Exhibit 10.1

POTLATCH CORPORATION

SEVERANCE PROGRAM FOR EXECUTIVE EMPLOYEES

Effective September 5, 2013

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TABLE OF CONTENTS

 

         Page  

SECTION 1

  ADOPTION AND PURPOSE OF PROGRAM      1   

SECTION 2

  DEFINITIONS      1   

SECTION 3

  ELIGIBILITY      6   

SECTION 4

  SEVERANCE BENEFITS      6   

SECTION 5

  CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS      9   

SECTION 6

  TIME AND FORM OF BENEFIT      13   

SECTION 7

  EFFECT OF DEATH OF EMPLOYEE      13   

SECTION 8

  AMENDMENT AND TERMINATION      13   

SECTION 9

  CLAIMS PROCEDURE      14   

SECTION 10

  REVIEW PROCEDURE      14   

SECTION 11

  APPLICATION OF SECTION 409A OF THE CODE.      16   

SECTION 12

  BASIS OF PAYMENTS TO AND FROM PROGRAM      17   

SECTION 13

  NO EMPLOYMENT RIGHTS      17   

SECTION 14

  NON-ALIENATION OF BENEFITS      18   

SECTION 15

  SUCCESSORS AND ASSIGNS      18   

SECTION 16

  NOTICES      18   

 

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POTLATCH CORPORATION

SEVERANCE PROGRAM FOR EXECUTIVE EMPLOYEES

Effective September 5, 2013

SECTION 1  ADOPTION AND PURPOSE OF PROGRAM.

Potlatch Corporation (the “Corporation”) amended and restated the Potlatch
Corporation Severance Program for Executive Employees (the “Program”), effective
September 5, 2013, to provide a program of severance payments to certain
employees of the Corporation and its designated subsidiaries. The Program is an
employee welfare benefit plan within the meaning of Section 3(1) of ERISA and
Section 2510.3-1 of the regulations issued thereunder. The plan administrator of
the Program for purposes of ERISA is the Corporation.

SECTION 2  DEFINITIONS.

(a) “Affiliate” means any other entity which would be treated as a single
employer with the Corporation under Section 414(b) or (c) of the Code, provided
that in applying such Sections and in accordance with the rules of Treasury
Regulations Section 1.409A-1(h)(3), the language “at least 50 percent” shall be
used instead of “at least 80 percent.”

(b) “Appeals Committee” means the appeals committee described in Section 10.

(c) “Base Compensation” means an Eligible Employee’s base rate of pay as in
effect at the time the Eligible Employee Separates from Service, or, if greater,
the rate in effect at the time the material change described in Section 5(a)(iv)
occurs or the time a Change of Control occurs, if applicable. An Eligible
Employee’s base rate of pay shall be determined without reduction for (i) any
deferred contributions made by the Eligible Employee pursuant to the Salaried
401(k) Plan or Supplemental Retirement Plan II, or (ii) any contributions made
by the Eligible Employee pursuant to the Potlatch Management Deferred
Compensation Plan.

(d) “Board” means the Board of Directors of Potlatch Corporation.

(e) “Change of Control” means

(i) The consummation of a merger or consolidation involving the Corporation (a
“Business Combination”), in each case, unless, following such Business
Combination,

(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the then outstanding shares of common stock
of the Corporation (the “Outstanding Common Stock”) and the then outstanding
voting

 

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securities of the Corporation entitled to vote generally in the election of
directors (the “Outstanding Voting Securities”) immediately prior to such
Business Combination beneficially own, directly or indirectly, more than fifty
percent (50%) of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors of the corporation or other entity
resulting from such Business Combination (including, without limitation, a
corporation or other entity which as a result of such transaction owns the
Corporation either directly or through one (1) or more subsidiaries);

(B) no individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) (excluding any corporation or other entity resulting from
such Business Combination or any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any of its subsidiaries or such
other corporation or other entity resulting from such Business Combination)
beneficially owns, directly or indirectly, thirty percent (30%) or more of,
respectively, the then outstanding shares of common stock or common equity of
the corporation or other entity resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation or other entity except to the extent that such ownership is based on
the beneficial ownership, directly or indirectly, of Outstanding Common Stock or
Outstanding Voting Securities immediately prior to the Business Combination, and

(C) at least a majority of the members of the board of directors or similar
governing body of the corporation or other entity resulting from such Business
Combination were members of the Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such Business
Combination; or

(ii) The acquisition by any Person of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or
more of either:

(A) the then Outstanding Common Stock, or

(B) the combined voting power of the Outstanding Voting Securities; provided,
however, that the following acquisitions shall not be deemed to be covered by
this Section 2(e)(ii):

(I) any acquisition of Outstanding Common Stock or Outstanding Voting Securities
by the Corporation,

(II) any acquisition of Outstanding Common Stock or Outstanding Voting
Securities by any employee benefit plan (or related trust) sponsored or
maintained by the Corporation, or

 

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(III) any acquisition of Outstanding Common Stock or Outstanding Voting
Securities by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of Section 2(e)(i);

(iii) The consummation of the sale, lease or exchange of all or substantially
all of the assets of the Corporation; or

(iv) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.

(f) “Code” means the Internal Revenue Code of 1986, as amended.

(g) “Committee” means the Executive Compensation and Personnel Policies
Committee of the Board.

(h) “Corporation” means Potlatch Corporation.

(i) “Eligible Employee” means a Principal Officer of a Participating Company or
other employee of a Participating Company who participates in the Program.

(j) “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

(k) “Identification Date” means each December 31.

(l) “Incentive Plan” means the Potlatch Corporation Annual Incentive Plan and
any successor plan.

(m) “Key Employee” means an Eligible Employee who, on an Identification Date,
is:

(i) An officer of the Corporation or an Affiliate having annual compensation
greater than the compensation limit in Section 416(i)(l)(A)(i) of the Code,
provided that no more than fifty (50) officers of the Corporation and its
Affiliates shall be determined to be Key Employees as of any Identification
Date;

(ii) A five percent (5%) owner of the Corporation; or

(iii) A one percent (1%) owner of the Corporation having annual compensation
from the Corporation and its Affiliates of more than $150,000.

If an Eligible Employee is identified as a Key Employee on an Identification
Date, then such Eligible Employee shall be considered a Key Employee for
purposes of the Program during the period beginning on the first April 1
following the Identification Date and ending on the next March 31.

 

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(n) “Misconduct” means that the Eligible Employee

(i) Has been convicted of any felony or crime involving fraud, dishonesty or
moral turpitude;

(ii) Has engaged in unfair competition with a Participating Company or any
successor to a Participating Company;

(iii) Has induced any customer of a Participating Company or any successor to a
Participating Company to breach any contract with a Participating Company or any
successor to a Participating Company;

(iv) Has made any unauthorized disclosure of any of the secrets or confidential
information of a Participating Company or any successor to a Participating
Company;

(v) Has committed an act of embezzlement, fraud or theft with respect to the
property of a Participating Company or any successor to a Participating Company;
or

(vi) Has engaged in conduct, including any intentional, material violation of
any contractual or statutory duty that is not corrected following thirty
(30) days’ written notice, which is not in good faith and which directly results
in material loss, damage or injury to the business, reputation or employees of a
Participating Company or any successor to a Participating Company.

(o) “Normal Retirement Date” means “normal retirement date” as determined under
the Retirement Plan.

(p) “Participating Company” means the Corporation and its subsidiaries
designated by the Committee to participate in the Program.

(q) “Present Value” means the present value calculated using the assumed
discount rate applied in projecting the Corporation’s pension benefit
obligations for financial reporting purposes and the RP 2000 mortality table.

(r) “Principal Officers” means the chairman and chief executive officer,
president and chief operating officer, chief financial officer, secretary,
treasurer and controller and any elected vice-president of a Participating
Company.

(s) “Program” means the Potlatch Corporation Severance Program for Executive
Employees.

(t) “Reduction in Authority or Responsibility” means

(i) The assignment to the Eligible Employee of any duties that are materially
inconsistent in any respect with the Eligible Employee’s position (which may
include status, offices, titles and reporting requirements), authority, duties,
or responsibilities as in effect immediately prior to such assignment, or

 

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(ii) Any other action by a Participating Company or any successor to a
Participating Company which results in a material diminution in such position,
authority, duties, or responsibilities, excluding for this purpose (i) an
isolated, insubstantial, and inadvertent action taken in good faith and which is
remedied by the Corporation promptly after receipt of notice thereof given by
the Eligible Employee, or (ii) any temporary Reduction in Authority or
Responsibility while the Eligible Employee is absent from active service on any
approved disability leave or other approved leave of absence.

(u) “Retirement Plan” means the Potlatch Salaried Retirement Plan as in effect
from time to time.

(v) “Salaried 401(k) Plan” means the Potlatch Salaried 401(k) Plan as in effect
from time to time.

(w) “Separation from Service” or “Separates from Service” means termination of
an Eligible Employee’s service as an Eligible Employee consistent with
Section 409A of the Code and the regulations promulgated thereunder. For
purposes of the Program, “Separation from Service” (including “Separates from
Service”) generally means termination of an Eligible Employee’s employment as a
common-law employee of the Corporation and each Affiliate of the Corporation. A
Separation from Service will not be deemed to have occurred if an Eligible
Employee continues to provide services to the Corporation or an Affiliate in a
capacity other than as an employee and if the former employee is providing a
level of bona fide services that is fifty percent (50%) or more of the average
level of services rendered during the immediately preceding thirty-six
(36) months of employment with the Corporation or Affiliate; provided, however,
that a Separation from Service will be deemed to have occurred if it is
reasonably anticipated that an Eligible Employee’s service with the Corporation
and its Affiliates will terminate after a certain date or the level of bona fide
services that the Eligible Employee will perform after such date (whether as an
employee or in another capacity) will permanently reduce to a rate that is less
than twenty percent (20%) of the bona fide level of services rendered, on
average, during the immediately preceding thirty-six (36) months (or if employed
by the Corporation and its Affiliates less than thirty-six (36) months, such
lesser period). However, the employment relationship is treated as continuing
intact while the individual is on military leave, sick leave, or other bona fide
leave of absence if the period of such leave does not exceed six (6) months, or
if longer, so long as the individual’s right to reemployment with the service
recipient is provided either by statute or by contract. If the period of leave
exceeds six (6) months and the individual’s right to reemployment is not
provided either by statute or by contract, the employment relationship is deemed
to terminate on the first date immediately following such six (6) month period.

 

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(x) “Supplemental Plans” means the Potlatch Corporation Salaried Employees’
Supplemental Benefit Plan and Potlatch Corporation Salaried Supplemental Benefit
Plan II and any successor plan.

(y) “Year of Service” means a year of vesting service as determined under the
Retirement Plan.

SECTION 3  ELIGIBILITY.

All Principal Officers and appointed vice presidents of the Participating
Companies and such other employees of the Participating Companies who are
designated by the Committee to participate in the Program shall be eligible to
participate in the Program. As a condition to participation in the Program, each
Eligible Employee shall agree in writing to become bound by its terms.

SECTION 4  SEVERANCE BENEFITS.

(a) Basic Severance Benefits. Upon the occurrence of any of the events specified
in Section 5(a), an Eligible Employee shall receive (in lieu of any other
severance benefit payable under any other plan or program now or hereafter
maintained by a Participating Company) basic severance benefits under the
Program as follows:

(i) A lump sum cash benefit equal to three (3) weeks of the Eligible Employee’s
Base Compensation for each full Year of Service completed by such Eligible
Employee, provided that the sum of the amounts payable under this
Section 4(a)(i) shall not be less than an amount equal to one (1) year of the
Eligible Employee’s Base Compensation;

(ii) A lump sum cash benefit equal to the Eligible Employee’s unused and accrued
vacation pay, if any, determined as of the date when the Eligible Employee
Separates from Service under the terms of the Participating Company’s vacation
policy as in effect when the applicable event specified in Section 5(a) occurs
(which, in the case of Separation from Service pursuant to Section 5(a)(iv),
shall be the date of the material change rather than the date the Eligible
Employee Separates from Service);

(iii) Eligibility for an “Award” under the Incentive Plan for the “Award Year”
in which the Eligible Employee Separates from Service, determined under all the
terms and conditions of the Incentive Plan;

(iv) In consideration of the Eligible Employee’s future health care needs, a
lump sum cash benefit in an amount equal to the product of (A) the total monthly
premium for medical and dental coverage, if any, for the Eligible Employee in
effect on the day preceding the date of the Eligible Employee’s Separation from
Service, and (B) twelve (12); and

 

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(v) Reimbursement for outplacement services incurred for a period of up to
twelve (12) months from the date of the Eligible Employee’s Separation from
Service. The Eligible Employee must submit his or her receipts in accordance
with the Participating Company’s then current expense reimbursement policy.

(b) Change of Control Benefits. Upon the occurrence of any of the events
specified in Section 5(b), an Eligible Employee shall receive (in lieu of any
severance benefit payable under Section 4(a) or any other severance benefit
payable under any other plan or program now or hereafter maintained by a
Participating Company) Change of Control benefits under the Program as follows:

(i) A lump sum cash benefit equal to the Eligible Employee’s annual Base
Compensation plus his or her annual Base Compensation multiplied by his or her
standard bonus percentage (as determined pursuant to the Incentive Plan),
determined as of the date of the Change of Control or the effective date the
Eligible Employee Separates from Service, whichever produces the larger amount,
multiplied by the appropriate factor from the following table:

 

Eligible Employee

  

Pay Multiple Factor

  Chief Executive Officer      3.00    Other Eligible Employees      2.50   

(ii) A lump sum cash benefit equal to the Eligible Employee’s unused and accrued
vacation pay, if any, determined as of the date on which the Eligible Employee
Separates from Service under the terms of the Participating Company’s vacation
policy. For this purpose, an Eligible Employee’s Base Compensation and the terms
of the vacation policy shall be determined as of the date when the Eligible
Employee Separates from Service;

(iii) Eligibility for an “Award” for the “Award Year” in which the Eligible
Employee Separates from Service under the Incentive Plan determined under all
the terms and conditions of such plan but based on the Eligible Employee’s
target or standard bonus determined pursuant to such plan; provided, however,
that such benefit shall not be payable with respect to any Award Year for which
the Eligible Employee receives a payment pursuant to any similar change of
control provision in the Incentive Plan;

(iv) In consideration of the Eligible Employee’s future health care needs, a
lump sum cash benefit in an amount equal to the product of (A) the total monthly
premium for medical and dental coverage, if any, for the Eligible Employee and
his or her spouse and dependents in effect on the day preceding the date of the
Eligible Employee’s Separation from Service, and (B) twelve (12);

 

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(v) Reimbursement for outplacement services incurred for a period of up to
twelve (12) months from the date of the Eligible Employee’s Separation from
Services. The Eligible Employee must submit his or her receipts in accordance
with the Participating Company’s current expense reimbursement policy;

(vi) In the case of an Eligible Employee who has less than two (2) Years of
Service on the date he or she Separates from Service, a lump sum cash benefit
equal to the unvested portion, if any, of the Eligible Employee’s “401(k) Plan
Supplemental Benefit” account under the Supplemental Plans. The value of those
portions of the Eligible Employee’s “401(k) Plan Supplemental Benefit” account
referred to in the preceding sentence shall be determined as of the date the
Eligible Employee Separates from Service with the Participating Companies; and

(vii) A lump sum cash benefit equal to the Present Value of the Eligible
Employee’s “Normal Retirement Benefit” and “Retirement Plan Supplemental
Benefit” determined under the Retirement Plan and the Supplemental Plans,
respectively, if the Eligible Employee was not entitled to a “Vested Benefit”
under the Retirement Plan as of the date the Eligible Employee Separates from
Service with the Participating Company.

(c) Limitation on Payments Under Certain Circumstances.

(i) Notwithstanding any other provision under the Program, in the event that an
Eligible Employee becomes entitled to receive or receives any payments or
benefits under the Program or under any other plan, agreement, program or
arrangement with a Participating Company (collectively, the “Payments”), that
may separately or in the aggregate constitute “parachute payments” within the
meaning of Section 280G of the Code and the Treasury regulations promulgated
thereunder (“Section 280G”) and it is determined that, but for this
Section 4(c)(i), any of the Payments will be subject to any excise tax pursuant
to Section 4999 of the Code or any similar or successor provision (the “Excise
Tax”), the Participating Company shall pay to the Eligible Employee either
(A) the full amount of the Payments or (B) an amount equal to the Payments
reduced by the minimum amount necessary to prevent any portion of the Payments
from being an “excess parachute payment” (within the meaning of Section 280G)
(the “Capped Payments”), whichever of the foregoing amounts results in the
receipt by the Eligible Employee, on an after-tax basis (with consideration of
all taxes incurred in connection with the Payments, including the Excise Tax),
of the greatest amount of Payments notwithstanding that all or some portion of
the Payments may be subject to the Excise Tax. For purposes of determining
whether an Eligible Employee would receive a greater after-tax benefit from the
Capped Payments than from receipt of the full amount of the Payments and for
purposes of Section 4(c)(iii) (if applicable), the Eligible Employee shall be
deemed to pay federal, state and local taxes at the highest marginal rate of
taxation for the applicable calendar year.

 

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(ii) All computations and determinations called for by Sections 4(c)(i) and
4(c)(iii) shall be made and reported in writing to the Participating Company and
the Eligible Employee by a third-party service provider selected by the
Participating Company (the “Tax Advisor”), and all such computations and
determinations shall be conclusive and binding on the Participating Company and
the Eligible Employee. For purposes of such calculations and determinations, the
Tax Advisor may rely on reasonable, good faith interpretations concerning the
application of Sections 280G and 4999 of the Code. The Participating Company and
the Eligible Employee shall furnish to the Tax Advisor such information and
documents as the Tax Advisor may reasonably request in order to make the
required calculations and determinations. The Participating Company shall bear
all fees and expenses charged by the Tax Advisor in connection with its
services.

(iii) In the event that Section 4(c)(i) applies and a reduction is required to
be applied to the Payments thereunder, the Payments shall be reduced by the
Participating Company in a manner and order of priority that provides the
Eligible Employee with the largest net after-tax value; provided that payments
of equal after-tax present value shall be reduced in the reverse order of
payment. Notwithstanding anything to the contrary herein, any such reduction
shall be structured in a manner intended to comply with Section 409A of the
Code.

(d) No Duty to Mitigate; Offset. The Eligible Employee shall not be required to
mitigate the amount of any payments provided under Section 4(b), nor shall any
payment or benefit provided for in Section 4(b) be offset by any compensation
earned by the Eligible Employee as the result of employment by another employer
or by retirement benefits. Notwithstanding the foregoing, the Committee in its
sole discretion may reduce any payments provided under Section 4(a), 4(b) and
4(c) (to an amount not less than zero) by any payments that an Eligible Employee
has or will receive pursuant to an arrangement or agreement with the Corporation
that provides for severance payments, including related tax payments, to which
such Eligible Employee may be entitled in the event of termination of
employment, provided that no such payments are subject to the requirements of
Section 409A of the Code.

SECTION 5  CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS.

(a) Payment of Basic Severance Benefits. Subject to the provisions of
Section 5(c), an Eligible Employee will be eligible for the benefits specified
in Section 4(a) upon the occurrence of any of the following events (except that
an Eligible Employee who has satisfied the conditions of Section 5(b) will be
eligible for the benefits specified in Section 4(b) rather than the benefits
specified in Section 4(a)):

(i) The Eligible Employee’s involuntary termination of employment that
constitutes a Separation from Service by a Participating Company or by the
Eligible Employee’s Separation from Service at the request of the Participating
Company for any reason other than Misconduct, subject to the limitations of
Section 5(c)(ii); provided, however, that if the Separation from Service is due
to death or because the Eligible Employee is disabled (as defined in
Section 409A(a)(2)(C) of the Code), the Eligible Employee shall not be eligible
for any severance benefits under the Program; or

 

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(ii) Termination of the Eligible Employee’s employer’s status as a Participating
Company due to the sale to a third party or a spin-off of a designated
subsidiary, subject to the limitations of Section 5(c)(ii) and provided that
such transaction is a change in the ownership or effective control of the
Corporation or a change in the ownership of a substantial portion of the assets
of the Corporation as defined in the regulations promulgated under Section 409A
of the Code;

(iii) The Participating Company requires the Eligible Employee to relocate his
or her principal place of work and the new principal place of work is fifty
(50) or more miles further from the Eligible Employee’s primary residence than
was his or her former principal place of work, and the Eligible Employee elects
to Separate from Service rather than to relocate; or

(iv) The Eligible Employee Separates from Service with a Participating Company
within twenty-four (24) months following:

(A) A material Reduction in Authority or Responsibility of the Eligible
Employee. Whether a Reduction in Authority or Responsibility of the Eligible
Employee is material shall be determined in accordance with the criteria set
forth in Section 2(t) in the definition of Reduction in Authority or
Responsibility; provided, however, that (I) a change in the Eligible Employee’s
reporting relationship to another executive who is within the same reporting
level, or (II) a reduction in the Eligible Employee’s business unit budget or a
reduction in the Eligible Employee’s business unit headcount or number of direct
reports, by themselves, shall not constitute a material Reduction in Authority
or Responsibility, or

(B) Any reduction in the Eligible Employee’s Base Compensation, standard bonus
opportunity or long-term incentive opportunity or a fifteen percent (15%) or
greater reduction in the Eligible Employee’s aggregate benefits or perquisites
as compared to those of all other employees similarly situated, unless in each
case the reduction is applicable to all salaried employees or all other
employees similarly situated.

This Section 5(a)(iv) shall apply to the Separation from Service of an Eligible
Employee only if the Eligible Employee or the Participating Company has notified
the other party in writing within three (3) months following the occurrence of
any such change that the party giving notice considers such change to be a
material change encompassed by this Section 5(a)(iv). If the party receiving
such notice does not agree that the change in question is a material change
encompassed by this Section 5(a)(iv), it shall give written notice thereof to
the party first giving notice hereunder within thirty (30) days after receiving
notice and the matter shall be

 

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immediately referred to the Appeals Committee. If necessary, the twenty-four
(24) month period specified above shall be extended to a date not later than
thirty (30) days following the announcement of the decision of the Appeals
Committee. The Participating Company or the Eligible Employee may each give the
notice described in this Section 5(a)(iv) only once while the Program is in
effect. If one party has given notice and the twenty-four (24) month period
specified above has commenced running, the other party may not give notice
hereunder with respect to a change occurring during such twenty-four (24) month
period. If an Eligible Employee gives notice pursuant to this Section 5(a)(iv)
and the Corporation thereafter in good faith makes an adjustment in the Eligible
Employee’s compensation, benefits, assigned job or duties, responsibilities,
privileges or perquisites, the Eligible Employee and the Corporation may
mutually agree in writing that the notice shall be null and void.

Notwithstanding the foregoing, no benefits shall be available under the Program
(i) if the Eligible Employee Separates from Service with a Participating Company
because he or she is eligible for or receiving long-term or permanent disability
benefits under the Corporation’s disability income plan as in effect on the date
of onset of disability or (ii) if the Eligible Employee satisfies all of the
following conditions:

(I) He or she separates from Service on or after his or her Normal Retirement
Date;

(II) For the two (2) year period immediately before retirement, he or she
qualified as an Eligible Employee; and

(III) He or she is entitled to benefits under the Retirement Plan, Salaried
401(k) Plan and Supplemental Plans which, when converted to a straight life
annuity (and excluding any portion of the benefit under the Salaried 40l(k) Plan
which represents contributions by the Eligible Employee), equals, in the
aggregate, at least $44,000.

(b) Payment of Change of Control Benefits. Subject to the provisions of
Section 5(c), an Eligible Employee will be eligible for the benefits specified
in this Section 4(b) if, within two (2) years following a Change of Control, the
Eligible Employee Separates from Service under the conditions described in
Section 5(a)(i), (ii) or (iii) or a material change described in
Section 5(a)(iv) occurs and the Eligible Employee thereafter Separates from
Service under the conditions described in Section 5(a)(iv); provided, that the
Eligible Employee was employed by a Participating Company on the date preceding
the Change of Control.

(c) Limitations on Eligibility for Benefits.

(i) If an Eligible Employee is assigned from one to another Participating
Company, he or she shall not be considered to have Separated from Service under
the provisions of the Program.

 

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(ii) The provisions of Section 5(a)(i) and 5(a)(ii) to the contrary
notwithstanding, no benefit will be payable hereunder due to an Eligible
Employee’s Separation from Service because of the sale to a third party or
spin-off of a division (or other operating assets) of a Participating Company or
the termination of the Eligible Employee’s employer’s status as a Participating
Company upon the sale to a third party or spin-off of a designated subsidiary
where such sale or spin-off is a change in the ownership or effective control of
the Corporation or a change in the ownership of a substantial portion of the
assets of the Corporation as defined in the regulations promulgated under
Section 409A of the Code, if (A) (I) the Eligible Employee is employed in the
same or better job by the purchaser of such division, assets, or subsidiary or
such other spun-off entity or (II) such purchaser or spun-off entity is
contractually obligated to offer the Eligible Employee the same or a better job
and (B) such purchaser or spun-off entity is contractually obligated to maintain
a plan which in all material respects is equivalent to the Program, providing
for continuing coverage of the Eligible Employee for two (2) years following the
sale or spin-off of such division, assets or subsidiary.

(iii) To the extent that an Eligible Employee shall have received severance
payments or other severance benefits under any other plan or agreement of the
Corporation before receiving benefits hereunder, the severance payments or other
severance benefits under such other plan or agreement shall reduce (but not
below zero) the corresponding benefits to which the Eligible Employee shall be
entitled under Section 4. To the extent that an Eligible Employee accepts
payments made pursuant to Section 4, he or she shall be deemed to have waived
his or her right to receive a corresponding amount of future severance payments
or other severance benefits under any other plan or agreement of the
Corporation. Benefits provided under the Program shall be in lieu of any
termination or severance payments or other severance benefits for which the
Eligible Employee may be eligible under any of the plans or agreements of the
Corporation or an Affiliate or under the Worker Adjustment Retraining
Notification Act of 1988 or any similar statute or regulation.

(iv) Any and all amounts payable and benefits or additional rights provided
pursuant to the Program shall only be payable if an Eligible Employee (or the
Eligible Employee’s beneficiary in the event of his or her death) timely
delivers to the Corporation and does not revoke a general waiver and release of
claims in favor of the Corporation and related parties identified therein in the
form presented by the Corporation, and the revocation period related to such
general waiver and release has expired. Such general waiver and release shall be
executed and delivered (and the revocation period related thereto, if any, shall
have lapsed without revocation having been made) within sixty (60) days
following the Eligible Employee’s Separation from Service.

 

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SECTION 6  TIME AND FORM OF BENEFIT.

(a) Time of Benefit. Except as provided in Section 6(b), distributions made to
Eligible Employees will commence no more than sixty (60) days following the
Eligible Employee’s Separation from Service, provided the applicable revocation
period required for the release under Section 5(c)(iv) has lapsed at that time
without revocation having been made.

(b) Key Employees. Notwithstanding any other provision of the Program, a
distribution of benefits subject to the requirements of Section 409A of the Code
made to an Eligible Employee who is identified as a Key Employee at the time of
his or her Separation from Service will be delayed for a minimum of six
(6) months if the Eligible Employee’s distribution is triggered by his or her
Separation from Service. Any payment that otherwise would have been made except
for the application of this Section 6(b) during such six (6) month period will
be made in one (1) lump sum payment not later than the last day of the second
month following the month that is six (6) months from the date the Eligible
Employee Separates from Service. The determination of which Eligible Employees
are Key Employees will be made by the Corporation in its sole discretion in
accordance with this Section 6(b) and Sections 416(i) and 409A of the Code and
the regulations promulgated thereunder.

(c) Form of Benefit. The benefits described in Section 4(a)(i) shall be paid,
less withholding for applicable taxes, in monthly installments over a period not
to exceed twelve (12) months from the date the Eligible Employee Separates from
Service pursuant to Section 4, as determined by the Corporation. The benefits
described in Sections 4(a)(ii) and 4(a)(iv) shall be paid, less withholding for
applicable taxes, in a lump sum. The benefits described in Sections 4(b)(i),
(ii), (iv), (vi) and (vii) shall be paid, less withholding for applicable taxes,
in a lump sum.

SECTION 7  EFFECT OF DEATH OF EMPLOYEE.

Should an Eligible Employee die after Separation from Service but while
participating in the Program and prior to the payment of the entire benefit due
hereunder, the balance of the benefit payable under the Program shall be paid in
a lump sum to the estate of the Eligible Employee.

SECTION 8  AMENDMENT AND TERMINATION.

The Committee reserves the right to amend or terminate the Program at any time
and to increase or decrease the amount of any benefit provided under the
Program; provided, however, that as to any individual who has qualified as an
Eligible Employee and has become entitled to any Change of Control benefit under
Section 4(b), the Program cannot be terminated or amended to reduce any benefit
provided under Section 4(b) or make any condition pertaining to qualification
for the Change of Control benefit under Section 4(b) materially more
restrictive. Once an individual has qualified as an Eligible Employee, the
Program may not be amended to cause such individual to cease to qualify as an
Eligible Employee for purposes of determining that individual’s eligibility for
the Change of Control benefit under Section 4(b). Notwithstanding any other
provision of the Program, following a Change of Control this Section 8 may not
be amended for a period of three (3) years.

 

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Notwithstanding the foregoing, the Vice President, Human Resources of the
Corporation shall have the power and authority to amend the Program with respect
to any amendment that (i) does not materially increase the cost of the Program
to the Company or (ii) is required to comply with new or changed legal
requirements applicable to the Program, including, but not limited to,
Section 409A of the Code.

SECTION 9  CLAIMS PROCEDURE.

(a) Claims. All applications for benefits and all inquiries concerning claims
under the program shall be submitted to the Corporation addressed as follows:
Potlatch Corporation, Plan Administrator under the Potlatch Corporation
Severance Program for Executive Employees, 601 W. First Avenue, Suite 1600,
Spokane, Washington 99201.

(b) Denial of Claims. In the event that any application for benefits under the
Program is denied in whole or in part, the Corporation shall notify the
applicant in writing of such denial and shall advise the applicant of the right
to a review thereof. Such written notice shall set forth, in a manner calculated
to be understood by the applicant, specific reasons for such denial, specific
references to the provisions of the Program on which such denial is based, a
description of any information or material necessary for the applicant to
perfect his or her application, an explanation of why such material is necessary
and an explanation of the Program’s review procedures and the time limits
applicable to such procedures, including a statement of the applicant’s right to
bring a civil action under Section 502(a) of ERISA following a denial on review
of the claim, as described in Section 10. Such written notice shall be given to
the applicant within ninety (90) days after the Corporation receives the
application, unless special circumstances require an extension of time up to an
additional ninety (90) days for processing the application. If such an extension
of time for processing is required, written notice of the extension shall be
furnished to the applicant prior to the termination of the initial ninety
(90) day period. This notice of extension shall indicate the special
circumstances requiring the extension of time and the date by which the
Corporation expects to render its decision on the application for benefits.

SECTION 10  REVIEW PROCEDURE.

(a) Informal Resolution of Questions. Any Eligible Employee who has questions or
concerns about his or her benefits under the Program is encouraged to
communicate with the Vice President, Human Resources. If this discussion does
not give the Eligible Employee satisfactory results, a formal claim for benefits
may be made within one (1) year of the event giving rise to the claim in
accordance with the procedures of this Section 10.

 

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(b) Formal Benefits Claim – Review by Appeals Committee. An Eligible Employee
may make a written request for review of any matter concerning his or her
benefits under the Program. The claim must be addressed to the Appeals
Committee, Potlatch Corporation, 601 W. First Avenue, Suite 1600, Spokane,
Washington 99201. The Corporation’s Appeals Committee shall decide the action to
be taken with respect to any such request and may require additional
information, if necessary, to process the request. The Appeals Committee shall
review the request and shall issue its decision, in writing, no later than
ninety (90) days after the date the request is received, unless the
circumstances require an extension of time. If such an extension is required,
written notice of the extension shall be furnished to the person making the
request within the initial ninety (90) day period, and the notice shall state
the circumstances requiring the extension and the date by which the Appeals
Committee expects to reach a decision on the request. In no event shall the
extension exceed a period of ninety (90) days from the end of the initial
period.

(c) Notice of Denied Request. If the Appeals Committee denies a request in whole
or in part, it shall provide the person making the request with written notice
of the denial within the period specified in Section 10(b). The notice shall set
forth the specific reason for the denial, reference to the specific Program
provisions upon which the denial is based, a description of any additional
material or information necessary to perfect the request, an explanation of why
such information is required, and an explanation of the Program’s appeal
procedures and the time limits applicable to such procedures, including a
statement of the claimant’s right to bring a civil action under Section 502(a)
of ERISA following an adverse benefit determination on review.

(d) Appeal to Appeals Committee.

(i) A person whose request has been denied in whole or in part (or such person’s
authorized representative) may file an appeal of the decision in writing with
the Appeals Committee within sixty (60) days of receipt of the notification of
denial. The appeal must be addressed to: Appeals Committee, Potlatch
Corporation, 601 W. First Avenue, Suite 1600, Spokane, Washington 99201. The
Appeals Committee, for good cause shown, may extend the period during which the
appeal may be filed for another sixty (60) days. The appellant and his or her
authorized representative shall be permitted to submit written comments,
documents, records and other information relating to the claim for benefits.
Upon request and free of charge, the appellant should be provided reasonable
access to, and copies of, all documents, records or other information relevant
to the appellant’s claim.

(ii) The Appeals Committee’s review shall take into account all comments,
documents, records and other information submitted by the appellant relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination. The Appeals Committee’s review
shall not be restricted to those provisions of the Program cited in the original
denial of the claim.

 

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(iii) The Appeals Committee shall issue a written decision within a reasonable
period of time but not later than sixty (60) days after receipt of the appeal,
unless special circumstances require an extension of time for processing, in
which case the written decision shall be issued as soon as possible, but not
later than one hundred twenty (120) days after receipt of an appeal. If such an
extension is required, written notice shall be furnished to the appellant within
the initial sixty (60) day period. This notice shall state the circumstances
requiring the extension and the date by which the Appeals Committee expects to
reach a decision on the appeal.

(iv) If the decision on the appeal denies the claim in whole or in part, written
notice shall be furnished to the appellant. Such notice shall state the
reason(s) for the denial, including references to specific Program provisions
upon which the denial was based. The notice shall state that the appellant is
entitled to receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information relevant to the claim
for benefits. The notice shall describe any voluntary appeal procedures offered
by the Program and the appellant’s right to obtain the information about such
procedures. The notice shall also include a statement of the appellant’s right
to bring an action under Section 502(a) of ERISA.

(v) The decision of the Appeals Committee on the appeal shall be final,
conclusive and binding upon all persons and shall be given the maximum possible
deference allowed by law.

(e) Exhaustion of Remedies. No legal or equitable action for benefits under the
Program shall be brought unless and until the claimant has submitted a written
claim for benefits in accordance with Section 10(a), has been notified that the
claim is denied in accordance with Section 10(c), has filed a written request
for a review of the claim in accordance with Section 10(d), and has been
notified in writing that the Appeals Committee has affirmed the denial of the
claim in accordance with Section 10(d); provided, however, that an action for
benefits may be brought after the Appeals Committee has failed to act on the
claim within the time prescribed in Section 10(b) and Section 10(d),
respectively.

SECTION 11  APPLICATION OF SECTION 409A OF THE CODE.

(a) Interpretation; Savings; Limitation of Liability. Notwithstanding the other
provisions hereof, the Program (and benefits and payments hereunder) are
intended to qualify for the short-term deferral or involuntary termination
exception described in Treasury Regulation Sections 1.409A-1(b)(4) and -1(b)(9).
To the extent the requirements of Section 409A of the Code apply, the Program is
intended to comply with such requirements. Accordingly, all provisions herein
shall be construed and interpreted in a manner consistent with such intentions
and, if necessary, any provision of the Program shall be deemed amended to
comply with Section 409A of the Code. If any payment or benefit cannot be
provided or made at the time specified herein without incurring additional tax
under Section 409A of the Code, then such benefit or payment shall be provided
in full at the earliest time thereafter when such additional tax will not be
imposed.

 

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Notwithstanding the foregoing, no provision of the Program shall transfer any
liability for failure to comply with Section 409A of the Code from an Eligible
Employee or any other individual to the Corporation, any Participating Company,
or any of their Affiliates.

(b) Payment Periods; Release. Whenever the Program specifies a payment period
with reference to a number of days, the actual date of payment within the
specified period shall be within the sole discretion of the Corporation;
provided that if the timing of the payment is contingent on the lapse or
expiration of the revocation period for the release required under
Section 5(c)(iv) and such revocation period could, as of an Eligible Employee’s
Separation from Service, lapse either in the same year as the date of such
Separation from Service or in the following year, the actual date of payment
within the specified period shall be in such following year.

(c) Reimbursements. All reimbursements provided under the Program shall be made
or provided in accordance with the requirements of Section 409A of the Code,
including, where applicable, the requirement that (A) any reimbursement is for
expenses incurred during the Eligible Employee’s lifetime (or during a shorter
period of time specified in the Program), (B) the amount of expenses eligible
for reimbursement during a calendar year may not affect the expenses eligible
for reimbursement in any other calendar year, (C) the reimbursement of an
eligible expense will be made on or before the last day of the taxable year
following the year in which the expense is incurred, and (D) the right to
reimbursement is not subject to liquidation or exchange for another benefit.

SECTION 12  BASIS OF PAYMENTS TO AND FROM PROGRAM.

All benefits under the Program shall be paid by the Corporation. The Program
shall be unfunded and benefits hereunder shall be paid only from the general
assets of the Corporation. Nothing contained in the Program shall be deemed to
create a trust of any kind for the benefit of Eligible Employees or create any
fiduciary relationship between the Corporation and the Eligible Employees with
respect to any assets of the Corporation. The Corporation is under no obligation
to fund the benefits provided herein prior to payment, although it may do so if
it chooses. Any assets which the Corporation chooses to use for advance funding
shall not cause the Program to be a funded plan within the meaning of ERISA.

SECTION 13  NO EMPLOYMENT RIGHTS.

Nothing in the Program shall be deemed to give any individual the right to
remain in the employ of a Participating Company or a subsidiary or to limit in
any way the right of a Participating Company or a subsidiary to terminate an
individual’s employment, which right is hereby reserved.

 

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SECTION 14  NON-ALIENATION OF BENEFITS.

No benefit payable under the Program shall be subject to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to do so shall be void.

SECTION 15  SUCCESSORS AND ASSIGNS.

The Program shall be binding on the Corporation, its successors and assigns, and
any parent corporation of the Corporation’s successors or assigns.
Notwithstanding that the Program may be binding upon a successor or assign by
operation of law, the Corporation shall require any successor or assign to
expressly assume and agree to be bound by the Program in the same manner and to
the same extent that the Corporation would be if no succession or assignment had
taken place.

SECTION 16  NOTICES.

All notices pertaining to the Program shall be in writing and shall be deemed
given if delivered by hand or mailed with postage prepaid and addressed, in the
case of the Corporation to the address set forth in Section 9(a), attention of
its Corporate Secretary, and in the case of the Eligible Employee to his or her
last known address as reflected in the records of the Corporation.

 

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