STOCK OPTION AGREEMENT

    POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN


     THIS AGREEMENT made and entered into the day specified in 
the attached addendum to this Agreement by and between
POTLATCH CORPORATION, a Delaware corporation (the "Corporation") 
and the outside director of the Corporation named in the attached 
addendum ("Outside Director"),

                    W I T N E S S E T H:

     That to encourage stock ownership by directors of the 
Corporation and for other valuable consideration, the parties 
agree as follows:

     1. Definitions.

     (a) "Agreement" means this stock option agreement.

     (b) "Board" means the Board of Directors of the 
Corporation.

     (c) "Change in Control" means an event or transaction 
described in Subparagraph (a), (b), (c) or (d) of Paragraph 3 
(without regard to the 30- and 365-day periods also described in 
those Subparagraphs).

     (d) "Code" means the Internal Revenue Code of 1986, as 
amended.

     (e) "Common Stock" means the $1 par value Common Stock of 
the Corporation.

     (f) "Committee" means the committee appointed by the Board 
to administer the Plan. If Outside Director is a member of such 
Committee, Outside Director shall not participate in any actions 
and determinations of the Committee with respect to this 
Agreement.

     (g) "Corporation" means Potlatch Corporation, a Delaware 
corporation.

     (h) "Date of Grant" means the date specified in Section 1 
of the addendum to this Agreement.

     (i) "Exercise Price" means the price per Share designated 
in Section 2 of the addendum to this Agreement at which this 
Option may be exercised.

                                1
                                                Exhibit (10)(n)(v)

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     (j) "Fair Market Value" of a Share as of a specified date 
means the closing price at which Shares are traded at the close 
of business on such date as reported in the New York Stock
Exchange composite transactions published in the Western Edition 
of The Wall Street Journal, or if no trading of Shares is 
reported for that day, on the next preceding day on which trading 
was reported.

     (k) "Nonqualified Stock Option" means an Option other than 
an incentive stock option described in Code section 422(b).

     (1) "Option" means a stock option granted pursuant to the 
Plan.

     (m) "Option Period" means the term of this Option as 
provided in Paragraph 3 of this Agreement.

     (n) "Partial Exercise" means an exercise with respect to 
less than all of the vested but unexercised Shares subject to 
Option held by the person exercising the Option.

     (o) "Plan" means the Potlatch Corporation 1995 Stock 
Incentive Plan, pursuant to which the parties have entered into 
this Agreement.

     (p) "Purchase Price" means the Exercise Price times the 
number of whole shares with respect to which this Option is 
exercised.

     (q) "Securities Act" means the Securities Act of 1933, as 
amended.

     (r) "Share" means one share of Common Stock, adjusted in 
accordance with Section 13 of the Plan.

     (s) "Subsidiary" means any corporation in an unbroken chain 
of corporations beginning with the Corporation if each of the 
corporations other than the last corporation in the unbroken 
chain owns stock possessing 50% or more of the total combined 
voting power of all classes of stock in one of the other 
corporations in such chain.

     2. The Corporation grants to Outside Director the option 
to purchase that number of shares of Common Stock specified in 
Section 3 of the addendum to this Agreement for the Exercise 
Price specified in Section 2 of the addendum to this Agreement, 
on the terms and conditions stated in this Agreement.

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     This Option has been granted pursuant to the Plan, a copy of 
the text of which Outside Director may obtain upon request to the 
Corporation.

     3. Subject to the conditions stated in this Agreement, the 
period during which the Option may be exercised (the "Vesting 
Schedule") shall be as follows:

    Number of Shares               Vesting Schedule*

50% of the number of shares     From one year from the Date
specified in Section 3 of       of Grant to end of term for
the addendum                    Option

50% of the number of shares     From two years from the
specified in Section 3 of       Date of Grant to end of
the addendum                    term for Option

     No Partial Exercise of this Option may be for less than a 
multiple of 10 Shares.

     Beginning six months after the Date of Grant, Outside 
Director shall have the right to exercise the Option (or to call 
the related stock appreciation right as described in Paragraph 
4), in whole or in part:

        (a) Within 30 days following the consummation of any 
     transaction approved by the stockholders of the Corporation 
     in which the Corporation will cease to be an independent 
     publicly owned corporation (including, without limitation, a 
     reverse merger transaction in which the Corporation becomes 
     the subsidiary of another corporation) or the sale or other 
     disposition of all or substantially all of the assets of the 
     Corporation;

        (b) Within 365 days following the date on which more 
     than one-third (determined by rounding down to the next 
     whole number) of the individual members of the Board neither 
     (i) were directors of the Corporation on a date three years 
     earlier nor (ii) are individuals whose election or 
     nomination for election as directors was affirmatively voted 
     on by at least a majority of those directors described in 
     (i) above who were still in office as of the date the Board 
     approved such election or nomination;

        (c) Within 365 days following the date on which any 
     "person" (as such term is used in sections 13(d) and 14(d) 
     of the Securities Exchange Act of 1934, as amended (the 

* See Paragraph 5 for further explanation of end of term for Option.

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<PAGE>

     "1934 Act")) that has acquired Shares pursuant to a tender 
     offer subject to section 14(d) of the 1934 Act becomes 
     entitled to vote 20% or more of the aggregate voting power 
     of the capital stock of the Corporation issued and 
     outstanding; and

        (d) Within 30 days prior to any dissolution or 
     liquidation of the Corporation or any merger or 
     consolidation in which the Corporation is not the surviving 
     corporation, but not earlier than the date on which any 
     required stockholder approval is obtained.

If an option is not exercised during any 30-day period described 
in (a) or (d) above, the option shall terminate at the close of 
business on the last day of the 30-day period; provided that if 
periods described in (a) and (d) are contiguous or overlap, 
unexercised options shall terminate at the close of business on 
the last day of the second 30-day period.

     4. In the event of a Change in Control, this Option shall 
automatically include a stock appreciation right that may be 
called only during the periods described in Subparagraphs (a), 
(b), (c) or (d) of Paragraph 3. During any such period, Outside 
Director may surrender all or part of this Option and exercise 
the stock appreciation right in lieu of exercising all or any 
part of this Option, provided that at least six months have 
elapsed from the Date of Grant and that the Fair Market Value of 
the Common Stock on the date of such exercise is higher than the 
Exercise Price specified in Section 2 of the addendum to this 
Agreement. The exercise of a stock appreciation right is referred 
to in this Paragraph 4 as the "call." Upon the call of a stock 
appreciation right, Outside Director shall be entitled to receive 
payment of an amount equal to the difference obtained by 
subtracting the aggregate option price of the shares subject to 
the Option (or the portion of such Option) from the Fair Market 
Value of such Shares on the date of such call. In the case of a 
stock appreciation right that is called during either of the 
30-day periods described in Paragraph 3(a) or 3(d), for purposes 
of measuring the value of the stock appreciation right, "Fair 
Market Value" shall be the greater of (a) the value of the 
consideration per share that the Outside Director would have 
received in connection with the transaction described in 
Paragraph 3(a) or 3(d) as a stockholder of the Corporation if he 
or she had exercised the Option prior to the consummation of such 
transaction, or (b) the value determined in good faith by the 
Committee (as composed on the day preceding the date of 
consummation of the transaction described in Paragraph 3(a) or 
3(d)), taking into consideration all relevant facts and 
circumstances.

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     For all purposes under this Agreement (unless the context 
requires otherwise), the terms "exercise" or "exercisable" shall 
be deemed to include the terms "call" or "callable" as such terms 
may apply to a stock appreciation right, and in the event of the 
call of a stock appreciation right the underlying Option
will be deemed to have been exercised for all purposes under the 
Plan.

     Payment of a stock appreciation right shall be made as soon 
as reasonably practicable following receipt by the Corporation of 
the notice described in Paragraph 8. Payment of the stock 
appreciation right shall be made in such form as may be permitted 
pursuant to the rules and regulations adopted from time to time 
by the Committee, as in effect on the date the stock appreciation 
right is called.

     5. The term of this Option shall end and this Option shall 
not be exercisable after 10 years from the Date of Grant or, if 
earlier, upon the termination of Outside Director's services as a 
director of the Corporation subject to the following provisions:

        (a) If the termination of services is caused by 
     Outside Director's death, this Option, to the extent that it 
     was exercisable under Paragraph 3 of this Agreement at the 
     date of death and had not previously been exercised, may be 
     exercised at any time before the end of the Option Period as 
     specified in the Option Agreement by Outside Director's 
     executors or administrators or by any person or persons who 
     shall have acquired this Option directly from Outside 
     Director by bequest or inheritance.

        (b) If the termination of services is caused by 
     retirement after five years of service as an Outside 
     Director of the Corporation, this Option, to the extent it 
     was exercisable under Paragraph 3 of this Agreement at the 
     date of such termination and had not previously been 
     exercised, may be exercised at any time before the end of 
     the Option Period as specified in the Option Agreement.

        (c) If the termination of services is for any reason 
     other than death or retirement, this Option, to 
     the extent that it was exercisable under Paragraph 3 of this 
     Agreement at the date of such termination and had not 
     previously been exercised, may be exercised within three 
     months after the date of such termination; provided that in 
     such case the right to call a stock appreciation right as 
     described in Paragraph 4 shall terminate on the date Outside 
     Director's services terminate unless Outside Director 
     requests and the Committee permits the call of the stock 
     appreciation right within three months after the date of 

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     such termination. Notwithstanding the foregoing, if the 
     termination of services is for cause, the option shall cease 
     to be exercisable or callable at the time of such 
     termination. The Board shall determine whether Outside 
     Director's services are terminated for cause in accordance 
     with the Corporation's Restated Certificate of 
     Incorporation.

     6. The Corporation agrees that it will at all times during 
the Option Period reserve and keep available sufficient 
authorized but unissued or reacquired Common Stock to satisfy the 
requirements of this Agreement. The number of Shares reserved and 
the Exercise Price shall be proportionately adjusted for any 
increase or decrease in the number of issued and outstanding 
Shares by reason of stock dividends, stock splits, 
consolidations, recapitalizations, reorganizations or like 
events, as determined by the Committee pursuant to the Plan.

     7. Subject to any required action by the stockholders, if 
the Corporation shall be the surviving corporation in any merger, 
consolidation or other reorganization, this Option shall apply to 
the securities to which a holder of the number of Shares subject 
to this Option would have been entitled. Except to the extent 
Paragraph 3 (and Paragraph 4) permit the exercise of Options (and 
stock appreciation rights) within a specified time period before 
or after a Change in Control, a dissolution or liquidation of the 
Corporation or a merger, consolidation or other reorganization in 
which the Corporation is not the surviving corporation shall 
cause this Option to terminate on the effective date of such 
dissolution, liquidation or reorganization, unless the agreement 
of merger, consolidation or reorganization shall otherwise 
provide. In the event that the Corporation undergoes a reverse 
merger transaction, Outside Director (or Outside Director's 
representative) shall be entitled to receive the same 
consideration in such transaction (including, without limitation, 
cash) as other stockholders are entitled to receive.

     8. Outside Director, or Outside Director's representative, 
may exercise this Option by giving written notice to the 
Corporation at Spokane, Washington, attention of the Secretary, 
specifying the election to exercise the Option, the number of 
Shares for which it is being exercised and the method of payment 
for the amount of the Purchase Price of the Shares for which this 
Option is exercised. Such payment shall be made:

        (a) In United States dollars delivered at the time of 
     exercise;

        (b) Subject to the conditions stated in rules and 
     regulations adopted by the Committee, by the surrender of 

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     Shares in good form for transfer, owned by the person 
     exercising this Option and having an aggregate Fair Market 
     Value on the date of exercise equal to the Purchase Price; 
     or

        (c) In any combination of Subparagraphs (a) and (b) 
     above, if the total of the cash paid and the Fair Market 
     Value of the Shares surrendered equals the Purchase Price of 
     the Shares for which this Option is being exercised.

     The notice shall be signed by the person or persons 
exercising this Option, and in the event this Option is being 
exercised by the representative of Outside Director, shall be 
accompanied by proof satisfactory to the Corporation of the right 
of the representative to exercise the Option. No Share shall be 
issued until full payment has been made. After receipt of full 
payment, the Corporation shall cause to be issued a certificate 
or certificates for the Shares for which this Option has been 
exercised, registered in the name of the person or persons 
exercising the Option (or in the name of such person or persons 
and another person as community property or as joint tenants), 
and cause such certificate or certificates to be delivered to or 
upon the order of such person or persons.

     9. In the event the Corporation determines that it is 
required to withhold state or federal income tax as a result of 
the exercise of this Option, as a condition to the exercise of 
the Option, Outside Director will make arrangements satisfactory 
to the Corporation to enable it to satisfy such withholding 
requirements.

     10. Neither Outside Director nor Outside Director's 
representative shall have any rights as a stockholder with 
respect to any Shares subject to this Option until such Shares 
shall have been issued to Outside Director or Outside Director's 
representative.

     11. Unless at the time Outside Director gives notice of the 
exercise of this Option, the Shares to be issued are registered 
under the Securities Act, the notice shall include a statement to 
the effect that all Shares for which this Option is being 
exercised are being purchased for investment, and without present 
intention of resale, and will not be sold without registration 
under the Securities Act or exemption from registration, and such 
other representations as the Committee may require. The 
Corporation may permit the sale or other disposition of any 
Shares acquired pursuant to any such representation if it is 
satisfied that such sale or other disposition would not 
contravene applicable state or federal securities laws. Unless 
the Corporation shall determine that, in compliance with the 

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Securities Act or other applicable statute or regulation, it is 
necessary to register any of the Shares for which this Option has 
been exercised, and unless such registration, if required, has 
been completed, certificates to be issued upon the exercise of 
this Option shall contain the following legend:

        "The Shares represented by this certificate have not 
     been registered under the Securities Act of 1933 and may be 
     offered, sold or transferred only if registered pursuant to 
     the provisions of that Act or if an exemption from 
     registration is available."

     12. Except as otherwise provided in this Agreement, this 
Option and the rights and privileges conferred by this Agreement 
shall not be transferred, assigned, pledged or hypothecated in 
any way (whether by operation of law or otherwise) and shall not 
be subject to sale under execution, attachment or similar 
process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this Option, or of any right
or privilege conferred by this Agreement, contrary to the 
provisions of this Paragraph, or upon any attempted sale under 
any execution, attachment or similar process upon the rights and 
privileges conferred by this Agreement, this Option and the 
rights and privileges conferred by this Agreement shall 
immediately become null and void.

     13. Nothing in this Agreement shall be construed as giving 
Outside Director the right to be retained as a director of the 
Corporation.

     14. This Agreement shall be interpreted and construed in 
accordance with the laws of the State of Delaware without regard 
to choice of law principles.

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<PAGE>
               	ADDENDUM TO STOCK OPTION AGREEMENT

          POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN


Name of Outside Director: _____________________________ 

1. Date of Grant: _______________________
   
2. Exercise Price:  $ ____________ per share, which is agreed 
   to be one hundred percent (100%) of the Fair Market Value of 
   the common stock subject to the Option on the Date of Grant.

3. The number of Shares subject to this Option is (check one):  


   ____   	2,000 Shares (Plan Approval/Director Election)


   ____    1,000 Shares (Annual Grant)


   This number is subject to adjustment as provided in
   Section 13 of the Plan and Paragraph 6 of this stock option 
   agreement.

The document entitled Stock Option Agreement - Potlatch 
Corporation 1995 Stock Incentive Plan is incorporated by this 
reference into this addendum.

     IN WITNESS WHEREOF, the Corporation has caused this addendum 
to the stock option agreement to be executed on its behalf by its 
duly authorized representative and the Outside Director has 
executed the same on the date indicated below.
     
                                 POTLATCH CORPORATION                     
		

Date:__________________          By_______________________
                                        Secretary



Date:__________________          By_______________________ 
                                      Outside Director


                                                    Outside Director Option
                                 9
                                                            Adopted 12/3/98