            Change of Distribution Election . A Participant may request, in writing, a change of his or her Distribution Election at any time. The new election must (a) defer commencement of distr