Document:

Form of Stock Option Agreement

 Exhibit 10.4 
 CLEARWATER PAPER CORPORATION 
 STOCK OPTION AGREEMENT 
 2008 STOCK INCENTIVE PLAN 
 THIS STOCK OPTION AGREEMENT is
made and entered into the day specified in the attached Addendum by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

 W I T N E S S E T H: 
 That to
encourage stock ownership by employees of the Corporation and for other valuable consideration, the parties agree as follows: 
 1.
Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the
same definitions as in the Plan. 
 (a) “Addendum” means the attached Addendum. 
 (b) “Date of Grant” means the date on which the Committee determined to grant this Option, as specified in the Addendum. 
 (c) “Disability” means the Employee is unable to engage in any substantial gainful activity by reason 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. 
 (d) “Exercise Price” means the price per Share designated in the Addendum at which this Option may be exercised. 
 (e) “Misconduct” means that the Committee (or its delegate) has determined in its sole discretion that the Employee has: 
 (i) engaged in competition with the Corporation or a Subsidiary or an Affiliate, including, but not limited to, the rendering of services for any organization or engaging directly or indirectly in any business that is
or may be (in the reasonable discretion of the Committee) directly or indirectly competitive with the Corporation or a Subsidiary or an Affiliate; 
 (ii) induced any customer of the Corporation or a Subsidiary or an Affiliate to breach any contract with the Corporation or a Subsidiary or an Affiliate, or induced any employee of the Corporation or a Subsidiary or an Affiliate to be
employed or perform services elsewhere; 
 (iii) made any unauthorized disclosure of any of the secrets or confidential information of the
Corporation or a Subsidiary or an Affiliate; 

 (iv) committed an act of embezzlement, fraud or theft with respect to the property of the Corporation or
a Subsidiary or an Affiliate; 
 (v) engaged in conduct which is not in good faith and which directly results in material loss, damage or
injury to the business, reputation or employees of the Corporation or a Subsidiary or an Affiliate; 
 (vi) committed an act that could
(either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or 
 (vii) committed an alcohol or drug offense in violation of the Corporation’s or a Subsidiary’s or an Affiliate’s Substance Abuse Policy
for salaried employees. 
 (f) “Option Period” means the term of this Option as provided in Section 4 of this
Agreement. 
 (g) “Purchase Price” means the Exercise Price times the number of whole shares with respect to which this
Option is exercised. 
 (h) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan. 
 2. Grant of Option. The Corporation grants to Employee the option to purchase that number of shares of Stock specified in the Addendum for the
Exercise Price specified in the Addendum, on the terms and conditions stated in this Agreement. This Option has been granted pursuant to the Plan, a copy of the text of which Employee may obtain upon request to the Corporation. 
 3. Vesting. Subject to the conditions stated in this Agreement, unless a different period is specified in the Addendum, 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 specified in the Addendum	  	From one year from the Date of Grant to end of term for Option
		
	50% of the number of shares specified in the Addendum	  	From two years from the Date of Grant to end of term for Option

 Notwithstanding the foregoing, Employee shall have the right to exercise the Option for 100% of the Shares covered
by the Option, or any portion thereof, upon a Change of Control that occurs after the date that is six months after the Date of Grant. 
 4.
Option Term; Exercise After Termination of Service. The term of this Option shall end and this Option shall not be exercisable after seven years from the Date of Grant if this 
  

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

  

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Option is designated as an Incentive Stock Option in the Addendum or 10 years from the Date of Grant if this Option is designated as a Nonstatutory Stock
Option in the Addendum or, if earlier, upon the termination of Employee’s Service, subject to the following provisions: 
 (a) If the
termination of employment is caused by the Employee’s death, this Option, to the extent that it was exercisable under Section 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 Employee’s executors or administrators or by any person or persons who shall have acquired this Option directly from Employee by bequest or inheritance. 
 (b) If the termination of employment is caused by Disability or retirement under the Retirement Plan, this Option, to the extent it was exercisable under
Section 3 of this Agreement at the end 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 Service is for any reason other than death, Disability or retirement under the Retirement Plan, this Option, to the extent that
it was exercisable under Section 3 of this Agreement at the date of such termination and had not previously been exercised, may be exercised within 90 days after the date of such termination. Notwithstanding the foregoing, if the termination of
employment is by reason of Employee’s Misconduct, this Option shall cease to be exercisable at the time of such termination. 
 5.
Share Reserve. 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. 
 6. Manner of Exercise. Employee, or Employee’s representative, may exercise 20% or more of the portion of this Option that has become vested
under Section 3 of this Agreement by giving written notice to the Corporation at Spokane, Washington, attention of the Human Resources Department, or by giving electronic notice in a manner approved by the Committee, 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 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; 
 (c) In any combination of subsections (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; or 
 (d) If the Committee has established a broker-assisted cashless exercise program, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities
broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the Purchase Price. 
  

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 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 Employee, 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. 
 7. Withholding Taxes. 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, Employee will make arrangements satisfactory to the Corporation to enable it to satisfy such withholding requirements. 
 8.
Stockholder Rights. Neither Employee nor Employee’s representative shall have any rights as a stockholder with respect to any Share subject to this Option until such Shares shall have been issued to Employee or Employee’s
representative. 
 9. Legal Restrictions. Unless at the time Employee 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 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, transaction advices to be provided upon the exercise of this Option shall contain the
following legend on the face thereof: 
 “The Shares represented by this transaction advice 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.” 
 10. No Employment Rights. Nothing in this Agreement shall be construed as giving Employee the right to be retained as an employee or as impairing the rights of the Corporation to terminate his or her employment
at any time, with or without cause. 
 11. Interpretation; Applicable Law. This Agreement shall be interpreted and construed in a
manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and
conditions of the Plan, the terms and conditions of the Plan shall control. 
  

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 IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the
respective date set forth below. 
  

			
	CORPORATION:
	
	 Clearwater Paper Corporation,
 a Delaware
corporation

		
	By:	 	  

	Name:	 	  

	Title:	 	  

	Date:	 	  

	
	EMPLOYEE:
	
	  

	[Name of Employee]
		
	Date:	 	  

  

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 ADDENDUM TO STOCK OPTION AGREEMENT 
 CLEARWATER PAPER CORPORATION 2008 STOCK INCENTIVE PLAN 
 Name of Employee: [—] 
 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 Stock Option Agreement is [—], subject to adjustment as provided in Section 11 of the Plan and Section 6 of this Stock Option Agreement. 
 4.
This Option is: [ISO] [NSO]. 
 5. The Vesting Schedule for this Option is: The schedule specified in Paragraph 3 of the Stock Option Agreement, except that
no exercise will be permitted for a fractional Share. 
 The document entitled Stock Option Agreement – Clearwater Paper Corporation 2008 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 Employee has executed the same on the date indicated below. 
 IN
WITNESS WHEREOF, each party has or has caused this Addendum to be executed as of the respective date set forth below. 
  

			
	CORPORATION:
	
	 Clearwater Paper Corporation,
 a Delaware
corporation

		
	By:	 	  

	Name:	 	  

	Title:	 	  

	Date:	 	  

	
	EMPLOYEE:
	
	  

	[Name of Employee]
		
	Date:	 	  

  

 7Annual Incentive Plan

 Exhibit 10.5 
 CLEARWATER PAPER CORPORATION 
 ANNUAL INCENTIVE PLAN 
 Effective January 1, 2009 

 CLEARWATER PAPER CORPORATION 
 ANNUAL INCENTIVE PLAN 
 Effective January 1, 2009 
  

	1.	ESTABLISHMENT AND PURPOSE 

 (a) The Clearwater Paper
Corporation Annual Incentive Plan (the “Plan”) was adopted by the Board of Directors of Clearwater Paper Corporation and approved by its sole stockholder on December 1, 2008, to become effective January 1, 2009, to provide
rewards to those employees of Clearwater Paper Corporation and its subsidiaries who are in a position to contribute to the achievement by Clearwater Paper Corporation and its subsidiaries of certain business performance objectives. 
 (b) Pursuant to the Employee Matters Agreement by and between Potlatch Corporation and Clearwater Paper Corporation (the “EMA”), the liability
for paying 2008 annual bonuses to “Clearwater Employees” (as defined in the EMA) under the Potlatch Corporation Management Performance Award Plan II (the “MPAP II”) shall be transferred to this Plan if the
“Distribution” (as defined in the EMA) occurs prior to the date for payment of such bonuses under the MPAP II. If such transfer occurs, the amounts and recipients of such bonuses shall be determined in accordance with the terms of the MPAP
II, but the payment of such bonuses shall be made in accordance with the terms and conditions of this Plan. 
 (c) The Plan is intended to
comply with the requirements of Section 409A of the Code, to the extent applicable, and, in the case of covered employees, the exception for “qualified performance-based compensation” under Section 162(m) of the Code. 

 

	2.	DEFINITIONS 

 (a) “Award” means an award
under the Plan. 
 (b) “Award Year” means a Year with respect to which Awards are made. 
 (c) “Board of Directors” means the Board of Directors of Clearwater Paper Corporation. 
 (d) “CEO” means the Chief Executive Officer of Clearwater Paper Corporation. 
 (e) “Change of Control” means the effective date of any one of the following events: 
 (i) Upon consummation of a merger or consolidation involving Clearwater Paper (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 Clearwater 

  

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Paper (the “Outstanding Common Stock”) and the then outstanding voting securities of Clearwater Paper 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 Clearwater Paper either directly or through one 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 Clearwater Paper 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 of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination;
or 
 (ii) On the date that individuals who, as of 11:59 p.m. (Pacific) on the date of the Distribution, constitute the Board of Directors
(the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board of Directors on or subsequent to the day immediately
following the date of the Distribution whose election, or nomination for election by Clearwater Paper’s stockholders, was approved by a vote of at least a majority of the members of the Board of Directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board of Directors occurs as a result of an actual or threatened election
contest with respect to the election or removal of a member or members of the Board of Directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of, any Person other than the
Incumbent Board; or 
 (iii) Upon the acquisition on or after the date of the Distribution 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 
  

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 (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 paragraph (iii): 
  

	 	(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

  

	 	(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); or 

 (iv) Upon the consummation of the sale, lease or exchange of all or substantially all of the assets
of Clearwater Paper; or 
 (v) Upon the approval by the stockholders of Clearwater Paper of a complete liquidation or dissolution of
Clearwater Paper. 
 (f) “Clearwater Paper” means Clearwater Paper Corporation, a Delaware corporation. 
 (g) “Code” means the Internal Revenue Code of 1986, as amended. 
 (h) “Committee” means the committee which shall administer the Plan in accordance with Section 3. 
 (i) “Corporation” means Clearwater Paper Corporation and its Subsidiaries. 
 (j) “Covered Employee” means a
“covered employee” within the meaning of Section 162(m) of the Code and the regulations thereunder. 
 (k)
“Distribution” means the distribution by Potlatch Corporation to its stockholders of all of the outstanding shares of the common stock of Clearwater Paper then owned by Potlatch Corporation, pursuant to the Separation and Distribution
Agreement between Potlatch Corporation and Clearwater Paper. 
 (l) “Employee” means a full-time salaried employee (including any
Officer) of the Corporation. 
 (m) “Guidelines” means the Clearwater Paper Corporation Stock Ownership Guidelines. 
 (n) “Management Deferred Compensation Plan” means the Clearwater Paper Corporation Management Deferred Compensation Plan, and any successor
plan. 
  

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 (o) “Officer” means any Employee who is a Board of Directors elected officer of the Corporation
and who is the chief manager of an Organization Unit. 
 (p) “Organization Unit” means a major organizational component or profit
center of the Corporation as determined in accordance with rules and regulations adopted by the Committee, the Employees of which are eligible to participate in the Plan. 
 (q) “Participant” means any Officer and any Employee actively employed by the Corporation during an Award Year in an Organization Unit in a position designated as a participating position in accordance with
rules and regulations adopted by the Committee. 
 (r) “Plan” means the Clearwater Paper Corporation Annual Incentive Plan, adopted
effective January 1, 2009. 
 (s) “Separation from Service” means termination of a Participant’s service as an employee
consistent with Section 409A of the Code and the regulations promulgated thereunder. For purposes of the Plan, “Separation from Service” generally means termination of a Participant’s employment as a common-law employee of
Clearwater Paper and each Affiliate (as defined herein) of Clearwater Paper. A Separation from Service will not be deemed to have occurred if a Participant continues to provide services to Clearwater Paper 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
Clearwater Paper or an Affiliate; provided, however, that a Separation from Service will be deemed to have occurred if it is reasonably anticipated that a Participant’s service with Clearwater Paper and its Affiliates will terminate after a
certain date or the level of bona fide services that the Participant will perform after such date (whether as an employee or 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 Clearwater Paper 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 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 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-month period. For purposes of determining when a Separation from Service occurs “Affiliate” means any other entity which would be treated as a single employer with Clearwater Paper
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.” 
 (t) “Subsidiary” means any corporation fifty percent (50%) or more of the voting stock of
which is owned by Clearwater Paper or by one or more of such corporations. 
 (u) “Year” means the calendar year. 
  

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	3.	ADMINISTRATION OF THE PLAN 

 The Plan shall be administered by the
Compensation Committee of the Board of Directors, or such other committee as may be designated and appointed by the Board of Directors, which shall consist of at least three (3) members of the Board of Directors. Notwithstanding the foregoing,
with respect to Participants who are Covered Employees, except in the case of a Change of Control as explained below, the Committee shall consist solely of “outside directors” within the meaning of Section 162(m). No member of the
Committee shall be eligible to participate and receive Awards under the Plan while serving as a member of the Committee. 
 In addition to the powers and
duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan, to adopt and periodically review such rules and regulations
consistent with the terms of the Plan as the Committee deems necessary or advisable in order to properly carry out the provisions of the Plan, to receive and review an annual report to be submitted by the CEO which shall describe and evaluate the
operation of the Plan, and to take any and all necessary action in connection therewith. The Committee’s interpretation and construction of the Plan and its determination of the amount of any Award thereunder shall be conclusive and binding on
all persons. In making such determinations, the Committee shall be entitled to rely on information and reports provided by the CEO. 
 Within thirty
(30) days after a Change of Control, the Committee shall appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which
shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan. 
  

	4.	ELIGIBILITY AND PARTICIPATION 

 In accordance with rules and
regulations adopted by the Committee, the CEO (the Committee in the case of Covered Employees) shall designate the Organization Units and the individuals who will participate in the Plan for an Award Year. 
  

	5.	AWARDS 

 Awards shall be determined in accordance with Sections 6, 7
and 8 following the close of the Award Year and, unless deferred in accordance with the Management Deferred Compensation Plan, shall be paid no later than March 15 following the close of the Award Year. 
  

	6.	DETERMINING THE ACTUAL FUNDED BONUS POOL 

 The total amount of
Awards made to all Participants with respect to any Award Year shall be determined pursuant to this Section 6. For each Award Year, the Committee shall determine the Target Bonuses, Target Bonus Pool and the available range of Corporate
Performance Modifiers in accordance with this Section 6 prior to or during the first 90 days of such Award Year. 
 (a) Target Bonus
Pool. The Target Bonus Pool for an Award Year shall be determined first. The Target Bonus Pool for an Award Year shall be the sum of the Target 

  

 5 

 
Bonuses for all Participants for the Award Year. A Participant’s Target Bonus shall be an amount equal to a percentage of the Participant’s base
salary, based on the position to which the Participant is assigned, as determined in accordance with rules and regulations adopted by the Committee. If a Participant does not qualify as a Participant for the entire period of the applicable Award
Year, the Target Bonus will be prorated to reflect the number of half calendar months that the Employee was a Participant. 
 (b) Actual
Funded Bonus Pool. The Actual Funded Bonus Pool for an Award Year shall be determined next. The Actual Funded Bonus Pool for each Award Year shall be determined in accordance with rules and regulations adopted by the Committee. The Actual Funded
Bonus Pool shall be represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Actual Funded Bonus Pool for an Award Year shall be equal to the Target Bonus Pool for the Award Year adjusted by
one or more “Corporate Performance Modifiers”. A Corporate Performance Modifier shall be a percentage determined in accordance with rules and regulations adopted by the Committee. A Corporate Performance Modifier may range from a minimum
of zero to a maximum of two hundred percent (200%). 
 (c) Qualifying Performance Criteria. In its rules and regulations concerning
the determination of the Corporate Performance Modifiers, the Committee may take into consideration one or more of the following performance criteria, either individually, alternatively or in any combination, applied either to the Corporation as a
whole or to Clearwater Paper, an Organization Unit or Subsidiary, either individually, alternatively or in any combination, and measured on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated
comparison group or index, in each case as specified by the Committee: (i) cash flow (including operating cash flow), (ii) earnings per share, (iii) (A) earnings before interest, (B) earnings before interest and taxes,
(C) earnings before interest, taxes and depreciation, (D) earnings before interest, taxes, depreciation and amortization, or (E) earnings before any combination of such expenses or deductions, (iv) return on equity,
(v) total stockholder return, (vi) share price performance, (vii) return on capital, (viii) return on assets or net assets, (ix) revenue, (x) income or net income, (xi) operating income or net operating income,
(xii) operating profit or net operating profit, (xiii) operating margin or profit margin (including as a percentage of revenue), (xiv) return on operating revenue, (xv) return on invested capital, (xvi) market segment shares
or (xvii) economic profit (“Qualifying Performance Criteria”). After the end of the Award Year the Committee shall determine and certify the extent to which the Qualifying Performance Criteria have been met. The Committee may
appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occur during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or
settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary,
nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in managements’ discussion and analysis of financial condition and results of operations appearing in the Corporation’s annual report to stockholders
for the applicable year. 
  

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	7.	ALLOCATING THE ACTUAL FUNDED BONUS POOL AMONG ORGANIZATION UNITS 

 The Actual Funded Bonus Pool for each Award Year shall be allocated among the Organization Units in accordance with rules and regulations adopted by the Committee. The allocation methodology to be used for a particular Award Year shall be
determined by the Committee prior to or during the first 90 days of the Award Year. The resulting allocations of the Actual Funded Bonus Pool for the Award Year may be adjusted up or down at the discretion of the CEO, except that they may not be
adjusted up in the case of a Covered Employee. 
  

	8.	DETERMINING INDIVIDUAL AWARDS 

 Each Officer shall determine the
amount of the Award to each Participant who is assigned to such Officer’s Organization Unit in accordance with rules and regulations adopted by the Committee, by allocating such Organization Unit’s portion of the Actual Funded Bonus Pool
among the Participants employed in such Organization Unit in proportion to the product of the Participant’s Target Bonus and the Participant’s individual performance modifier. Each Participant’s Award shall be subject to review by and
approval of the CEO. Notwithstanding the foregoing, in the case of an Award to an Officer, the CEO, any Covered Employee, or any individual who is subject to Section 16 of the Exchange Act, this determination shall be made solely by the
Committee. 
 The Committee shall determine the Covered Employee’s, Officer’s or other Section 16 individual’s available range of
individual performance modifiers at the same time as it determines his or her Target Bonus at the beginning of the Award Year. The Committee may decrease, but not increase, the individual performance modifier when it determines the Covered
Employee’s actual Award after the end of the Award Year. Such Covered Employee’s Award also may not be increased based on his or her individual performance (other than increases resulting from application of the pre-determined individual
performance modifiers) or based on the Committee’s (or the CEO’s or another Officer’s) exercise of discretion to reduce the bonuses payable to other Participants. 
 In no event may the Award granted to the CEO exceed $2.5 million, or the Award granted to any other individual Covered Employee exceed $1.5 million. 
  

	9.	FORM AND TIME OF PAYMENT OF AWARDS 

 (a) All
non-deferred Awards under the Plan shall be paid in cash to all Participants other than those subject to the Guidelines. For a Participant subject to the Guidelines, the Award shall be paid in a combination of fifty percent (50%) cash and fifty
percent (50%) common stock of Clearwater Paper if the Participant has not incrementally reached the required ownership level at the end of each of his or her first five (5) years under the Guidelines or has not maintained one hundred
percent (100%) of the applicable guideline amount in subsequent years. The number of shares of common stock shall be determined by dividing the dollar value of the portion of the Award allocated as stock by the closing price of Clearwater
Paper’s common stock on the date of the Committee meeting at which the Award payments are approved. Award amounts shall be prorated for the portion of the Award Year the Employee was an eligible Participant in accordance with rules and
regulations adopted by the Committee. A Participant whose employment is terminated before the payment of an Award for any reason other than death, disability (within the meaning of Section 409A(a)(2)(C) of the Code) or early, normal or 

  

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deferred retirement under the Clearwater Paper Salaried Retirement Plan shall not be entitled to receive an Award. Notwithstanding any other provision of
this Plan, in no event may the achievement of performance goals for any Participant who is a Covered Employee be waived except in the event of such Participant’s death or disability (within the meaning of Section 409A(a)(2)(C) of the Code)
or pursuant to Section 15 below. 
 (b) Notwithstanding the foregoing, a Participant may be permitted to elect to defer receipt of
payment of all or a portion of an Award (other than an Award from the Special Awards Fund described in Section 10) subject to, and in accordance with, the terms of the Management Deferred Compensation Plan. 
 (c) Notwithstanding any other provision of the Plan, the Board of Directors or the Committee may, in its sole discretion, determine limits on the amount
and alter the time and form of payment of Awards with respect to an Award Year if any of the following conditions occurs: (i) Clearwater Paper does not declare cash dividend with respect to its common stock during such Award Year, or
(ii) the Actual Funded Bonus Pool determined pursuant to Section 6(b) for such Award Year exceeds six percent (6%) of Clearwater Paper’s consolidated net earnings, before taxes, for such Award Year. 
  

	10.	SPECIAL AWARDS FUND 

 (a) Creation of the
Fund. A Special Awards Fund shall be established with respect to each Award Year in an amount determined by the Committee but not to exceed ten percent (10%) of the Target Bonus Pool for such Award Year. The Special Awards Fund shall be
represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Special Awards Fund shall be in addition to the Bonus Pool created under Sections 5-9 above. 
 (b) Eligibility. Awards may be made in a total amount equal to the Special Awards Fund to those Employees of the Corporation who are not
Participants with respect to such Award Year, but who in the judgment of an Officer have made outstanding contributions to the success of the Corporation. 
 (c) Selection. After the close of the Award Year, recipients of Awards under the Special Awards Fund shall be selected by the CEO upon the recommendation of an Officer. The amount of each individual’s
Award under the Special Awards Fund shall be determined by the CEO upon the recommendation of an Officer and shall fall within a range set forth in rules and regulations adopted by the Committee, expressed as minimum and maximum percentages of
annualized salary at the end of the year. Awards under the Special Awards Fund shall be announced by March 1 following the close of the Award Year. 
 (d) Payment. Awards under the Special Awards Fund shall be paid in full in cash no later than March 15 following the close of the Award Year. 
  

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	11.	NO ASSIGNMENT OF INTEREST 

 The interest of any person in the Plan
or in payments to be received pursuant to it shall not be subject to option or assignable either by voluntary or involuntary assignment or by operation of law, and any act in violation of this section shall be void. 
  

	12.	EMPLOYMENT RIGHTS 

 The selection of an Employee as a Participant
shall not confer any right on such Employee to receive an Award under the Plan or to continue in the employ of the Corporation or limit in any way the right of the Corporation to terminate such Participant’s employment at any time. 

 

	13.	AMENDMENT OR TERMINATION OF THE PLAN 

 The Board of Directors or the
Committee may amend, suspend or terminate the Plan at any time; provided, however, that any amendment adopted or effective on or after July 1 in any Award Year which would adversely affect the calculation of a Participant’s Award or the
Participant’s eligibility for an Award for such Award Year shall be applied prospectively from the date the amendment was adopted or effective, whichever is later; provided, further that if the Plan is terminated effective on or after
July 1 in any Award Year such termination shall not adversely affect any Participant’s eligibility for a pro rata share of an Award for the period of such Award Year before the date the termination was adopted or effective, whichever is
later, subject to all other applicable terms and conditions of the Plan. The foregoing notwithstanding, no amendment adopted nor termination of the Plan following the occurrence of a Change of Control shall be effective if it (a) would reduce a
Participant’s Target Bonus for the Award Year in which the Change of Control occurs, (b) would reduce an Award earned and payable to a Participant in respect of the Award Year that ended immediately before the Award Year in which the
Change of Control occurs, or (c) modify the provisions of this sentence. 
 Notwithstanding the foregoing, the Vice President, Human Resources of
Clearwater Paper shall have the power and authority to amend the Plan with respect to any amendment that (i) does not materially increase the cost of the Plan to the Corporation or (ii) is required to comply with new or changed legal
requirements applicable to the Plan, including, but not limited to, Section 409A of the Code. 
 Without approval by vote of the shareholders, neither
the Board of Directors, the Committee nor the Vice President, Human Resources of Clearwater Paper shall adopt any amendment that would modify the material terms of the Plan (within the meaning of Section 162(m) of the Code) as to Covered
Employees. 
  

	14.	SUCCESSORS AND ASSIGNS 

 The Plan shall be binding upon the
Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan 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 Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place. 
  

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	15.	CHANGE OF CONTROL 

 Notwithstanding any other provision of the Plan
to the contrary, this Section 15 shall apply with respect to the determination of Awards and the payment of Awards following a Change of Control. In the event that the employment of a Participant terminates following a Change of Control, such
Participant shall be guaranteed payment of a prorated Award for the Award Year in which the Change of Control occurs determined in accordance with Section 8 based on the Participant’s Target Bonus. A prorated Target Bonus shall be
calculated by multiplying the Participant’s Target Bonus for the applicable Award Year by a fraction, the numerator of which is the number of full months in the Award Year completed at the effective time of the Change of Control, and the
denominator of which is twelve (12). With respect to any Award earned but not yet paid in respect of the Award Year that ended immediately before the Award Year in which a Change of Control that also is a change in the ownership or effective control
of Clearwater Paper or a change in the ownership of a substantial portion of the assets of Clearwater Paper as defined in the regulations promulgated under Section 409A of the Code (a “Code Section 409A Change of Control”)
occurs, each Participant shall be guaranteed payment of his or her Award determined in accordance with Section 8 based on the performance results for the applicable Award Year. Awards paid pursuant to this Section 15 shall be paid in a
lump sum in cash upon the earliest of (i) the time prescribed in Sections 5 and 9(a), or (ii) the date the Participant Separates from Service for any reason other than “misconduct,” as defined in Clearwater Paper’s Severance
Program for Executive Employees or Salaried Severance Plan, whichever applies to the Participant, or any successor severance plan that applies to the Participant, following the Code Section 409A Change of Control. 
  

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