POTLATCH CORPORATION
               1995 STOCK INCENTIVE PLAN
        AS AMENDED AND RESTATED DECEMBER 3, 1998

   1. PURPOSE.
   This Potlatch Corporation 1995 Stock Incentive Plan is 
intended to provide incentive to employees and directors of 
Potlatch Corporation (the "Corporation") and its eligible 
subsidiaries, to encourage proprietary interest in the 
Corporation and to encourage employees and directors to remain in 
the service of the Corporation or its subsidiaries.

   2. DEFINITIONS.
   (a)	"Award"	means any award of an option, Restricted 
Stock or an Other Share-Based Award under the Plan.
   (b) "Board" means the Board of Directors of the 
Corporation.
   (c) "Code" means the Internal Revenue Code of 1986, as 
amended.
   (d) "Committee" means the Committee appointed by the 
Board in accordance with Section 4.
   (e) "Common Stock" means the $1 par value common stock of 
the Corporation.
   (f) "Corporation" means Potlatch Corporation, a Delaware 
corporation.
   (g) "Director" means a director of the Corporation.
   (h) "Disability" means the condition of an Employee who 
is unable to engage in any substantial gainful activity by reason 

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                                                       Exhibit (10)(n)
 
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of any medically determinable physical or mental impairment which 
can be expected to result in death or which has lasted or can be 
expected to last for a continuous period of at least 12 months.
   (i) "Employee" means an individual (who may be an officer 
or a Director) employed by the Corporation or a Subsidiary 
(within the meaning of the Code section 3401 and the regulations 
thereunder).
   (j) "Exercise Price" means the price per Share of Common 
Stock at which an option may be exercised.
   (k) "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.
   (l) "Incentive Stock Option" means an Option described in 
Code section 422(b).
   (m) "Misconduct" means that a Participant has engaged in 
unfair competition with the Corporation or a Subsidiary, induced 
any customer of the Corporation or a Subsidiary to breach any 
contract with the Corporation or a Subsidiary, made any 
unauthorized disclosure of any of the secrets or confidential 
information of the Corporation or a Subsidiary, committed an act 
of embezzlement, fraud or theft with respect to the property of 
the Corporation or a Subsidiary, or engaged in conduct which is 
not in good faith and which directly results in material loss, 

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damage or injury to the business, reputation or employees of the 
Corporation or a Subsidiary.
   (n) "Nonqualified Stock Option" means an Option not 
described in Code section 422(b) or 423(b).
   (o) "Option" means a stock option granted pursuant to 
Section 7 or Section 10.  "Option Agreement" means the 
agreement between the Corporation and the Participant which 
contains the terms and conditions pertaining to such Option.
   (p) "Other Share-Based Award" means an Award granted 
pursuant to Section 9.  "Other Share-Based Award Agreement" 
means the agreement between the Corporation and the recipient of 
an Other Share-Based Award which contains the terms and 
conditions pertaining to the Other Share-Based Award.
   (q)	"Outside Director" means a Director who is not an 
Employee.
   (r) "Participant" means an Employee who has received an 
Award or an Outside Director who has received an Option.
   (s) "Plan" means this Potlatch Corporation 1995 Stock 
Incentive Plan.
   (t) "Purchase Price" means the Exercise Price times the 
number of whole Shares with respect to which an Option is 
exercised.
   (u) "Restricted Stock" means Shares granted pursuant to 
Section 8.  "Restricted Stock Agreement" means the agreement 
between the Corporation and the recipient of Restricted Stock 
which contains the terms, conditions and restrictions pertaining 
to the Restricted Stock.

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   (v) "Share" means one share of Common Stock, adjusted in 
accordance with Section 13 (if applicable).
   (w) "Stock Right" means a bookkeeping entry representing 
a right to the equivalent of one Share.
   (x) "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.

   3. EFFECTIVE DATE.
   This Plan was adopted by the Board on December 7, 1995, to 
be effective immediately, subject to approval by the 
Corporation's stockholders.

   4. ADMINISTRATION.
   The Plan shall be administered by a committee (the 
"Committee") appointed by the Board, consisting of not less 
than two disinterested members.  The term "disinterested 
members" as applied to Directors shall include only Directors 
who are not active Employees of the Corporation or of any of its 
Subsidiaries, who are not eligible to receive discretionary 
Awards under Sections 7, 8 and 9 of this Plan or under any other 
stock incentive plan of the Corporation and who have not received 
such discretionary Awards for at least one year preceding 
appointment as a member of the Committee.  The Board may from 
time to time remove members from, or add members to, the 

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Committee.  Vacancies on the Committee shall be filled by the 
Board.  The Board shall appoint one of the members of the 
Committee as Chairman.
   If any member of the Committee does not qualify as an 
"outside director" for purposes of section 162(m) of the Code, 
Awards under the Plan for the chief executive officer and the 
four most highly compensated officers of the Corporation (other 
than the chief executive officer) shall be administered by a 
subcommittee consisting of each Committee member who qualifies as 
an "outside director."  If fewer than two Committee members 
qualify as "outside directors," the Board shall appoint one or 
more other members to such subcommittee who do qualify as 
"outside directors" so that it will at all times consist of at 
least two members who qualify as "outside directors" for 
purposes of section 162(m) of the Code.
   The Committee shall hold meetings at such times and places 
as it may determine.  Acts of a majority of the Committee at 
which a quorum is present, or acts reduced to or approved in 
writing by a majority of the Committee, shall be the valid acts 
of the Committee.  The Committee shall from time to time at its 
discretion make determinations with respect to Employees who 
shall be granted Awards, the number of Shares or Share 
equivalents to be subject to each Award, the vesting of Awards, 
the designation of Options as Incentive Stock Options or 
Nonqualified Stock Options and other conditions of Awards to 
Employees.
   The interpretation and construction by the Committee of any 
provisions of the Plan or of any Award shall be final.  No member 

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of the Committee shall be liable for any action or determination 
made in good faith with respect to the Plan or any Award.

   5. ELIGIBILITY.
   Participants shall be such key Employees (who may be 
officers, whether or not they are Directors) of the Corporation 
or of its Subsidiaries as the Committee shall select, but subject 
to the terms and conditions set forth below.  In addition, all 
Outside Directors shall be Participants solely for purposes of 
the nondiscretionary Awards described in Section 10.
   (a) Ten Percent Stockholders.
   An Employee who owns more than 10% of the total combined 
voting power of all classes of outstanding stock of the 
Corporation, its parent or any of its Subsidiaries is not 
eligible to receive an Incentive Stock Option pursuant to this 
Plan.  For purposes of this Section 5(a) the stock ownership of 
an Employee shall be determined pursuant to section 424(d) of the 
Code.
   (b) Number of Awards.
   A Participant may receive more than one Award, including 
Awards of the same type, but only on the terms and subject to the 
restrictions set forth in the Plan.  The maximum aggregate number 
of Shares or Share equivalents that may be subject to Awards to a 
Participant in any calendar year is 60,000 Shares.

   6. STOCK.
   The stock subject to Options, Restricted Stock, or Other 
Share-Based Awards granted under the Plan shall be Shares of the 

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Corporation's authorized but unissued or reacquired Common Stock.  
The aggregate number of Options, Restricted Stock or Other Share-
Based Awards issued under this Plan shall not exceed 1,700,000 
Shares.  In the event that any outstanding Option under the Plan 
for any reason expires or is terminated or any Restricted Stock 
or Other Share-Based Award is forfeited, the Shares allocable to 
the unexercised portion of such Option or the forfeited 
Restricted Stock or Other Share-Based Award may again be 
subjected to Options, Restricted Stock or Other Share-Based 
Awards under the Plan, provided that under the terms of the Award 
the Participant received no benefits of ownership during the 
period the Award was outstanding.  However, if one Award is 
granted in tandem with another, so that the exercise of one 
causes the other to expire, then the number of Shares subject to 
the expired Award shall not be restored to the pool available for 
Awards.
   The limitations established by this Section 6 shall be 
subject to adjustment as provided in Section 13.

   7. TERMS AND CONDITIONS OF EMPLOYEE OPTIONS.
   Options granted to Employees pursuant to the Plan shall be 
evidenced by written Option Agreements in such form as the 
Committee shall determine, subject to the following terms and 
conditions:
   (a) Number of Shares.
   Each Option shall state the number of Shares to which it 
pertains and shall provide for the adjustment of such number in 
accordance with Section 13.

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   (b) Exercise Price.
   Each Option shall state the Exercise Price, determined by 
the Committee, which shall not be less than the Fair Market Value 
of a Share on the date of grant.
   (c) Medium and Time of Payment.
   The Purchase Price shall be payable in full in United States 
dollars upon the exercise of the Option; provided that with the 
consent of the Committee and in accordance with its rules and 
regulations, the Purchase Price may be paid by the surrender of 
Shares in good form for transfer, owned by the person exercising 
the Option and having a Fair Market Value on the date of exercise 
equal to the Purchase Price, or in any combination of cash and 
Shares, so long as the total of the cash and the Fair Market 
Value of the Shares surrendered equals the Purchase Price.  No 
Share shall be issued until full payment has been made.
   (d) Term and Exercise of Options; Nontransferability of 
       Options.
   Each Option shall state the time or times when it becomes 
exercisable.  No Option shall be exercisable after the expiration 
of 10 years from the date it is granted.  During the lifetime of 
the Participant, the Option shall be exercisable only by the 
Participant and shall not be assignable or transferable.  In the 
event of the Participant's death, no Option shall be transferable 
by the Participant other than by will or the laws of descent and 
distribution.
   Subject to the foregoing, beginning six months after the 
date of grant the Participant shall have the right to exercise 

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the Option (or to call the related stock appreciation right as 
described in Section 7 (i)) in whole or in part:
      (i) 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;
      (ii)	Within 365 days following the date on which more 
   than one-third (determined by rounding down to the next 
   whole number) of the Directors neither (A) were Directors on 
   a date three years earlier nor (B) are individuals whose 
   election or nomination for election as Directors was 
   affirmatively voted on by at least a majority of those 
   Directors described in (A) above who were still in office as 
   of the date the Board approved such election or nomination;
      (iii) 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 
   "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
      (iv) Within 30 days prior to any dissolution or 
   liquidation of the Corporation or any merger or 

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   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 (i) or (iv) 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 (i) and (iv) above are contiguous or 
overlap, unexercised Options shall terminate at the close of 
business on the last day of the second 30-day period.  In the 
case of a stock appreciation right called during either of the 
30-day periods described in (i) or (iv) above, "Fair Market 
Value" shall be the greater of (A) the value of the 
consideration per share that the Participant would have received 
in connection with such transaction as a stockholder of the 
Corporation if he or she had exercised the Option prior to the 
consummation of the transaction described in (i) or (iv) above, 
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 (i) and (iv) above), taking into 
consideration all relevant facts and circumstances. 
   (e) Termination of Employment Except Death.
   In the event that a Participant who is an Employee ceases to 
be employed by the Corporation or its Subsidiaries for any reason 
other than death, such Participant shall have the right (subject 
to the limitations of Section 7(d) above) to exercise the Option 
either:
      (i) within three months after such termination of 
   employment; or

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      (ii) (in the case of Early, Normal or Late Retirement 
   under the Salaried Employees' Retirement Plan, or 
   Disability), at any time before the end of the option period 
   specified in the Option Agreement,
to the extent that, at the date of termination of employment, the 
Option had vested pursuant to the terms of the Option Agreement 
with respect to which such Option was granted and had not 
previously been exercised.  However, if the employment of a 
Participant is terminated by the Corporation or a Subsidiary by 
reason of Misconduct, such Option shall cease to be exercisable 
at the time of the Participant's termination of employment.  The 
Committee shall determine whether a Participant's employment is 
terminated by reason of Misconduct.  In making such determination 
the Committee shall act fairly and shall give the Participant an 
opportunity to be heard and present evidence on his or her 
behalf.
   For this purpose, the employment relationship will be 
treated as continuing while the Participant is on military leave, 
sick leave or other bona fide leave of absence (to be determined 
in the sole discretion of the Committee, in accordance with rules 
and regulations construing Code section 422(a)(2)).  
Notwithstanding the foregoing, in the case of an Incentive Stock 
Option, employment shall not be deemed to continue beyond the 
90th day after the Participant ceased active employment, unless 
the Participant's reemployment rights are guaranteed by statute 
or by contract.

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   (f) Death of Participant.
   If a Participant who is an Employee dies while in the employ 
of the Corporation or a Subsidiary, the Option may be exercised 
(subject to the limitations of Section 7(d) above) at any time 
before the end of the option period as specified in the Option 
Agreement by the executors or administrators of the Participant's 
estate or by any person or persons who acquired the Option 
directly from the Participant by bequest or inheritance, to the 
extent that, at the date of the Participant's death, the Option 
had vested pursuant to the terms of the Option Agreement and had 
not previously been exercised.
   (g) Rights as a Stockholder.
   A Participant or a transferee of a Participant shall have no 
rights as a stockholder with respect to any Shares covered by his 
or her Option until the date of issuance of a stock certificate 
for such Shares.  No adjustment shall be made for dividends, 
distributions or other rights for which the record date is prior 
to the date such stock certificate is issued, except as provided 
in Section 13.
   (h) Modification, Extension and Renewal of Options.
   Subject to the terms and conditions and within the 
limitations of the Plan, the Committee may modify, extend or 
renew outstanding Options granted to Employees under the Plan, or 
accept the exchange of outstanding Options (to the extent not 
previously exercised) for the granting of new Options (at the 
same or a different price).  Notwithstanding the foregoing, 
however, no modification of an Option shall, without the consent 

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of the Participant, alter or impair any rights or obligations 
under any Option previously granted under the Plan.  
   (i) Stock Appreciation Rights.
   Each Option granted under the Plan shall include a stock 
appreciation right which may be exercised only during the periods 
described in Section 7(d)(i) through (iv) and subject to the 
provisions of Section 7(d).  During any such period, the 
Participant shall have the right to surrender all or part of the 
Option and to exercise the stock appreciation right (the 
"call") to obtain payment of an amount equal to the difference 
obtained by subtracting the aggregate Exercise Price of the 
Shares subject to the Option (or the portion of such Option) 
surrendered from the Fair Market Value of such Shares on the date 
of such surrender.  The call of such stock appreciation right 
shall be subject to such limitations (including, but not limited 
to, limitations as to time and amount) as the Committee shall 
deem appropriate.  The payment may be made in shares of Common 
Stock (determined with reference to its Fair Market Value on the 
date of call), or in cash, or partly in cash and in shares of 
Common Stock, at the discretion of the Committee, provided that 
the Committee determines that such settlement is consistent with 
the purpose set forth in Section 1.  For all purposes under the 
Plan, 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.

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   (j) Limitation of Incentive Stock Option Awards.
   The aggregate Fair Market Value (determined as of the date 
the Option is granted) of the stock with respect to which any 
Incentive Stock Options are exercisable for the first time by a 
Participant during any calendar year under this Plan and all 
other plans maintained by the Corporation, its parent or its 
Subsidiaries shall not exceed $100,000.
   (k) Other Provisions.
   The Option Agreement shall contain such other provisions 
that are consistent with the terms of the Plan, including, 
without limitation, restrictions upon the exercise of the Option, 
as the Committee shall deem advisable.

   8. RESTRICTED STOCK.
   (a) Grants.
   Subject to the provisions of the Plan, the Committee shall 
have sole and complete authority to determine the Employees to 
whom, and the time or times at which, grants of Restricted Stock 
will be made, the number of shares of Restricted Stock to be 
awarded, the price (if any) to be paid by the recipient of 
Restricted Stock, the time or times within which such Awards may 
be subject to forfeiture, and all other terms and conditions of 
the Awards.  The Committee may condition the grant of Restricted 
Stock upon the attainment of specified performance goals or such 
other factors as the Committee may determine, in its sole 
discretion.
   The terms of each Restricted Stock Award shall be set forth 
in a Restricted Stock Agreement between the Corporation and the 

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Employee, which Agreement shall contain such provisions as the 
Committee determines to be necessary or appropriate to carry out 
the intent of the Plan.  Each Participant receiving a Restricted 
Stock Award shall be issued a stock certificate in respect of 
such shares of Restricted Stock.  Such certificate shall be 
registered in the name of such Participant, and shall bear an 
appropriate legend referring to the terms, conditions, and 
restrictions applicable to such Award.  The Committee shall 
require that stock certificates evidencing such shares be held by 
the Corporation until the restrictions lapse and that, as a 
condition of any Restricted Stock Award, the Participant shall 
deliver to the Corporation a stock power relating to the stock 
covered by such Award.
   (b) Restrictions and Conditions.
   The shares of Restricted Stock awarded pursuant to this 
Section 8 shall be subject to the following restrictions and 
conditions:
      (i) During a period set by the Committee commencing 
   with the date of such Award (the "Restriction Period"), 
   the Participant shall not be permitted to sell, transfer, 
   pledge, assign or encumber shares of Restricted Stock 
   awarded under the Plan.  Within these limits, the Committee, 
   in its sole discretion, may provide for the lapse of such 
   restrictions in installments and may accelerate or waive 
   such restrictions in whole or in part, based on service, 
   performance, a change of control of the Corporation or such 
   other factors or criteria as the Committee may determine in 
   its sole discretion.

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<PAGE>
      (ii) Except as provided in this paragraph (ii) and 
   paragraph (i) above, the Participant shall have, with 
   respect to the shares of Restricted Stock, all of the rights 
   of a stockholder of the Corporation, including the right to 
   vote the shares and the right to receive any cash dividends.  
   The Committee, in its sole discretion, as determined at the 
   time of Award, may provide that the payment of cash 
   dividends shall or may be deferred and, if the Committee so 
   determines, reinvested in additional Shares of Restricted 
   Stock to the extent available under Section 6, or otherwise 
   reinvested.  Stock dividends issued with respect to 
   Restricted Stock shall be treated as additional shares of 
   Restricted Stock that are subject to the same restrictions 
   and other terms and conditions that apply to the shares with 
   respect to which such dividends are issued.
      (iii) The Committee shall specify the conditions 
   under which shares of Restricted Stock shall vest or be 
   forfeited and such conditions shall be set forth in the 
   Restricted Stock Agreement.
     (iv) If and when the Restriction Period applicable to 
   shares of Restricted Stock expires without a prior 
   forfeiture of the Restricted Stock, certificates for an 
   appropriate number of unrestricted Shares shall be delivered 
   promptly to the Participant, and the certificates for the 
   shares of Restricted Stock shall be canceled.

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   9. OTHER SHARE-BASED AWARDS.
   (a) Grants.
   Other Awards of Shares and other Awards that are valued in 
whole or in part by reference to, or are otherwise based on, 
Shares ("Other Share-Based Awards"), may be granted either 
alone or in addition to or in conjuction with other Awards under 
this Plan.  Awards under this Section 9 may include (without 
limitation) Stock Rights, the grant of Shares conditioned upon 
some specified event, the payment of cash based upon the 
performance of the Shares or the grant of securities convertible 
into Shares.
   Subject to the provisions of the Plan, the Committee shall 
have sole and complete authority to determine the Employees to 
whom and the time or times at which Other Share-Based Awards 
shall be made, the number of Shares or other securities, if any, 
to be granted pursuant to Other Share-Based Awards, and all other 
conditions of the Other Share-Based Awards.  The Committee may 
condition the grant of an Other Share-Based Award upon the 
attainment of specified performance goals or such other factors 
as the Committee shall determine, in its sole discretion.  In 
making an Other Share-Based Award, the Committee may determine 
that the recipient of an Other Share-Based Award shall be 
entitled to receive, currently or on a deferred basis, interest 
or dividends or dividend equivalents with respect to the Shares 
or other securities covered by the Award, and the Committee may 
provide that such amounts (if any) shall be deemed to have been 
reinvested in additional Shares or otherwise reinvested. The 
terms of any Other Share-Based Award shall be set forth in an 

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Other Share-Based Award Agreement between the Corporation and the 
Employee, which Agreement shall contain such provisions as the 
Committee determines to be necessary or appropriate to carry out 
the intent of the Plan.
   (b) Terms and Conditions.
   In addition to the terms and conditions specified in the 
Other Share-Based Award Agreement, Other Share-Based Awards shall 
be subject to the following:
      (i) Any Other Share-Based Award may not be sold, 
   assigned, transferred, pledged or otherwise encumbered prior 
   to the date on which the Shares are issued or the Award 
   becomes payable, or, if later, the date on which any 
   applicable restriction, performance or deferral period 
   lapses.
      (ii) The Other Share-Based Award Agreement shall 
   contain provisions dealing with the disposition of such 
   Award in the event of termination of the Employee's 
   employment prior to the exercise, realization or payment of 
   such Award, and the Committee in its sole discretion may 
   provide for payment of the Award in the event of the 
   Employee's retirement, Disability or death or the change of 
   control of the Corporation, with such provisions to take 
   account of the specific nature and purpose of the Award.

   10. OPTION AWARDS TO OUTSIDE DIRECTORS.
   (a) Initial Award Conditioned Upon Plan Approval.
   Subject to the approval of the Plan by the stockholders of 
the Corporation, each individual who is an Outside Director on 

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December 7, 1995, shall receive a Nonqualified Stock Option for 
1,000 Shares as of such date.
   (b) Award Upon Election.
   Each Outside Director who is elected by the Board to fill a 
vacancy on the Board after May 21, 1998, shall receive a 
Nonqualified Stock Option for 2,000 Shares on the date of the 
Board's regular meeting in December following his or her 
election.
   (c) Annual Awards.
   Effective May 21, 1998, each Outside Director shall receive 
a Nonqualified Stock Option for 1,000 Shares on the date of the 
Board's regular meeting in December of each year he or she serves 
as Outside Director, other than a year in which the Outside 
Director receives an award under Section 10(b) above.
   (d) Terms and Conditions of Options.
   Each Nonqualified Stock Option granted pursuant to this 
Section 10 shall be subject to the following terms and 
conditions:
      (i) The Exercise Price shall be the Fair Market Value 
   of a Share on the date of grant.
      (ii) The Option shall become exercisable in 50% 
   increments on the first and second anniversaries of the date 
   of grant, provided the Outside Director has continuously 
   been an Outside Director from the date of grant until such 
   time.
      (iii) In the event the Outside Director terminates 
   services as a Director for any reason other than death, the 

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   former Director shall have the right to exercise the Option 
   either:
      (A) within three months after such termination,
      or
      (B) (in the case of retirement after five years of 
   service as an Outside Director) at any time before the 
   end of the option period specified in the Option 
   Agreement,
to the extent that, at the date of termination the Option had 
vested pursuant to (ii) above and had not previously been 
exercised.  However, if the services of the Outside Director are 
terminated by the Board for cause in accordance with the 
Corporation's Restated Certificate of Incorporation, such Option 
shall cease to be exercisable at the time of the Outside 
Director's termination of services.
      (iv) In the event the Outside Director's services 
   terminate by reason of death, the Option may be exercised at 
   any time before the end of the option period specified in 
   the Option Agreement by the executors or administrators of 
   the Director's estate or by any person or persons who shall 
   have acquired the Option directly from the Director by 
   bequest or inheritance, to the extent that, at the date of 
   the Director's death, the Option had vested pursuant to (ii) 
   above and had not previously been exercised.
Except as specifically set forth in (i) through (iv) above, each 
Nonqualified Stock Option granted pursuant to this Section 10 
also shall be subject to all of the terms and conditions set 
forth in Section 7, other than Section 7(h).

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   11. OTHER PAYMENTS IN SHARES.
   Shares may be issued under this Plan to satisfy the payment 
of all or part of an award pursuant to the Potlatch Corporation 
Management Performance Award Plan.  In addition, all or part of 
any Director's fees may be paid in Shares issued under this Plan.  
Any Shares issued pursuant to this Section 11 shall reduce the 
number of Shares authorized for Options, Restricted Stock or 
Other Share-Based Awards under Section 6 but shall not be 
considered an Award for purposes of the maximum grant limitation 
in Section 5(b).

   12.	TERM OF PLAN.
   Awards may be granted and Shares may be issued pursuant to 
the Plan until the termination of the Plan on December 6, 2005.

   13. RECAPITALIZATION.
   Subject to any required action by the stockholders, the 
number of Shares covered by this Plan as provided in Section 6, 
the maximum grant limitation in Section 5(b), the number of 
Shares covered by or referenced in each outstanding Award, the 
number of Options to be granted to Outside Directors under 
Sections 10(a) through 10(c) and the Exercise Price of each 
outstanding Option and any price required to be paid for 
Restricted Stock or Other Share-Based Award shall be 
proportionately adjusted for any increase or decrease in the 
number of issued Shares resulting from a subdivision or 
consolidation of Shares, the payment of a stock dividend (but 
only of Common Stock) or any other increase or decrease in the 

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number of such Shares effected without receipt of consideration 
by the Corporation or the declaration of a dividend payable in 
cash that has a material effect on the price of issued Shares.
   Subject to any required action by the stockholders, if the 
Corporation shall be the surviving corporation in any merger, 
consolidation or other reorganization, each outstanding Award 
shall pertain and apply to the securities to which a holder of 
the number of Shares subject to the Award would have been 
entitled.  Subject to the provisions of Section 7(d), 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 each outstanding Option 
and each nonvested Restricted Stock Award or Other Share-Based 
Award to terminate, unless the agreement of merger, consolidation 
or reorganization shall otherwise provide.  In the event that the 
Corporation undergoes a reverse merger transaction, the 
Participant shall be entitled to receive the same consideration 
in such transaction with respect to his or her Award (including, 
without limitation, cash) as other stockholders are entitled to 
receive.
   In the event of a change in the Common Stock as presently 
constituted, which is limited to a change of all of its 
authorized shares with par value into the same number of shares 
with a different par value or without par value, the shares 
resulting from any such change shall be deemed to be the Common 
Stock within the meaning of the Plan.
   To the extent that the foregoing adjustments relate to stock 
or securities of the Corporation, such adjustments shall be made 

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<PAGE>

by the Committee, whose determination in that respect shall be 
final, binding and conclusive, provided that each Incentive Stock 
Option granted pursuant to this Plan shall not be adjusted in a 
manner that causes the Option to fail to continue to qualify as 
an incentive stock option within the meaning of section 422 of 
the Code.
   Except as expressly provided in this Section 13, a 
Participant shall have no rights by reason of any subdivision or 
consolidation of shares of stock of any class or the payment of 
any stock dividend or any other increase or decrease in the 
number of shares of stock of any class or by reason of any 
dissolution, liquidation, merger or consolidation or spin-off of 
assets or stock of another corporation, and any issue by the 
Corporation of shares of stock of any class or securities 
convertible into shares of stock of any class, shall not affect 
the number or price of Shares subject to the Option.
   The grant of an Option pursuant to the plan shall not affect 
in any way the right or power of the Corporation to make 
adjustments, reclassifications, reorganizations or changes of its 
capital or business structure or to merge or consolidate or to 
dissolve, liquidate, sell or transfer all or any part of its 
business assets.

   14. SECURITIES LAW REQUIREMENTS AND LIMITATION OF RIGHTS.
   (a) Securities Law.
   No Shares shall be issued pursuant to the Plan unless and 
until the Corporation has determined that:  (i) it and the 
Participant have taken all actions required to register the 

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<PAGE>

Shares under the Securities Act of 1933 or perfect an exemption 
from registration; (ii) any applicable listing requirement of any 
stock exchange on which the Common Stock is listed has been 
satisfied; and (iii) any other applicable provision of state or 
federal law has been satisfied.
   (b) Employment Rights.
   Neither the Plan nor any Award granted under the Plan shall 
be deemed to give any individual a right to remain employed by 
the Corporation or a Subsidiary or to remain a Director.  The 
Corporation and its Subsidiaries reserve the right to terminate 
the employment of any employee at any time, with or without 
cause, subject only to a written employment contract (if any), 
and the Board reserves the right to terminate a Director's 
membership on the Board for cause in accordance with the 
Corporation's Restated Certificate of Incorporation.
   (c) Stockholders' Rights.
   A Participant shall have no dividend rights, voting rights 
or other rights as a stockholder with respect to any Shares 
covered by his or her Award prior to the issuance of a stock 
certificate for such Shares.  No adjustment shall be made for 
cash dividends or other rights for which the record date is prior 
to the date when such certificate is issued.
   (d) Creditors' Rights.
   A holder of an Other Share-Based Award shall have no rights 
other than those of a general creditor of the Corporation.  An 
Other Share-Based Award shall represent an unfunded and unsecured 
obligation of the Corporation, subject to the terms and 
conditions of the applicable Other Share-Based Award Agreement.

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<PAGE>

   15. AMENDMENT OF THE PLAN.
   The Board may suspend or discontinue the Plan or revise or 
amend it with respect to any Shares at the time not subject to 
Awards except that, without approval of the stockholders of the 
Corporation, no such revision or amendment shall:
   (a) Increase the number of Shares subject to the Plan;
   (b) Change the designation in Section 5 of the class 
of Employees eligible to receive Awards;
   (c) Decrease the price at which Incentive Stock 
Options may be granted;
   (d) Remove the administration of the Plan from the 
Committee;
   (e) Render any disinterested member of the Committee 
eligible to receive a discretionary Award under Sections 7, 
8 and 9 while serving on the Committee;
   (f) Change the provisions of Section 10 more than once 
in any six-month period, other than to comply with changes 
in the Code or the rules thereunder; or
   (g) Amend this Section 15 to defeat its purpose.

   16. APPLICATION OF FUNDS.
   The proceeds received by the Corporation from the sale of 
the Common Stock pursuant to the exercise of an Option or the 
grant of Restricted Stock will be used for general corporate 
purposes.

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<PAGE>

   17. NO OBLIGATION TO EXERCISE OPTION.
   The granting of an Option shall impose no obligation upon 
the Participant to exercise such Option.

   18. APPROVAL OF STOCKHOLDERS.
   This Plan and any amendments requiring stockholder approval 
pursuant to Section 15 shall be subject to approval by 
affirmative vote of the stockholders in accordance with 
applicable law.  Such vote shall be taken at the first annual 
meeting of stockholders of the Corporation following the adoption 
of the Plan or of any such amendments, or any adjournment of such 
meeting.

   19. LIMITATION ON PLAN PAYMENTS.
   Any provision of the Plan to the contrary notwithstanding, 
payments or transfers to a Participant under the Plan shall be 
limited to the amount (the "Capped Amount") necessary to avoid 
characterization of any amount payable to the Participant 
(including, but not limited to, amounts payable under the Plan) 
as an "excess parachute payment" as defined in Code section 
280G, except in the event that the total amount that the 
Participant would receive from all "parachute payments" as 
defined in Code section 280G, net of all applicable taxes, 
including the excise tax that would be imposed pursuant to Code 
section 4999, would exceed the Capped Amount, net of all 
applicable taxes.
   The determination of whether any amount would constitute an 
"excess parachute payment" shall be made by the firm of 
independent certified public accountants serving as the outside 

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<PAGE>

auditor of the Corporation as of the date of the event specified 
in Section 7(d)(i) through (iv).  In making such determination, 
such firm may disregard any payments or benefits available to the 
Participant under any contract, plan or program if the 
Participant irrevocably elects to relinquish or not exercise such 
payments or benefits before receipt of such payments or benefits.  
It is intended that payments shall be made under the Plan whether 
or not the status of a particular payment as an "excess 
parachute payment" has been finally determined by the Internal 
Revenue Service or a court of competent jurisdiction.

   20. WITHHOLDING TAXES.
   (a) General.
   To the extent required by applicable law, the recipient of 
any payment or distribution under the Plan shall make 
arrangements satisfactory to the Corporation for the satisfaction 
of any withholding tax obligations that arise by reason of such 
payment or distribution.  The Corporation shall not be required 
to make such payment or distribution until such obligations are 
satisfied.
   (b) Nonqualified Options.
   The Committee may permit a Participant who exercises 
Nonqualified Stock Options to satisfy all or part of his or her 
withholding tax obligations by having the Corporation withhold a 
portion of the Shares that otherwise would be issued to him or 
her under such Nonqualified Stock Options.  Such Shares shall be 
valued at their Fair Market Value on the date when taxes 
otherwise would be withheld in cash.  The payment of withholding 

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<PAGE>

taxes by surrendering Shares to the Corporation, if permitted by 
the Committee, shall be subject to such restrictions as the 
Committee may impose, including any restrictions required by 
rules of the Securities and Exchange Commission.

   21. EXECUTION.
   To record the amendment and restatement of the Plan 
effective December 3, 1998, the Corporation has caused its 
authorized officer to execute the same.

                                           POTLATCH CORPORATION

                                           By/s/Betty R. Fleshman					

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