Exhibit 10(c)(i)
STOCK OPTION AGREEMENT
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POTLATCH CORPORATION 2000 STOCK INCENTIVE PLAN
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THIS AGREEMENT made and entered into the day specified in the attached
addendum to this Agreement by and between POTLATCH CORPORATION, a Delaware
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corporation (the "Corporation") and the employee of the Corporation named in the
attached addendum ("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.
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(a) "Agreement" means this stock option agreement.
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(b) "Board" means the Board of Directors of the Corporation.
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(c) "Change in Control" means an event or transaction described
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in Subparagraph (a), (b), (c) or (d) of Paragraph 3.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
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(e) "Common Stock" means the $1 par value Common Stock of the
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Corporation.
(f) "Committee" means the committee appointed by the Board to
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administer the Plan.
(g) "Corporation" means Potlatch Corporation, a Delaware
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corporation.
(h) "Date of Grant" means the date on which the Committee
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determined to grant this Option, as specified in Section 1 of the addendum to
this Agreement.
(i) "Disability" means the Employee is unable to engage in any
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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.
(j) "Exercise Price" means the price per Share designated in
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Section 2 of the addendum to this Agreement at which this Option may be
exercised.
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(k) "Fair Market Value" of a Share as of a specified date means
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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.
(1) "Incentive Stock Option" means an Option described in Code
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section 422(b).
(m) "Nonqualified Stock Option" means an Option other than an
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Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to the Plan.
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(o) "Option Period" means the term of this Option as provided in
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Paragraph 3 of this Agreement.
(p) "Partial Exercise" means an exercise with respect to less
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than all of the vested but unexercised Shares subject to Option held by the
person, exercising the Option.
(q) "Plan" means the Potlatch Corporation 2000 Stock Incentive
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Plan, pursuant to which the parties have entered into this Agreement.
(r) "Purchase Price" means the Exercise Price times the number
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of whole shares with respect to which this Option is exercised.
(s) "Securities Act" means the Securities Act of 1933, as amended.
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(t) "Share" means one share of Common Stock, adjusted in
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accordance with Section 13 of the Plan.
(u) "Subsidiary" means any corporation in an unbroken chain of
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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 Employee 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.
This Option has been granted pursuant to the Plan, a copy of the text
of which Employee may obtain upon request to the Corporation.
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3. Subject to the conditions stated in this Agreement, unless a
different period is specified in Section 5 of the addendum to this Agreement,
the period during which the option may be exercised (the "Vesting Schedule")
shall be as follows:
Number of Shares Vesting Schedule*
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50% of the number of shares From one year from the Date
specified in Section 3 of of Grant to end of term for
the addendum Option
50% of the number of shares From two years from the
specified in Section 3 of Date of Grant to end of
the addendum term for Option
Beginning six months after the Date of Grant, Employee 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) Upon consummation of a reorganization, merger or
consolidation involving the Corporation (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 (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 subparagraph (c) below) (excluding any corporation
resulting from 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,
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* See Paragraph 5 for further explanation of end of term for Option.
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or of the action of the Board, providing for such Business
Combination; provided, however, if the Corporation and the other
party to the Business Combination agree that the transaction
is to be treated as a pooling of interests for financial reporting
purposes, and if the transaction in fact is so treated, then the right
to exercise the Option (or to call the related stock appreciation
right) shall not be accelerated upon consummation of the Business
Combination to the extent that the Corporation's independent
accountants and the other party's independent accountants separately
determine in good faith that the acceleration would preclude the use
of pooling of interests accounting; or
(b) On the date that individuals who, as of December 2, 1999
constitute the Board (the "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
c) Upon the acquisition after December 2, 1999 by any
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") of beneficial 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 subsection (c): (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 subsection (a) of this Paragraph 3; or
(d) 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.
4. In the event of a Change in Control, this Option shall
automatically include a stock appreciation right that may be called by the
Employee. After a Change in Control event, the Employee may surrender all or
part of this Option and exercise the stock appreciation right in lieu of
exercising all or any part of this Option, provided that at least
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six months have elapsed from the Date of Grant and that the Fair Market Value
of the Common Stock on the date of such exercise is higher than the Exercise
Price specified in Section 2 of the addendum to this Agreement. The exercise
of a stock appreciation right is referred to in this Paragraph 4 as the
"call". Upon the call of a stock appreciation right, Employee shall be
entitled to receive payment of an amount equal to the difference obtained by
subtracting the aggregate option price of the shares subject to the Option (or
the portion of such Option) from the Fair Market Value of such Shares on the
date of such call. In the case of a stock appreciation right that is called
after an event described in Paragraph 3(a) or 3(d), for purposes of measuring
the value of the stock appreciation right, "Fair Market Value" shall be the
greater of (a) the value of the consideration per share that the Employee
would have received in connection with the transaction described in Paragraph
3(a) or 3(d) as a stockholder of the Corporation if he or she had exercised
the Option immediately prior to the event described in Paragraph 3(a) or 3(d)
or (b) the value determined as of the date of the call in good faith by the
Committee (as composed on the day preceding the date of consummation of the
transaction described in Paragraph 3(a) or 3(d)), taking into consideration
all relevant facts and circumstances.
For all purposes under this Agreement (unless the context requires
otherwise), the terms "exercise" or "exercisable" shall be deemed to include
the terms "call" or "callable" as such terms may apply to a stock appreciation
right, and in the event of the call of a stock appreciation right the
underlying Option will be deemed to have been exercised for all purposes under
the Plan.
Payment of a stock appreciation right shall be made as soon as
reasonably practicable following receipt by the Corporation of the notice
described in Paragraph 8. Unless otherwise required by the Plan, payment of
the stock appreciation right shall be made in such form as may be permitted
pursuant to the rules and regulations adopted from time to time by the
Committee, as in effect on the date the stock appreciation right is called.
5. The term of this Option shall end and this Option shall not be
exercisable after seven years from the Date of Grant if this Option is
designated as an Incentive Stock Option in Section 4 of the addendum to this
Agreement or 10 years from the Date of Grant if this Option is designated as a
Nonqualified Stock Option in Section 4 of such addendum or, if earlier, upon
the termination of Employee's employment with the Corporation or its
Subsidiaries, subject to the following provisions:
(a) If the termination of employment is caused by
Employee's death, this Option, to the extent that it was exercisable
under Paragraph 3 of this Agreement at the date of death and had not
previously been exercised, may be exercised at any time before the end
of the Option Period as specified in the Option Agreement by
Employee's executors or administrators or by any person or persons who
shall have acquired this Option directly from Employee by bequest or
inheritance.
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(b) If the termination of employment is caused by
Disability or Early, Normal or Late Retirement under the Potlatch
Corporation Salaried Employees' Retirement Plan, this Option, to the
extent it was exercisable under Paragraph 3 of this Agreement at the
date of such termination and had not previously been exercised, may be
exercised at any time before the end of the Option Period as specified
in the Option Agreement.
(c) If the termination of employment is for any reason
other than death, Disability, or Early, Normal or Late Retirement
under the Potlatch Corporation Salaried Employees' Retirement Plan,
this Option, to the extent that it was exercisable under Paragraph 3
of this Agreement at the date of such termination and had not
previously been exercised, may be exercised within three months after
the date of such termination; provided that in such case the right to
call a stock appreciation right as described in Paragraph 4 shall
terminate on the date Employee's employment terminates unless Employee
requests and the Committee permits the call of the stock appreciation
right within three months after the date of such termination.
Notwithstanding the foregoing, if the termination of employment is by
reason of Employee's misconduct, the option shall cease to be
exercisable or callable at the time of such termination. As used in
this Paragraph, "misconduct" means that Employee has engaged in unfair
competition with the Corporation or a Subsidiary, induced any customer
of the Corporation or a Subsidiary to breach any contract
with the Corporation or a Subsidiary, made any unauthorized disclosure
of any of the secrets or confidential information of the Corporation
or a Subsidiary, committed an act of embezzlement, fraud or theft with
respect to the property of the Corporation or a Subsidiary, or engaged
in conduct which is not in good faith and which directly results in
material loss, damage or injury to the business, reputation or
employees of the Corporation or a Subsidiary. The Committee shall
determine whether Employee's employment is terminated by reason of
misconduct. In making such determination the Committee shall act
fairly and shall give Employee an opportunity to be heard and present
evidence on Employee's behalf.
6. The Corporation agrees that it will at all times during the
Option Period reserve and keep available sufficient authorized but unissued or
reacquired Common Stock to satisfy the requirements of this Agreement. The
number of Shares reserved and the Exercise Price shall be proportionately
adjusted for any increase or decrease in the number of issued and outstanding
Shares by reason of stock dividends, stock splits, consolidations,
recapitalizations, reorganizations or like events, as determined by the
Committee pursuant to the Plan.
7. Subject to any required action by the stockholders, if the
Corporation shall be a party to any merger, consolidation or other
reorganization, this Option shall apply to the securities to which a holder of
the number of Shares subject to this Option would have been entitled.
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8. Employee, or Employee's representative, may exercise 20% or
more of the portion of this Option that has become vested under Paragraph 3 of
this Agreement by giving written notice to the Corporation at Spokane,
Washington, attention of the Vice President, Employee Relations, 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; or
(c) In any combination of Subparagraphs (a) and (b) above,
if the total of the cash paid and the Fair Market Value of the Shares
surrendered equals the Purchase Price of the Shares for which this
Option is being exercised.
The notice shall be signed by the person or persons exercising this
Option, and in the event this Option is being exercised by the representative
of 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.
9. If any payments or transfers to or for the benefit of the
Employee are 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 Corporation shall pay to the Employee
an additional amount such that the total amount of all such payments and
benefits (including payments made pursuant to this Section) to the Employee
shall equal the total amount of all such payments and benefits to which the
Employee would have been entitled (but for this Section) net of all applicable
federal, state and local taxes except the excise tax. For purposes of this
Section, the 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 Employee shall be estimated by the firm of
independent certified public accountants serving as the outside auditor of the
Corporation, as of the date of the applicable event as described in Paragraph
3(a) through 3(d).
10. 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
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exercise of the Option, Employee will make arrangements satisfactory to the
Corporation to enable it to satisfy such withholding requirements.
11. Neither Employee nor Employee's representative shall have any
rights as a stockholder with respect to any Shares subject to this Option
until such Shares shall have been issued to Employee or Employee's
representative.
12. 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, certificates to be issued upon the exercise
of this Option shall contain the following legend:
"The Shares represented by this certificate have not been
registered under the Securities Act of 1933 and may be offered, sold
or transferred only if registered pursuant to the provisions of that
Act or if an exemption from registration is available."
13. Except as otherwise provided in this Agreement, this Option
and the rights and privileges conferred by this Agreement shall not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this Option, or of any
right or privilege conferred by this Agreement, contrary to the provisions of
this Paragraph, or upon any attempted sale under any execution, attachment or
similar process upon the rights and privileges conferred by this Agreement,
this Option and the rights and privileges conferred by this Agreement shall
immediately become null and void.
14. 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.
15. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Delaware without regard to choice of
law principles.
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ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 2000 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 13 of the Plan and
Paragraph 6 of this Stock Option Agreement.
4. This Option is: A Nonqualified Stock Option
5. The Vesting Schedule for this Option is: The schedule specified in
Paragraph 3 of the Stock Option Agreement, except that no exercise or
call will be permitted for a fractional Share.
The document entitled Stock Option Agreement -- Potlatch Corporation 2000 Stock
Incentive Plan is incorporated by this reference into this addendum.
IN WITNESS WHEREOF, the Corporation has caused this addendum to the Stock
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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.
POTLATCH CORPORATION
Date: ________________ By ____________________________________
Vice President Employee Relations
Date: ________________ By ____________________________________
Employee
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