Exhibit (10)(u)

POTLATCH FOREST PRODUCTS CORPORATION

RETIREMENT AGREEMENT

 

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Gerald L. Zuehlke

General

The above-named employee (the “Employee”) and Potlatch Forest Products
Corporation (the “Company”) have agreed upon the following items.

Separation from Service

Employee shall serve as Vice President and Chief Financial Officer of the
Company until August 1, 2007, and he shall serve as Senior Vice President,
Finance thereafter until his separation from employment with the Company.
Employee’s separation from employment with the Company will be effective at the
close of business on December 31, 2007, and his retirement date shall be
January 1, 2008 (“Retirement Date”). The Parties agree that the change of title
and responsibilities described herein is not a “Reduction in Authority or
Responsibility” under the Potlatch Forest Products Corporation Severance Program
for Executive Employees as Amended and Restated as of April 4, 2007.

MPAP Payments

In the event that any amounts are payable under the Potlatch Corporation
Management Performance Award Plan II (“MPAP”) for calendar year 2007, Employee
shall be entitled to payment of his target bonus amount (45% of Employee’s base
salary paid in 2007) under the MPAP for the period from January 1, 2007 to the
Retirement Date multiplied by the ROE performance modifier applicable to MPAP
payments for 2007 (as approved by the Executive Compensation and Personnel
Policies Committee of the Potlatch Corporation Board of Directors) and further
multiplied by an individual performance modifier of 1.0.

Pension Benefit

The Employee has a vested benefit under the Company’s Salaried Employees’
Retirement Plan (“Retirement Plan”), the Salaried Employees’ Supplemental
Benefit Plan (“Supplemental Plan”) and Salaried Employees’ Supplemental Benefit
Plan II (“Supplemental Plan II” and, collectively with the Retirement Plan and
the Supplemental Plan, the “Pension Plans”), and he shall receive benefit
payments in accordance with the provisions of the Pension Plans applicable as of
the Retirement Date. In addition, provided that following his separation from
employment on December 31, 2007 the Employee executes and delivers to the
Company a full general release of all claims, known and unknown, in a form
substantially similar to the release contained in Part II, Sections 1 – 9 below,
then the Employee shall receive an additional payment (the “Additional Pension
Benefit”) calculated as the difference between the retirement benefit he would
have been eligible to receive if he had reached age 62 as of the Retirement Date

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with no reduction in benefit, and the amount payable under the Pension Plans as
described above. Execution of a full general release following the Employee’s
separation from employment is a condition precedent to receipt of the Additional
Pension Benefits. The Additional Pension Benefit will be paid under the terms
and conditions of the Supplemental Plan II.

Performance Shares

In the event that there is a payout of performance shares under the terms of the
Employee’s Performance Share Agreement (“Award Agreement”) applicable to awards
granted for the period January 1, 2005-December 31, 2007, Employee shall be
entitled to receive 100% of the shares calculated under the applicable Award
Agreement. In the event that there is a payout of performance shares under the
terms of the Employee’s Award Agreement applicable to awards granted for the
years January 1, 2006-December 31, 2008, Employee shall be entitled to 66% of
the shares calculated under the applicable Award Agreement. In the event that
there is a payout of performance shares under the terms of the Award Agreement
applicable to awards granted for the years January 1, 2007-December 31, 2009,
Employee shall be entitled to 33% of the shares calculated under the applicable
Award Agreement .

Entitlement to Other Benefits

Except as provided herein, this Agreement is not intended to alter Employee’s
entitlement to other benefits available to him as a retiree under applicable
Company plans and policies.

 

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Part II.

I understand that I am eligible to receive the Additional Pension Benefit and
other benefits as described in Part I of this agreement if I choose to accept
the terms of this Agreement. If I choose to reject this Agreement, I understand
that I am eligible to receive the basic benefits as described in the Salaried
Employees’ Benefits Plans Handbook and in the other benefit plans applicable to
executive officers, all of which have previously been provided to me by the
Company.

Release and Waiver of Claims Agreement

1.    In consideration for the Additional Pension Benefit and the other benefits
offered to me by the Company, as outlined in Part I above, I release and
discharge Potlatch Forest Products Corporation, any affiliated company, parent,
subsidiary, alter egos, their predecessors, successors, affiliates, assigns,
partners, shareholders, directors, officers, agents, attorneys, and employees,
whether past, present, or future (the “Released Parties”) from any and all
actions,

 

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suits, debts, demands, damages, claims, judgments, or liabilities of any nature,
including costs and attorneys’ fees, whether known or unknown, including, but
not limited to, all claims arising out of the Employee’s employment with or
separation from any of the Released Parties, such as (by way of example only)
any claim for salary, bonus, severance, retirement benefits or other benefits
apart from the benefits stated herein; breach of contract; wrongful discharge;
impairment of economic opportunity; any claim under common law or at equity;
defamation; intentional infliction of emotional harm; any tort; claims for
reimbursements; claims for commissions; or claims for employment discrimination
under any state, federal, local law, statute, or regulation (including, but not
limited to, claims under Title VII of the Civil Rights act of 1964 or under the
Americans With Disabilities Act). Employee acknowledges and agrees that this
Release and Waiver Agreement, the Release and Waiver Agreement contained in
paragraph 2, and the covenant not to sue set forth in paragraph 4 are essential
and material terms of this Release and Waiver Agreement and that, without such
release and covenant not to sue, no agreement would have been reached by the
parties. Employee understands and acknowledges the significance and consequences
of this Release and Waiver Agreement.

2.    As a further material inducement to enter into this Release and Waiver of
Claims Agreement, Employee specifically waives and releases the Company and the
Released Parties from all claims Employee may have as of the date the Employee
signs the Release and Waiver of Claims Agreement regarding any claims or rights
arising under the Age Discrimination in Employment Act, as amended, 29 U.S.C.
621 (“ADEA”). This paragraph does not waive rights and claims that may arise
under the ADEA after the Employee signs this Release and Waiver of Claims
Agreement.

3.    Right to Revoke Agreement: Employee agrees that this Release and Waiver of
Claims Agreement provides benefits to which Employee is not otherwise entitled.
Employee acknowledges that the Company has advised Employee to consult an
attorney prior to signing this Release and Waiver of Claims Agreement. Employee
has been advised by the Company that Employee has up to twenty-one (21) days
within which to consider whether Employee should sign this Release and Waiver of
Claims Agreement and waive and release all claims and rights arising under the
ADEA. In the event that Employee signs this Release and Waiver of Claims
agreement before the expiration of twenty-one (21) days, Employee acknowledges
the Employee has chosen to waive the 21-day period. Employee shall have seven
(7) days after signing this Release and Waiver of Claims Agreement to revoke
this Release and Waiver of Claims Agreement, and this Release and Waiver of
Claims Agreement shall not become effective or enforceable until that revocation
period has expired.

 

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4.    It is understood that this is a full and final release covering all
unknown and unanticipated claims of or injuries, debts, or damages to Employee
that may have arisen, or may arise, in connection with any fact occurring prior
to the date of execution of this Release and Waiver of Claims Agreement.

5.    To the maximum extent permitted by law, Employee covenants not to sue or
to institute or cause to be instituted any action in any federal or state court
against any of the Released Parties, including, but not limited to, any of the
claims released in paragraphs 1 and 2 of this Release and Waiver of Claims
Agreement.

6.    Employee and the Company agree that neither the Employee nor the Released
Parties admit liability for, or violation of, any contract, any federal, state,
or local statute, or regulation, or any right protected under the common law.

7.    Employee acknowledges by signing this Release and Waiver of Claims
Agreement that Employee has read and understands this document, that Employee
has conferred with or had opportunity to confer with Employee’s attorneys
regarding the terms and meaning of this Release and Waiver of Claims Agreement,
that Employee has had sufficient time to consider the terms provided for in the
Release and Waiver of Claims Agreement, that no representations or inducements
have been made to Employee except as set forth herein, and that Employee has
signed the same knowingly and voluntarily.

8.    It is intended that the provisions of this Release and Waiver of Claims
Agreement shall be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is sought. In
the event that any paragraph, subparagraph, or provision of this Release and
Waiver of Claims Agreement shall be determined to be partially contrary to
governing law or otherwise partially unenforceable, the paragraph, subparagraph,
or provision and this Release and Waiver of Claims Agreement shall be enforced
to the maximum extent permitted by law, and if any paragraph, subparagraph, or
provision of the Release and Waiver of Claims Agreement shall be determined to
be totally contrary to governing law or otherwise totally unenforceable, the
paragraph, subparagraph, or provision shall be severed and disregarded and the
remainder of this Release and Waiver of Claims Agreement shall be enforced to
the maximum extent permitted by law.

 

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9.    This Release and Waiver of Claims Agreement contains the entire Agreement
between the Employee and the Company with respect to the matters covered and
supersedes all prior agreements, understandings, or commitments, whether oral or
written. No amendment or supplement to this Release and Waiver of Claims
Agreement may be made except by writing signed by both the Employee and the
Company.

Employee Signature Below Indicates Acceptance of the Special Arrangements
Described Herein, and Executes This Release and Waiver of Claims Agreement.

Employee Signature: /s/ Gerald L. Zuehlke

Date: June 4, 2007

Potlatch Forest Products Corporation

Chairman, President and Chief Executive Officer

/s/ Michael J. Covey

Date: June 4, 2007

 

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