STOCK OPTION AGREEMENT POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN

Exhibit (10)(n)(v)

 

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.

 

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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).

 

(l) “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:

 

 

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

 

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

 

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“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