POTLATCH CORPORATION
SEVERANCE PROGRAM FOR
EXECUTIVE EMPLOYEES
(As Amended and Restated Effective as of December 1, 1999)
SECTION 1. ADOPTION AND PURPOSE OF PROGRAM.
The Potlatch Corporation Severance Program for
Executive Employees (the "Program") was adopted effective
September 30, 1978, by Potlatch Corporation, a Delaware
corporation (the "Company"), to provide a program of
severance payments to certain employees of the Company and
its designated subsidiaries. The Program was last amended
and restated effective as of December 1, 1999, to read as
set forth herein. The Program is an employee welfare
benefit plan within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974 ("ERISA")
and section 2510.3-1 of the regulations issued thereunder.
The plan administrator of the Program for purposes of ERISA
is the Company.
SECTION 2. ELIGIBILITY AND DETERMINATION OF VESTING
SERVICE.
Exhibit (10)(b)
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All Principal Officers and appointed vice
presidents of the Company and of any subsidiary of the
Company that is designated to participate in the Program by
the Executive Compensation and Personnel Policies Committee
of the Board of Directors of the Company and such other
employees of the Company or any such subsidiary who are
designated by such Committee to participate in the Program
shall be eligible to participate in the Program. The
Company and such designated subsidiaries are referred to
collectively in the Program as the "Participating
Companies." For purposes of the Program, "Principal
Officers" shall include the chief executive officer,
president, secretary, treasurer and controller and any
elected vice-president of a Participating Company. Those
Principal Officers and other employees who participate in
the program are referred to herein as "Eligible Employees."
As a condition to participation in the Program, each
Eligible Employee shall agree in writing to become bound by
its terms, including, without limitation, the provisions of
Section 10.
For purposes of the Program, an Eligible
Employee's Years of Vesting Service shall be determined
under the provisions of the Potlatch Corporation Salaried
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Employees' Retirement Plan as in effect from time to time
(the "Retirement Plan").
SECTION 3. SEVERANCE BENEFITS.
(a) Basic Severance Benefits. Upon the occurrence
of any of the events specified in Section 4(a), an Eligible
Employee shall receive (in lieu of any other severance
benefit payable under any other plan or program now or
hereafter maintained by a Participating Company) Basic
Severance Benefits under the Program as follows:
(i) A cash benefit equal to three (3) weeks of the
Eligible Employee's Base Compensation for each full
Year of Vesting Service completed by such Eligible
Employee;
(ii) If at the end of the number of weeks
following termination of the Eligible Employee's
employment equal to three (3) times the number of full
Years of Vesting Service completed by the Eligible
Employee he or she has not obtained a position with
another employer (despite reasonable, diligent and good
faith efforts to do so) at a salary comparable to the
Eligible Employee's Base Compensation, a cash benefit
equal to an additional week of Base Compensation for
each full Year of Vesting Service completed by the
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Eligible Employee; provided, however, that such benefit
shall not be payable if the Eligible Employee is not
living on the last day of the period described herein;
(iii) In the event that a Participating Company
terminates the employment of an Eligible Employee and
does not give him or her one month's advance notice,
one month of the Eligible Employee's Base Compensation
in lieu of notice;
(iv) The Eligible Employee's unused and accrued
vacation pay, if any, determined as of the date when
the Eligible Employee's employment is terminated under
the terms of the Participating Company's basic vacation
policy as in effect when the applicable event specified
in Section 4(a) occurs (which, in the case of
termination of employment pursuant to Section 4(a)(iv),
shall be the date of the material change rather than
the date the Eligible Employee resigns);
(v) Eligibility for an Award under the Company's
Management Performance Award Plan for the Award Year in
which his or her employment terminates, determined
under all the terms and conditions of such plan;
provided, however, that if an Eligible Employee's
employment is terminated under the conditions described
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in Section 4(a)(iii) or (iv) or if his or her
employment is terminated by the Company during any
twenty-four (24) month period described in Section 4(a)
(iv), the Eligible Employee's eligibility for an Award
for such Award Year shall be determined under Section
9(a)(i) of such Plan as if the Eligible Employee had
retired during the Award Year, subject to all other
applicable terms and conditions of the Management
Performance Award Plan; and
(vi) Continued coverage as an employee during a
period of weeks equal to three (3) (four (4), in the
case of an Eligible Employee eligible for the benefit
described in (ii) above) times the number of full Years
of Vesting Service completed by the Eligible Employee,
under the following employee benefit plans of the
Company:
(A) Medical coverage under "Plan 1" of the
Potlatch Corporation Custom Benefits-Health Care Plan,
or any successor to such Plan;
(B) Dental coverage in the amount, if any, that
the Eligible Employee had in effect on the day
preceding the date of his or her termination of
employment;
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(C) Basic life insurance coverage in the amount,
if any, that the Eligible Employee had in effect on the
day preceding the date of his or her termination of
employment; and
(D) Accidental death and dismemberment coverage
(not including travel accident coverage) in the amount,
if any, that the Eligible Employee had in effect on the
day preceding the date of his or her termination of
employment, except that continuation of any
employee-paid coverage shall be at the Eligible
Employee's expense at standard group rates.
Notwithstanding any of the foregoing provisions of this
Section 3(a)(vi):
(I) Any such continued coverage shall terminate
when the Eligible Employee becomes covered by the life
insurance, medical, dental or accidental death and
dismemberment plan of another employer.
(II) In the event that after an Eligible
Employee's termination of employment with a
Participating Company he or she is otherwise entitled
to continued coverage under the Company's basic life
insurance, medical, dental and accidental death and
dismemberment plans pursuant to any employee benefit
plan or program of the Company (other than this
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Program), the total benefits paid for by the
Participating Companies during the period described
above shall not exceed the benefits to which the
Eligible Employee is entitled under this Section
3(a)(vi).
(III) For purposes of this Section 3(a)(vi), the
Company's basic life insurance plan shall not include
any group universal life insurance or travel accident
insurance coverage provided through or by the Company
to or on behalf of its employees or any accidental
death and dismemberment insurance coverage provided by
the Company to family members of its employees.
(IV) During the period of such continued coverage,
the Eligible Employee shall not be eligible to
participate in the Company's disability income plan or
as an employee in the Retirement Plan, the Salaried
Employees' Savings Investment Plan, any qualified or
nonqualified stock option or phantom stock plan of the
Company or any employee benefit plan or program now or
hereafter maintained by the Company or a Participating
Company other than those plans listed in the first
sentence of this Section 3(a)(vi).
Notwithstanding the foregoing provisions of this subsection
(a), the sum of the amounts payable under (i), (ii) and
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(iii) above shall be not less than four (4) months of the
Eligible Employee's Base Compensation nor greater than one
(1) year of the Eligible Employee's Base Compensation and
the period of continued coverage described in (vi) above
shall be not less than four (4) months nor more than one (1)
year from the termination of the Eligible Employee's
employment. The Executive Compensation and Personnel
Policies Committee of the Board of Directors of the Company
may, in its discretion, increase the benefit payable to any
Eligible Employee without regard to the foregoing
limitation.
(b) Change of Control Benefits. Upon the
occurrence of any of the events specified in Section 4(b),
an Eligible Employee shall receive (in lieu of any severance
benefit payable under Section 3(a) or any other severance
benefit payable under any other plan or program now or
hereafter maintained by a Participating Company) Change of
Control Benefits under the Program as follows:
(i) Within ten (10) business days following the
effective date an Eligible Employee terminates, a lump
sum cash benefit equal to the Eligible
Employee's annual Base Compensation plus his or her
annual Base Compensation multiplied by his or her
standard bonus percentage (as determined pursuant to
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the Management Performance Award Plan), determined as
of the date of the Change of Control or the effective date the
Eligible Employee terminates, whichever
produces the larger amount, multiplied by the
appropriate factor from the following table:
Eligible Pay Multiple
Employee Factor
Chief Executive Officer 3.0
Chief Operating Officer 3.0
Other Eligible Employees 2.5
Notwithstanding the foregoing, if the Eligible
Employee's employment terminates on or after the date
thirty (30) months prior to the Eligible Employee's
"normal retirement date," as determined under the
Retirement Plan, and the Eligible Employee meets the
conditions of Subsections (II) and (III) of Section
4(a), the applicable factor shall be a fraction, the
numerator of which is the number of full months between
the date the Eligible Employee's employment terminates
and such "normal retirement date" and the denominator
of which is twelve (12). An Eligible Employee
described in the preceding sentence shall be entitled
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to an additional benefit equal to the difference
between the benefit payable to the Eligible Employee,
if any, under the Retirement Plan and the Retirement
Plan Supplemental Benefit provisions of the Salaried
Employees' Supplemental Benefit Plan (the "Supplemental
Plan"), and such benefits that would have been payable,
if any, under such Plans if the Eligible Employee had
remained an Eligible Employee and continued to earn his
or her Base Compensation until such "normal retirement
date;" provided, however, that the present value
(calculated using the assumed discount rate applied in
projecting the Company's pension benefit obligations
for financial reporting purposes and the UP-84
mortality table) (the "Present Value") of such
additional benefit shall not exceed the difference
between the lump sum benefit determined under the
preceding sentence and the lump sum benefit determined
using the otherwise applicable factor from the table
above. Such additional benefit shall be paid at the
same time and in the same form as any benefit payable
to the Eligible Employee under the Supplemental Plan
or, if no benefit is payable to the Eligible Employee
under the Supplemental Plan, the Present Value of such
additional benefit shall be paid in a lump sum at the
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same time as the Eligible Employee's Change of Control
Benefits are paid.
(ii) In the event that a Participating Company
terminates the employment of an Eligible Employee and
does not give him or her one month's advance notice,
one month of the Eligible Employee's Base Compensation
(determined as of the date of the Change of Control or
the date the Eligible Employee's employment terminates,
whichever produces the larger amount) in lieu of
notice;
(iii) A lump sum cash benefit equal to the
Eligible Employee's unused and accrued vacation pay, if
any, under the terms of the Participating Company's
basic vacation policy. For this purpose, (I) an
Eligible Employee's Base Compensation and the terms of
the basic vacation policy shall be determined as of the
date when the Eligible Employee's employment is
terminated or as of the date of the Change of Control,
whichever produces the larger amount and (II) accrued
vacation pay shall be paid notwithstanding any minimum
service requirement of the Participating Company's
basic vacation policy;
(iv) Eligibility for an Award under the Company's
Management Performance Award Plan for the Award Year in
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which his or her employment terminates determined under
all the terms and conditions of such Plan; provided,
however, that if an Eligible Employee's employment is
terminated under the conditions described in Section
4(a)(iii) or (iv) or if his or her employment is
terminated by the Company during any twenty-four (24)
month period described in Section 4(a)(iv), the
Eligible Employee's eligibility for an Award for such
Award Year shall be determined under Section 9(a)(i) of
such Plan as if the Eligible Employee had retired
during the Award Year, subject to all other applicable
terms and conditions of the Management Performance
Award Plan;
(v) Continued coverage as an employee during the
number of years equal to the applicable factor
determined under (b)(i) above, subject to all of the
conditions and limitations described in Section
3(a)(vi)(I) through (IV) above (determined without
regard to the last paragraph of Section 3(a)) under the
following employee benefit plans of the Company;
(A) Medical coverage under "Plan 1" of the
Potlatch Corporation Custom Benefits-Health Care Plan,
or any successor to such Plan;
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(B) Dental coverage in the amount, if any, that
the Eligible Employee had in effect on the day
preceding the date of his or her termination of
employment;
(C) Basic life insurance coverage in the amount,
if any, that the Eligible Employee had in effect on the
day preceding the date of his or her termination of
employment;
(D) Accidental death and dismemberment coverage
(not including travel accident coverage) in the amount,
if any, that the Eligible Employee had in effect on the
day preceding the date of his or her termination of
employment, except that continuation of any
employee-paid coverage shall be at the Eligible
Employee's expense at standard group rates; and
(E) Temporary, long-term and permanent disability
income coverage in the amount, if any, that the
Eligible Employee had in effect on the day preceding
the date of his or her termination of employment;
(vi) In the case of an Eligible Employee who has
less than five (5) Years of Vesting Service on the
date his or her employment terminates, a lump sum cash
benefit equal to (A) the value of that portion of the
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Eligible Employee's Company Stock Account in the
Salaried Employees' Savings Investment Plan
attributable to Company Contributions under such Plan
made on the Eligible Employee's behalf in a Plan Year
which ended less than 24 months prior to the date the
Eligible Employee's employment with the Participating
Companies terminates, plus (B) the unvested portion, if
any, of the Eligible Employee's SIP Supplemental
Benefit account under the Supplemental Plan. The value
of those portions of the Eligible Employee's Company
Stock Account and SIP Supplemental Benefit account
referred to in the preceding sentence shall be
determined as of the Eligible Employee's Settlement
Date under such Plan; and
(vii) A lump sum cash benefit equal to the Present
Value of the Eligible Employee's Normal Retirement
Benefit and Retirement Plan Supplemental Benefit
determined under the Retirement Plan and the
Supplemental Plan, respectively, if the Eligible
Employee was not entitled to a Vested Benefit under the
Retirement Plan as of the date the Eligible Employee's
employment with the Participating Companies terminates.
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(c) Payment of Excise Taxes. If any payment or
benefit to or for the benefit of the Eligible Employee in
connection with a Change in Control is deemed an "excess
parachute payment" as defined in Section 280G of the
Internal Revenue Code of 1986 (the "Code") subject to the
excise tax imposed by Section 4999 of the code, the Company
shall pay to the Eligible Employee an additional amount
such that the total amount of all such payments and
benefits (including payments made pursuant to this Section
3(c)) to the Eligible Employee shall equal the total amount
of all such payments and benefits to which the Eligible
Employee would have been entitled (but for this Section
3(c)) net of all applicable federal, state and local taxes
except the excise tax. For purposes of this Section 3(c),
the Eligible Employee shall be deemed to pay federal, state
and local taxes at the highest marginal rate of taxation
for the applicable calendar year. The amount of the
payment to the Eligible Employee shall be estimated by the
firm of independent certified public accountants serving as
the outside auditor of the Company as of the date of the
event specified in Section 4(a) or, if earlier, as of the
date of the Change of Control as determined pursuant to
Section 4(b). Within thirty (30) business days following
the effective date an Eligible Employee terminates, the
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estimated amount due the Eligible Employee pursuant to this
Section 3(c) shall be paid to the Eligible Employee. In
the event that the amount of the estimated payment is less
than the amount actually due to the Eligible Employee under
this section 3(c), the amount of any such shortfall shall
be paid to the Eligible Employee within ten (10) business
days after the existence of the shortfall is discovered.
The Eligible Employee shall not be required to mitigate the
amount of any payments provided under Section 3(b) and
3(c), nor shall any payment or benefit provided for in
Section 3(b) and 3(c) be offset by any compensation earned
by the Eligible Employee as the result of employment by
another employer or by retirement benefits.
(d) Definition of "Base Compensation." For
purposes of the Program, "Base Compensation" shall mean the
Eligible Employee's base rate of pay as in effect at the
time the Eligible Employee's employment is terminated, or,
if greater, the rate in effect at the time the material
change described in Section 4(a)(iv) occurs or the time a
Change of Control described in Section 4(b) occurs, if
applicable. An Eligible Employee's base rate of pay shall
be determined without reduction for (i) any Deferred
Contributions made by the Eligible Employee pursuant to the
Potlatch Corporation Salaried Employees' Savings Investment
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Plan or (ii) any contributions made by the Eligible Employee
pursuant to the Potlatch Corporation Custom Benefits Plan.
SECTION 4. CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS.
(a) Payment of Basic Severance Benefits. Subject
to the provisions of Section 4(c), an Eligible Employee will
be eligible for the benefits specified in Section 3(a) upon
the occurrence of any of the following events (except that
an Eligible Employee who has satisfied the conditions of
Section 4(b) will be eligible for the benefits specified in
Section 3(b) rather than the benefits specified in Section
3(a)):
(i) Termination of the Eligible Employee's
employment by a Participating Company or by the
Eligible Employee at the request of the Participating
Company for any reason other than misconduct. As used
herein "misconduct" means that the Eligible Employee
has engaged in unfair competition with a Participating
Company or a subsidiary thereof, induced any customer
of a Participating Company or subsidiary to breach any
contract with a Participating Company or subsidiary,
made any unauthorized disclosure of any of the secrets
or confidential information of a Participating Company
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or subsidiary, committed an act of embezzlement, fraud
or theft with respect to the property of a
Participating Company or subsidiary, or 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 a Participating
Company or subsidiary; or
(ii) Termination of the Eligible Employee's
employer's status as a Participating Company due to the
sale of a designated subsidiary to a third party; or
(iii) The Participating Company requires the
Eligible Employee to relocate his or her principal
place of work and the new principal place of work is
fifty (50) or more miles further from the
Eligible Employee's primary residence than was his or
her former principal place of work, and the Eligible
Employee elects to resign rather than to relocate; or
(iv) The Eligible Employee resigns from employment
with a Participating Company within twenty-four (24)
months following a material change in his or her
compensation, benefits, assigned duties,
responsibilities, privileges or perquisites resulting
in a significant diminution of (A) the Eligible
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Employee's assigned job, as reflected in the
Participating Company's official position description
or (B) the Eligible Employee's compensation, benefits,
duties, responsibilities, privileges or perquisites as
compared to those of all other employees similarly
situated, unless the material change is applicable to
all salaried employees or all other employees similarly
situated; provided, however, that in the event of a
Change of Control, any change in an Eligible Employee's
compensation, benefits, duties, responsibilities,
privileges or perquisites which constitutes a
significant diminution from the circumstances
applicable to the Eligible Employee on the day
preceding the date of Change of Control shall be a
material change, even if the change is applicable to
all salaried employees or all other employees similarly
situated; provided, further, that this Section 4(a)
(iv) shall apply to the resignation of an Eligible
Employee only if the Eligible Employee or the
Participating Company has notified the other party in
writing within three (3) months following the
occurrence of any such change that the party giving
notice considers such change to be a material change
encompassed by this Section 4(a)(iv). If the party
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receiving such notice does not agree that the change in
question is a material change encompassed by this
Section 4(a)(iv), it shall give written notice thereof
to the party first giving notice hereunder within
thirty (30) days after receiving notice and the matter
shall be immediately referred to the Review Panel as
provided in Section 9; provided, however, that, within
thirty (30) days after receiving written notice that
the other party does not agree that the change in
question is covered by this Section 4(a)(iv), the
Eligible Employee may request that the matter be
submitted directly to arbitration as provided in
Section 10. If necessary, the twenty-four (24) month
period specified above shall be extended to a date not
later than thirty (30) days following (i) the
announcement of the decision of the Review Panel or, if
the matter is referred to arbitration within thirty
(30) days following the announcement of the Review
Panel's decision, the announcement of the award of the
arbitrator, or (ii) if the matter is referred directly
to arbitration, the announcement of the award of the
arbitrator. The Participating Company or the Eligible
Employee may each give the notice described in this
Section 4(a)(iv) only once while this Program is in
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effect. If one party has given notice and the
twenty-four (24) month period specified above has
commenced running, the other party may not give notice
hereunder with respect to a change occurring during
such twenty-four (24) month period. If an Eligible
Employee gives notice pursuant to this Section 4(a)
(iv) and the Company thereafter in good faith makes an
adjustment in the Eligible Employee's compensation,
benefits, assigned job or duties, responsibilities,
privileges or perquisites, the Eligible Employee and
the Company may mutually agree in writing that the
notice shall be null and void.
Notwithstanding the foregoing, no benefits shall be
available under the Program (i) if the Eligible Employee's
employment with a Participating Company terminates because
he or she is eligible for or receiving long-term or
permanent disability benefits under the Company's disability
income plan as in effect on the date of onset of disability
or (ii) if the Eligible Employee satisfies all of the
following conditions:
(I) His or her employment with a Participating
Company terminates on or after his or her "normal
retirement date," as determined under the Retirement
Plan;
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(II) For the two-year period immediately before
retirement, he or she qualified as an Eligible
Employee; and
(III) He or she is entitled to benefits under the
Retirement Plan, Salaried Employees' Savings Investment
Plan and Supplemental Plan which, when converted to a
straight life annuity (and excluding any portion of the
benefit under the Salaried Employees' Savings
Investment Plan which represents contributions by the
Eligible Employee), equals, in the aggregate, at least
$44,000.
(b) Payment of Change of Control Benefits. An
Eligible Employee will be eligible for the benefits
specified in Section 3(b) if, within three (3) years
following a Change of Control, the Eligible Employee's
employment terminates under the conditions described in
Section 4(a)(i), (ii) or (iii) or a material change
described in Section 4(a)(iv) occurs and the Eligible
Employee thereafter resigns under the conditions described
in Section 4(a)(iv); provided, that the Eligible Employee
was employed by a Participating Company on the date
preceding the Change of Control. For purposes of the
Program, "Change of Control" shall mean:
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(i) Upon consummation of a reorganizaton,
merger or consolidation involving the Corporation
(a "Busisness 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 (the
"Outstanding Common Stock") and the then
outstanding voting securities of the Corporation
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 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 resulting from such
Business Combination (including, without
limitation, a corporation which as a result of
such transaction owns the Corporation either
directly or through one or more subsidiaries),
(B) no Person (as defined in Section 4(b)(iii)
below) (excluding any corporation resulting from
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such Business Combination or any employee benefit
plan (or related trust) sponsored or maintained
by the Corporation or such other corporation
resulting from such Business Combination)
beneficially owns, directly or indirectly, 20% or
more of, respectively, the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or the
combined voting power of the then outstanding
voting securities of such corporation 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 of the
corporation resulting from such Business
Combination were members of the Board at the time
of the execution of the initial agreement, or of
the action of the Board, providing for such
Business Combination; or
(ii) On the date that individuals who, as of
December 2, 1999 constitute the Board (the
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"Incumbent Board") cease for any reason to
constitute at least a majority of the Board;
provided, however, that any individual becoming a
director subsequent to December 2, 1999 whose
election, or nomination for election by the
Corporation's stockholders, was approved by a
vote of at least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial
assumption of office occurs as a result of an
actual or threatened election contest with
respect to the election or removal 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 Board; or
(iii) Upon the acquisition after December2,
1999 by any individual, entity or group (within
the meaning of Sections 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) (a "Person") of beneficial
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ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or
more of either (A) the then Outstanding Common
Stock or (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 Section 4(b)(iii):
(x) any acquisition of Outstanding Common Stock
or Outstanding Voting Securities by the
Corporation, (y) 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 (z)
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 3(b)(i); or
(iv) Upon the consummation of the sale of all or
substantially all of the assets of the
Corporation or approval by the stockholders of
the Corporation of a complete liquidation or
dissolution of the Corporation.
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(c) Limitation on Eligibility for Benefits.
(i) If an Eligible Employee is assigned from one
to another Participating Company, his or her employment
shall not be considered to be terminated under the
provisions of the Program.
(ii) The provisions of Sections 4(a)(i) and 4(a)
(ii) to the contrary notwithstanding, no benefit will
be payable hereunder due to termination of an Eligible
Employee's employment because of the sale of a division
(or other operating assets) of a Participating Company
or to termination of the Eligible Employee's employer's
status as a Participating Company upon the sale of a
designated subsidiary to a third party, if (A)(I) the
Eligible Employee is employed by the purchaser of such
division, assets, or subsidiary or (II) such purchaser
is contractually obligated to offer the Eligible
Employee the same or a better job and (B) such
purchaser is contractually obligated to maintain a plan
which in all material respects is equivalent to the
Program, providing for continuing coverage of the
Eligible Employee for three (3) years following the
sale of such division, assets or subsidiary.
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SECTION 5. FORM OF BENEFIT.
The benefits described in Sections 3(a)(i), (ii)
and (iii) shall be paid in a lump sum or in monthly
installments over a period not to exceed twelve (12) months
from the date employment is terminated pursuant to Section
4, as determined by the Company. The benefit described in
Section 3(a)(iv) shall be paid in a lump sum. The
benefits described in Sections 3(b)(i), (ii), (iii), (vi)
and (vii) shall be paid in a lump sum.
SECTION 6. EFFECT OF DEATH OF EMPLOYEE.
Should an Eligible Employee die after employment
terminates but while participating in the Program and prior
to the payment of the entire benefit due hereunder, the
balance of the benefit payable under the Program (other than
any benefit described in Section 3(a)(ii) if the Eligible
Employee was not living on the last day of the period
described therein or the proceeds of any life insurance or
accidental death insurance, which shall be paid to the
beneficiary determined pursuant to the terms of the
applicable insurance policy) shall be paid in a lump sum to
the estate of the Eligible Employee. Continued medical and
dental coverage as provided in Section 3(a)(vi) and Section
3(b)(v), as applicable, shall be available to the Eligible
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Employee's surviving spouse only if and to the extent that
such coverage would have been available to such surviving
spouse if the Eligible Employee had died as an active
salaried employee of a Participating Company. Such coverage
shall be determined under the terms of the applicable plan
as in effect on the earlier of (i) the date the Eligible
Employee's employment terminated or (ii) the date of the
Change of Control or the material change described in
Section 4(a)(iv), if applicable.
SECTION 7. AMENDMENT AND TERMINATION.
The Company reserves the right to amend or
terminate the Program at any time and to increase or
decrease the amount of any benefit provided under the
Program; provided, however, that any individual who has
qualified as an Eligible Employee may become entitled to
any Change of Control Benefit under Section 3(b), the
Program cannot be terminated or amended to reduce any
benefit provided under Section 3(b) or make any condition
pertaining to qualification for the Change of Control
Benefit under Section 3(b) materially more restrictive.
Once an individual has qualified as an Eligible Employee,
the Program may not be amended to cause such individual to
cease to qualify as an Eligible Employee for purposes of
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determining that individual's eligibility for the Change of
Control Benefit under Section 3(b).
SECTION 8. CLAIMS PROCEDURE.
(a) Claims. All applications for benefits and all
inquiries concerning claims under the program shall be
submitted to the Company addressed as follows: "Potlatch
Corporation, Plan Administrator under the Potlatch
Corporation Severance Program for Executive Employees, 601
West Riverside Avenue, Suite 1100, Spokane, Washington
99201."
(b) Denial of Claims. In the event that any
application for benefits under the Program is denied in
whole or in part, the Company shall notify the applicant in
writing of such denial and shall advise the applicant of the
right to a review thereof. Such written notice shall set
forth, in a manner calculated to be understood by the
applicant, specific reasons for such denial, specific
references to the provisions of the Program on which such
denial is based, a description of any information or
material necessary for the applicant to perfect his or her
application, an explanation of why such material is
necessary and an explanation of the Program's review
procedure. Such written notice shall be given to the
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applicant within ninety (90) days after the Company receives
the application, unless special circumstances require an
extension of time up to an additional ninety (90) days for
processing the application. If such an extension of time
for processing is required, written notice of the extension
shall be furnished to the applicant prior to the termination
of the initial ninety (90) day period. This notice of
extension shall indicate the special circumstances requiring
the extension of time and the date by which the Company
expects to render its decision on the application for
benefits. If written notice of the denial of the
application for benefits is not furnished within the time
specified in this Section 8(b), the application shall be
deemed denied, and the applicant shall be permitted to
appeal such denial in accordance with the review procedure
set out in Section 9 hereof.
SECTION 9. REVIEW PROCEDURE.
(a) Appointment of Review Panel. The Company
shall appoint a Review Panel which shall consist of three
(3) or more individuals who may (but need not) be employees
of the Company. The Review Panel shall be the named
fiduciary which shall have authority to act with respect to
appeals from denials of benefits under the Program.
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(b) Right to Appeal. Any person whose application
for benefits is denied (or is deemed denied) in whole or in
part (or such person's authorized representative) may appeal
from the denial by submitting to the Review Panel a written
request for review of the application within sixty (60) days
after receiving written notice from the Company of the
denial (or in the case of a deemed denial within sixty (60)
days after the date the application is deemed denied). The
Company shall give the applicant (or the applicant's
representative) an opportunity to review pertinent documents
in preparing such request for review.
(c) Form of Request for Review. The request for
review must be in writing and shall be addressed as follows:
"Review Panel under the Potlatch Corporation Severance
Program for Executive Employees, 601 West Riverside Avenue,
Suite 1100, Spokane, Washington 99201." The request for review shall
set forth all of the grounds upon which it is based, all
facts in support thereof, and any other matters which the
applicant deems pertinent. The Review Panel may require the
applicant to submit such additional facts, documents or
other material as the Review Panel may deem necessary or
appropriate in making its review.
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(d) Time for Review Panel Action. The Review
Panel shall act upon each request for review within sixty
(60) days after receipt thereof unless special circumstances
require an extension of time of up to an additional sixty
(60) days for processing the request for review. If such an
extension of time for review is required, written notice of
the extension shall be furnished to the applicant prior to
the end of the initial sixty (60) day period.
(e) Review Panel Decision. Within the time
prescribed in Section 9(d), the Review Panel shall give
written notice of its decision to the applicant and to the
Company. In the event the Review Panel confirms the denial
of the application for benefits in whole or in part, such
notice shall set forth, in a manner calculated to be
understood by the applicant, the specific reasons for such
denial and specific references to the provisions of the
Program on which the decision was based. In the event that
the Review Panel determines that the application for
benefits should not have been denied in whole or in part,
the Company shall take appropriate remedial action as soon
as reasonably practicable after receiving notice of the
Review Panel's decision. If written notice of the Review
Panel's decision is not given to the applicant within the
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time prescribed in Section 9(d), the application will be
deemed denied on review.
(f) Section 4(a)(iv) Dispute. In the event that a
dispute involving the application or interpretation of
Section 4(a)(iv) is referred to the Review Panel as provided
therein, the Review Panel shall treat such dispute as an
appeal from the denial of a claim for benefits under this
Program that is subject to all of the terms and conditions
of this Section 9.
(g) Rules and Procedures. The Review Panel shall
establish such rules and procedures, consistent with the
Program and with ERISA, as it may deem necessary or
appropriate in carrying out its responsibilities under this
Section 9. The Review Panel may require an applicant who
wishes to submit additional information in connection with
an appeal from the denial of benefits in whole or in part to
do so at the applicant's own expense.
SECTION 10. RESOLUTION OF DISPUTES INVOLVING SECTION 4.
(a) Arbitration of Section 4 Dispute. Any
dispute, controversy or question arising under Section 4
which is not resolved by the decision of the Review Panel
(or which the Eligible Employee requests be submitted
directly to arbitration as provided herein) shall be
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referred for decision by an arbitrator selected by the
parties. The proceeding shall be governed by the Rules of
the American Arbitration Association then in effect or such
rules last in effect (in the event such Association is no
longer in existence). If the parties are unable to agree
upon such an Arbitrator within thirty (30) days after either
party has given the other party written notice of its desire
to submit the dispute, controversy or question for decision
as aforesaid, then either party may apply to the American
Arbitration Association for the appointment of an arbitrator
or, if such Association is not then in existence or does not
desire to act in the matter, either party may apply to the
Presiding Judge of the Superior Court of the City and County
of Spokane, State of Washington, for the appointment
of an arbitrator to hear the parties and settle the dispute,
controversy or question, and such Judge is authorized to
make such appointment pursuant to the Program. The
arbitration shall take place at the location mutually agreed
to by the parties or, if the parties are unable to agree
upon the location, at the location designated by the
Arbitrator. The compensation and expenses of the Arbitrator
shall be borne by the Company, unless the Arbitrator
determines that an Eligible Employee acted willfully and
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maliciously in connection with his or her claim for benefits
under the Program, in which case the Arbitrator shall direct
the Eligible Employee to pay all or a portion of the
compensation and expenses of the Arbitrator.
(b) Arbitration Exclusive Remedy. Arbitration
shall be the exclusive remedy for the settlement of disputes
involving the application or interpretation of Section 4.
The decision of the Arbitrator shall be final, conclusive
and binding on all interested persons and no action at law
or in equity involving the application or interpretation of
Section 4 shall be instituted other than to enforce the
award of the Arbitrator.
SECTION 11. BASIS OF PAYMENTS TO AND FROM PROGRAM.
All benefits under the Program shall be paid by
the Company. The Program shall be unfunded and benefits
hereunder shall be paid only from the general assets of the
Company. Nothing contained in the Program shall be deemed
to create a trust of any kind for the benefit of Eligible
Employees, or create any fiduciary relationship between the
Company and the Eligible Employees with respect to any
assets of the Company. The Company is under no obligation
to fund the benefits provided herein prior to payment,
although it may do so if it chooses. Any assets which the
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Company chooses to use for advance funding shall not cause
the Program to be a funded plan within the meaning of ERISA.
SECTION 12. NO EMPLOYMENT RIGHTS.
Nothing in the Program shall be deemed to give any
individual the right to remain in the employ of a
Participating Company or a subsidiary or to limit in any way
the right of a Participating Company or a subsidiary to
terminate an individual's employment, which right is hereby
reserved.
SECTION 13. NON-ALIENATION OF BENEFITS.
No benefit payable under the Program shall be
subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt
to do so shall be void.
SECTION 14. NOTICES.
All notices pertaining to the Program shall be in
writing and shall be deemed given if delivered by hand or
mailed with postage prepaid and addressed, in the case of
the Company to the address set forth in Section 8(a),
attention of its Secretary, and the case of the Eligible
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Employee to his or her last known address as reflected in
the records of the Company.
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