POTLATCH CORPORATION DEFERRED
COMPENSATION PLAN FOR DIRECTORS

APPENDIX A
RETIREMENT STOCK UNITS

1. Establishment and Purpose.
This Appendix A to the Potlatch Corporation Deferred Compensation Plan for Directors (the "Plan") is effective December 31, 1996. Its purpose is to provide benefits to Directors who participated in the Potlatch Corporation Directors' Retirement Plan (the "Retirement Plan"), which is being terminated on that date. This Appendix A is a part of and shall be administered in accordance with the terms of the Plan except as otherwise provided in this Appendix A. Capitalized terms that are used but not defined in this Appendix A shall have the same meaning as in the main text of the Plan.

2. Conversion of Retirement Plan Benefits to Stock Units. In connection with the termination of the Retirement Plan, the present value of each Director's Retirement Plan accrued benefit shall be calculated as provided in Section 14(a) of the Potlatch Corporation Salaried Employees' Retirement Plan, giving each Eligible Director credit for the lesser of ten years or actual years of service upon reaching mandatory retirement age. The present value shall be converted into Stock Units by dividing

Exhibit (10)(g)(i)

the present value by the Value of the Corporation's common stock on December 31, 1996. The resulting Stock Units ("Retirement Stock Units") shall be credited to a special account for each Director under this Appendix A.

3. Vesting of Retirement Stock Units. If a Director has completed at least 10 years of service as a Director on December 31, 1996, then the Director's Retirement Stock Units shall be fully vested as of such date. If a Director has completed fewer than 10 years of service as a Director on December 31, 1996, then only the amount of the Retirement Stock Units attributable to actual service as a Director shall be vested as of December 31, 1996. The balance of the Director's Retirement Stock Units shall vest in equal installments on each December 31 thereafter until the Director completes 10 years of service as a Director or retires from the board, whichever is first. If the Director's service terminates before the Director is fully vested in his or her Retirement Stock Units, the nonvested Retirement Stock Units shall be forfeited.

4. Payment Election. On or before December 31, 1996, each Director who is credited with Retirement Stock Units shall file an election on the prescribed form indicating the Year in which payment of the Director's vested Retirement Stock Units shall commence; provided, however, that payments shall commence no earlier than the date

(a) all units are vested, or (b) board service terminates, and no later than the Year following the Year in which the Director attains retirement age. The election shall specify whether payment is to be made in a single lump sum or in a series of approximately equal installments over a period of years specified by the Director (but in no event more than 15 years). If a Director fails to file an election concerning payment of the Director's vested Retirement Stock Units, payment shall be made in accordance with the Director's most recent deferral election pursuant to the Plan, or if the Director has no prior deferral election, payment shall be made in a single lump sum in January of the Year following the termination of the Director's service. Until payment, the Director's Retirement Stock Units shall be credited with Dividend Equivalents in the same manner as other Stock Units under the Plan. Payment of vested Retirement Stock Units shall be made in cash in the same manner as other Stock Units under the Plan.

DIRECTORS' DEFERRED COMPENSATION PLAN

DEFERRAL ELECTION FOR RETIREMENT PLAN STOCK UNITS

To: Secretary - Potlatch Corporation

Pursuant to the terms of Appendix A of the Potlatch Corporation Deferred Compensation Plan for Directors, I hereby elect to receive payment of my vested retirement plan stock unit special account as follows:

(1) Date Payments to Commence:

__ Payment of my deferred compensation retirement plan stock units special account shall begin January, ______ (year).

Note: This date may be no earlier than the date
(a)all your units are vested or (b) your Board service terminates, and no later than the year following your 72nd birthday.

(2) Method of Payment:

Payment of my deferred compensation retirement plan special account shall be made in cash as follows:

__ Lump sum; or

__ ______ annual installments (not exceeding 15).

12/5/96

RESOLUTIONS

DIRECTORS' RETIREMENT PLAN

December 5, 1996

RESOLVED, that the Potlatch Corporation Directors' Retirement Plan (the "Plan") is terminated effective December 31, 1996; and be it further

RESOLVED, that notwithstanding any contrary provision of the Plan, (1) the present value of the accrued benefits of each Eligible Director (as defined in the Plan) shall be calculated as of December 31, 1996, as provided in Section 14(a) of the Potlatch Corporation Salaried Employees' Retirement Plan, giving each Eligible Director credit for the lesser of ten years or actual years of service upon reaching mandatory retirement age; (2) such present value shall be converted into Stock Units by dividing such present value by the closing price of the Corporation's common stock on December 31, 1996 as reported in the New York Stock Exchange, Inc., composite transactions report for such date;
(3) such Stock Units shall be credited to a special account for each Eligible Director which shall be administered in accordance with the terms of the Potlatch Corporation Deferred Compensation Plan for Directors, except that if the Eligible Director has completed fewer than 10 years of service as an Eligible Director on December 31, 1996, then only the amount of the special account attributable to actual service as an Eligible Director shall be vested as of December 31, 1996, and the balance of the special account shall vest in equal installments on each December 31 thereafter until the Eligible Director completes 10 years of service as an Eligible Director or retires from the board, whichever is first; and (4) other than the provision of special Stock Units as described above, no amounts shall be payable to an Eligible Director pursuant to the Plan; and be it further

RESOLVED, that Appendix A to the Potlatch Corporation Deferred Compensation Plan for Directors shall be adopted effective December 31, 1996, in the form of the document attached to these resolutions, to provide for the special Stock Units described in the preceding resolution.

Exhibit (10)(h)(i)

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT, made and entered into this _____ day of ________ , 198_ ("Agreement"), by and between POTLATCH CORPORATION, a Delaware Company ("Company"), and ______________________________ (the "Director"),

W I T N E S S E T H:

Whereas highly competent persons are becoming more reluctant to serve publicly-owned corporations and their subsidiaries as directors or in other capacities unless they are provided with adequate protection through insurance or indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the Company; and

Whereas the current difficulty of obtaining significant amounts of insurance at reasonable premiums and the uncertainties relating to statutory indemnification have increased the difficulty of attracting and retaining such persons; and

Whereas the Board of Directors of the Company (the "Board") has determined that the inability to attract and retain such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased cer- tainty of such protection in the future:

Whereas it is reasonable, prudent and necessary for the Company contractually to obligate itself to indem- nify such persons to the fullest extent permitted by appli- cable law in order to induce them to serve or continue to serve the Company free from undue concern that they will not be so indemnified; and

Whereas Director is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he be so indemnified:

N o w, T h e r e f o r e, in consideration of the premises and the covenants in this Agreement, and intending to be legally bound, the Company and Director do hereby covenant and agree as follows:

Section 1. Services by Director. Director agrees to serve as a director so long as he is duly appointed or elected and qualified in accordance with the applicable

Exhibit (10)(j)

provisions of the Restated Certificate of Incorporation and By-laws of the Company or any subsidiary of the Company and until such time as he resigns or fails to stand for ele- ction. Director may at any time and for any reason resign from such position (subject to any other contractual obligation or other obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Director in any such position.

Section 2. Amendment of Certificate of Incorpora- tion. The Company shall use its best efforts to amend the Restated Certificate of Incorporation of the Company to contain in substance the following provisions:

A. A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability which, by express provision of the General Corporation Law of Delaware as in effect from time to time (hereinafter the "Delaware Law"), cannot be eliminated.

B. (i) The corporation shall, to the fullest extent permitted by Delaware Law, indemnify any person (the "Indemnitee") who is or was involved in any manner (including, without limitation, as a party or a witness) in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including without limitation, any action, suit or proceeding brought by or in the right of the corporation to procure a judgment in its favor) (a "Proceeding") by reason of the fact that Indemnitee is or was a director, officer or employee of the corporation, or is or was serving another entity in such capacity at the request of the corporation, against all expenses and liabilities actually and reasonably incurred by Indemnitee in connection with such Proceeding.

(ii) The right to indemnification conferred by this Article shall be presumed to have been relied upon by the Indemnitee and shall be enforceable as a contract right. The corporation may enter into contracts to provide individual Indemnitees with specific rights of indemnification to the fullest extent permitted by Delaware Law and may create trust funds, grant security interests, obtain letters of credit or use other means to ensure the payment of such amounts as may be necessary to effect the rights provided in this Article or in any such contract.

(iii) Upon making a request for indemnification, Indemnitee shall be presumed to be entitled to indemnification under this Article and the corporation shall have the burden of proof to overcome that presumption in reaching any contrary determination. Such indemnification shall include the right to receive payment in advance of any expenses incurred by the Indemnitee in connection with any Proceeding, consistent with the provisions of Delaware Law.

C. Any repeal or modification of the foregoing provisions of this Article shall not adversely affect any right or protection of any director or any Indemnitee existing at the time of such repeal or modification.

D. The amendment or repeal of this Article shall require the approval of the holders of shares representing at least eighty percent (80%) of the shares of the corporation entitled to vote in the election of directors, voting as one class.

Section 3. Indemnification. The Company shall indemnify Director to the fullest extent permitted by applicable law or the Restated Certificate of Incorporation of the Company in effect on the date hereof or as such laws or Restated Certificate of Incorporation may from time to time be amended (but, in the case of any such amendment, only to the extent such amendment permits the Company to provide broader indemnification rights than the law or Restated Certificate of Incorporation permitted the Company to provide before such amendment). The right to indemnification conferred in the Restated Certificate of Incorporation shall be presumed to have been relied upon by Director in serving or continuing to serve the Company and shall be enforceable as a contract right. Without in any way diminishing the scope of the indemnification provided by this Section 3, the Company will indemnify Director if and whenever he is or was a party or is threatened to be made a party to any Proceeding, including without limitation any such Proceeding brought by or in the right of the Company, by reason of the fact that he is or was an Agent or by reason of anything done or not done by him in such capacity, against Expenses and Liabilities actually and reasonably incurred by Director or on his behalf in connection with the investigation, defense, settlement or appeal of such Proceeding. No initial finding by the Board, its counsel, Independent Counsel, arbitrators or the stockholders shall be effective to deprive Director of the protection of this indemnity, nor shall a court to which Director may apply for enforcement of this indemnity give any weight to any such adverse finding in deciding any issue before it, as it is

intended that Director shall be paid promptly by the Company all amounts necessary to effectuate the foregoing indemnity in full. In addition to, and not as a limitation of, the foregoing, the rights of indemnification of Director provided under this Agreement shall include those rights set forth in Sections 4, 7 and 8 below.

Section 4. Advancement of Expenses and Costs; Letter of Credit.

(a) Advances. All reasonable Expenses incurred by or on behalf of Director shall be advanced by the Company to Director within 20 days after the receipt by the Company of a written request for an advance or advances of Expenses from time to time, whether prior to or after final disposition of a Proceeding (unless there has been a final determination that Director is not entitled to be indemnified for such Expenses), including without limitation any Proceeding brought by or in the right of the Company. Director's entitlement to advancement of Expenses shall include those incurred in connection with any Proceeding by Director seeking an adjudication or award in arbitration pursuant to this Agreement. The requests shall reasonably evidence the Expenses incurred by Director in connection therewith. If required by law at the time of such advance, Director hereby undertakes to repay the amounts advanced if it shall ultimately be determined that Director is not entitled to be indemnified pursuant to the terms of this Agreement.

(b) Letter of Credit. In order to secure the obligations of the Company to indemnify Director under Section 3 hereof and to advance to Director certain amounts under
Section 4(a) hereof, the Company shall obtain upon the occurrence of any Triggering Event, an irrevocable standby letter of credit naming Director as the sole beneficiary, in an appropriate amount not less than $500,000, issued by a financial institution having assets in excess of $100 million and containing terms and conditions reasonably acceptable to Director (the "Letter of Credit"). The Letter of Credit shall provide that Director may from time to time draw certain amounts thereunder, upon the presentation to the issuer thereof of a certificate executed by Director certifying (i) that Director has made demand upon the Company for an amount not less than the amount he is drawing upon under the Letter of Credit and that the Company has refused to provide Director with such amount and (ii) that Director believes that he is entitled under the terms of this Agreement to the amount which he is drawing upon under the Letter of Credit.

(c) Term of Letter of Credit. Once the Company has obtained the Letter of Credit required by Section 4(b)

hereof, the Company shall maintain and renew the Letter of Credit or a substitute letter of credit meeting the criteria of Section 4(b) hereof during the term of this Agreement in a manner such that the Letter of Credit shall have an initial term of five years, be renewed for successive five-year terms, and shall always have at least one year of its term remaining.

Section 5. Procedure for Determination of Entitlement to Indemnification.

(a) Whenever Director believes that he is entitled to indemnification pursuant to this Agreement, Director shall submit a written request for indemnification to the Company to the attention of the Chairman of the Board and Chief Executive Officer with a copy to the Secretary. This request shall include documentation or information which is necessary for the determination of entitlement to indemnification and which is reasonably available to Director. Determination of Director's entitlement to indemnification shall be made not later than 60 days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceeding or any other event which could enable the Company to determine Director's entitlement to indemnification. The Chairman of the Board and Chief Executive Officer, or the Secretary shall, promptly upon receipt of Director's request for indemnification, advise the Board in writing that Director has made such request for indemnification.

(b) The Company shall be entitled to select the forum in which Director's entitlement to indemnification will be heard unless a Triggering Event has occurred, in which case Director shall be entitled to select the forum. The Company or Director, as the case may be, shall notify the other party in writing as to the forum selected, which selection shall be from among the following:

(i) The stockholders of the Company;

(ii) A quorum of the Board consisting of Disinterested Directors;

(iii) Independent Counsel selected by Director, and reasonably approved by the Board, which counsel shall make the determination in a written opinion; or

(iv) A panel of three arbitrators, one of whom is selected by the Company, another of whom is selected by Director and the last of whom is

selected by the first two arbitrators so selected; or if for any reason three arbitrators are not selected within thirty days after the appointment of the first arbitrator, then selection of additional arbitrators to complete the three person panel shall be made by the American Arbitration Association under its commercial arbitration rules now in effect.

Section 6. Presumptions and Effect of Certain Proceedings. Upon making a request for indemnification, Director shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption in reaching any contrary determination. If the person or persons so empow- ered to make the determination shall have failed to make the requested indemnification within 60 days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceed- ing or any other event which could enable the Company to determine Director's entitlement to indemnification, the requisite determination of entitlement to indemnification shall be deemed to have been made and Director shall be abso- lutely entitled to indemnification under this Agreement, absent (i) misrepresentation by Director of a material fact in the request for indemnification or (ii) a specific finding that all or any part of such indemnification is expressly prohibited by law. The termination of any Pro- ceeding by judgment, order, settlement, arbitration award or conviction, or upon a plea of nolo contendere or its equi- valent, shall not of itself (a) adversely affect the rights of Director to indemnification except as may be provided herein, (b) create a presumption that Director did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, or (c) with respect to any criminal action or proceeding, create a presumption that Director had reasonable cause to believe that his conduct was unlawful.

Section 7. Remedies of Director in Cases of Determination not to Indemnify or to Advance Expenses.

(a) In the event that (i) an initial determina- tion is made that Director is not entitled to indemnifica- tion, (ii) advances are not made pursuant to this Agreement,
(iii) payment has not been timely made following a deter- mination of entitlement to indemnification pursuant to this Agreement or (iv) Director otherwise seeks enforcement of this Agreement, Director shall be entitled to a final adjudi- cation in an appropriate court of the State of Delaware of his entitlement to such indemnification or advance.

Alternatively, Director at his option may seek an award in arbi- tration to be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American Arbitration Association now in effect, which award is to be made within ninety (90) days following the filing of the demand for arbitration. The Company shall not oppose Director's right to seek any such adjudication or arbitration award. In any such proceeding or arbitration Director shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption.

(b) In the event an initial determination has been made, in whole or in part, that Director is not entitled to indemnification, the decision in the judicial proceeding or arbitration provided in paragraph (a) of this Section 7 shall be made de novo and Director shall not be prejudiced by reason of a determination that he is not entitled to indemnification.

(c) If an initial determination is made or deemed to have been made pursuant to the terms of this Agreement that Director is entitled to indemnification, the Company shall be bound by such determination in the absence of (i) a misrepresentation of a material fact by Director or (ii) a specific finding (which has become final) that all or any part of such indemnification is expressly prohibited by law.

(d) The Company shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding and enforceable. The Company shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

(e) Expenses incurred by Director in connection with his request for indemnification under, seeking enforcement of or to recover damages for breach of this Agreement shall be borne by the Company.

Section 8. Other Rights to Indemnification. Director's rights of indemnification and advancement of expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Director may now or in the future be entitled under applicable law, the Restated Certificate of Incorporation, By-laws, agreement, vote of stockholders, resolution of directors, or otherwise.

Section 9. Limitations on Indemnity. The Company shall not be liable under this Agreement to make any payment to Officer to the extent that Officer has already been

reimbursed pursuant to such D & O Insurance as the Company may maintain for Director's benefit. Notwithstanding the availability of such insurance, Director may also claim indemnification from the Company pursuant to this Agreement by assigning to the Company any claims under such insurance to the extent Director is paid by the Company.

Section 10. Duration and Scope of Agreement; Binding Effect. This Agreement shall continue so long as Director shall be subject to any possible Proceeding by reason of the fact that he is or was an Agent and shall be applicable to Proceedings commenced or continued after execution of this Agreement, whether arising from acts or omissions occurring before or after such execution. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Director and his spouse, assigns, heirs, devisees, executors, administrators and other legal representatives.

Section 11. Severability. If any provision or provisions of this Agreement (or any portion thereof) shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 12. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 13. Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Director to the fullest extent now or hereafter permitted by law.

Section 14. Headings. The headings of the Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 15. Definitions. For purposes of this Agreement:

(a) "Agent" shall mean any person who (i) is or was a director, officer or employee of the Company or a subsidiary of the Company whether serving in such capacity or as a director, officer, employee, agent, fiduciary or other official of another entity at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company or (ii) was a director, officer or employee of a corporation which was a predecessor corporation of the Company or a subsidiary of the Company whether serving in such capacity or as a director, officer, employee, agent, fiduciary or other official of another entity at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

(b) "Disinterested Director" shall mean a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by Director.

(c) "Expenses" shall include all direct and indirect costs (including, without limitation, attorneys' fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or out-of-pocket expenses and reasonable compensation for time spent by Director for which he is otherwise not compensated by the Company or any third party) actually and reasonably incurred in connection with either the investigation, defense, settlement or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement, applicable law or otherwise; provided, however, that "Expenses" shall not include any judgments, fines or ERISA excise taxes or penalties.

(d) "Independent Counsel" shall mean a law firm or a member of a law firm that neither is presently nor in the past five years has been retained to represent: (i) the Company or Director in any matter material to either party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Director in an action to determine Director's right to indemnification under this Agreement.

(e) "Liabilities" shall mean liabilities of any type whatsoever, including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement.

(f) "Proceeding" shall mean any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative.

(g) "Triggering Event" shall mean the acquisition by any person (other than the Company) of 30% or more of the outstanding shares of common stock of the Company unless a majority of the entire Board, which shall include the affirmative vote of at least one director from each class of the Board, shall have earlier approved such acquisition.

Section 16. Pronouns. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

Section 17. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any provision of this Agreement shall be deemed to constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 18. Notice by Director and Defense of Claims. Director agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification hereunder, whether civil, criminal, administrative or investigative; but the omission so to notify the Company will not relieve it from any liability which it may have to Director if such omission does not prejudice the Company's rights and if such omission does prejudice the Company's rights, it will relieve the Company from liability only to the extent of such prejudice; nor will such omission relieve the Company from any liability which it may have to Director otherwise than under this Agreement. With respect to any Proceeding as to which Director notifies the Company of the commencement thereof:

(a) The Company will be entitled to participate therein at its own expense; and

(b) Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to

assume the defense thereof, with counsel reasonably satisfactory to Director. After notice from the Company to Director of its election so to assume the defense thereof, the Company will not be liable to Director under this Agreement for any Expenses subsequently incurred by Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Director shall have the right to employ his counsel in such Proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Director unless
(i) the employment of counsel by Director has been authorized by the Company, (ii) Director shall have reasonably concluded that there may be a conflict of interest between the Company and Director in the conduct of the defense of such action or that counsel may not be adequately representing Director, (iii) a Triggering Event shall have occurred or (iv) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding as to which Director shall have made the conclusion provided for in (ii) above or if an event specified in (iii) above shall have occurred.

(c) The Company shall not be liable to indemnify Director under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on Director without Director's written consent. Neither the Company nor Director will unreasonably withhold their consent to any proposed settlement.

Section 19. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Director, to:

(b) If to the Company, to:

Potlatch Corporation
P.O. Box 3591
San Francisco, CA 94119
Attn: Chairman of the Board and Chief Executive Officer

With a copy to:

Secretary

or to such other address as may have been furnished to Director by the Company or to the Company by Director, as the case may be.

Section 20. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.

Section 21. Consent to Jurisdiction. The Company and Director each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

By ______________________      By _________________________

                               Director

                               ____________________________

                      Address: ____________________________

Schedule A to Exhibit (10)(j) February 1, 1997

Form of Indemnification Agreement with each Director is dated as of December 11, 1986, except for the Agreements with:

(i) Messrs. Charles R. Weaver and Richard B. Madden, which are dated as of February 20, 1987, and May 6, 1988, respectively;

(ii) Messrs. Allen F. Jacobson and Richard M. Morrow and Dr. William T. Weyerhaeuser, which are dated as of February 22, 1990;

(iii) Mr. John M. Richards, which is dated as of January 1, 1991;

(iv) Mrs. Vivian W. Piasecki and Mr. Richard M. Rosenberg, which are dated as of December 10, 1992; and

(v) Mr. Kenneth T. Derr, which is dated as of January 1, 1994.

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT, made and entered into this _____ day of ________ , 198_ ("Agreement"), by and between POTLATCH CORPORATION, a Delaware Company ("Company"), and ______________________________ (the "Officer"),

W I T N E S S E T H:

Whereas it has been the practice of this Company to provide officers with adequate protection through insur- ance or indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the Company; and

Whereas the current difficulty of obtaining significant amounts of insurance at reasonable premiums and the uncertainties relating to statutory indemnification have increased the difficulty of adequately protecting such persons; and

Whereas the Board of Directors of the Company (the "Board") has determined that the inability to so protect such persons is detrimental to the best interests of the Company's stockholders and that the Company should act to assure such persons that there will be increased cer- tainty of such protection in the future:

N o w, T h e r e f o r e, in consideration of the premises and the covenants in this Agreement, and intending to be legally bound, the Company and Officer do hereby covenant and agree as follows:

Section 1. Services by Officer. Officer agrees to serve as an officer so long as he is duly elected by the Board or appointed by the Chairman of the Board and until such time as he resigns or is relieved of his responsibilities. Officer may at any time and for any reason resign from such position or be relieved of his responsibilities (subject to any other contractual obligation or other obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Officer in any such position.

Exhibit (10)(k)

Section 2. Amendment of Certificate of Incorpora- tion. The Company shall use its best efforts to amend the Restated Certificate of Incorporation of the Company to contain in substance the following provisions:

A. A director of the corporation shall not be liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability which, by express provision of the General Corporation Law of Delaware as in effect from time to time (hereinafter the "Delaware Law"), cannot be eliminated.

B. (i) The corporation shall, to the fullest extent permitted by Delaware Law, indemnify any person (the "Indemnitee") who is or was involved in any manner (including, without limitation, as a party or a witness) in any threatened, pending or completed investigation, claim, action, suit or proceeding, whether civil, criminal, administrative or investigative (including without limitation, any action, suit or proceeding brought by or in the right of the corporation to procure a judgment in its favor) (a "Proceeding") by reason of the fact that Indemnitee is or was a director, officer or employee of the corporation, or is or was serving another entity in such capacity at the request of the corporation, against all expenses and liabilities actually and reasonably incurred by Indemnitee in connection with such Proceeding.

(ii) The right to indemnification conferred by this Article shall be presumed to have been relied upon by the Indemnitee and shall be enforceable as a contract right. The corporation may enter into contracts to provide individual Indemnitees with specific rights of indemnification to the fullest extent permitted by Delaware Law and may create trust funds, grant security interests, obtain letters of credit or use other means to ensure the payment of such amounts as may be necessary to effect the rights provided in this Article or in any such contract.

(iii) Upon making a request for indemnification, Indemnitee shall be presumed to be entitled to indemnification under this Article and the corporation shall have the burden of proof to overcome that presumption in reaching any contrary determination. Such indemnification shall include the right to receive payment in advance of any expenses incurred by the Indemnitee in connection

with any Proceeding, consistent with the provisions of Delaware Law.

C. Any repeal or modification of the foregoing provisions of this Article shall not adversely affect any right or protection of any director or any Indemnitee existing at the time of such repeal or modification.

D. The amendment or repeal of this Article shall require the approval of the holders of shares representing at least eighty percent (80%) of the shares of the corporation entitled to vote in the election of directors, voting as one class.

Section 3. Indemnification. The Company shall indemnify Officer to the fullest extent permitted by applicable law or the Restated Certificate of Incorporation of the Company in effect on the date hereof or as such laws or Restated Certificate of Incorporation may from time to time be amended (but, in the case of any such amendment, only to the extent such amendment permits the Company to provide broader indemnification rights than the law or Restated Certificate of Incorporation permitted the Company to provide before such amendment). The right to indemnification conferred in the Restated Certificate of Incorporation shall be presumed to have been relied upon by Officer in serving or continuing to serve the Company and shall be enforceable as a contract right. Without in any way diminishing the scope of the indemnification provided by this Section 3, the Company will indemnify Officer if and whenever he is or was a party or is threatened to be made a party to any Proceeding, including without limitation any such Proceeding brought by or in the right of the Company, by reason of the fact that he is or was an Agent or by reason of anything done or not done by him in such capacity, against Expenses and Liabilities actually and reasonably incurred by Officer or on his behalf in connection with the investigation, defense, settlement or appeal of such Proceeding. No initial finding by the Board, its counsel, Independent Counsel, arbitrators or the stockholders shall be effective to deprive Officer of the protection of this indemnity, nor shall a court to which Officer may apply for enforcement of this indemnity give any weight to any such adverse finding in deciding any issue before it, as it is intended that Officer shall be paid promptly by the Company all amounts necessary to effectuate the foregoing indemnity in full. In addition to, and not as a limitation of, the foregoing, the rights of indemnification of Officer provided under this Agreement shall include those rights set forth in Sections 4, 7 and 8 below.

Section 4. Advancement of Expenses and Costs; Letter of Credit.

(a) Advances. All reasonable Expenses incurred by or on behalf of Officer shall be advanced by the Company to Officer within 20 days after the receipt by the Company of a written request for an advance or advances of Expenses from time to time, whether prior to or after final disposition of a Proceeding (unless there has been a final determination that Officer is not entitled to be indemnified for such Expenses), including without limitation any Proceeding brought by or in the right of the Company. Officer's entitlement to advancement of Expenses shall include those incurred in connection with any Proceeding by Officer seeking an adjudication or award in arbitration pursuant to this Agreement. The requests shall reasonably evidence the Expenses incurred by Officer in connection therewith. If required by law at the time of such advance, Officer hereby undertakes to repay the amounts advanced if it shall ultimately be determined that Officer is not entitled to be indemnified pursuant to the terms of this Agreement.

(b) Letter of Credit. In order to secure the obligations of the Company to indemnify Officer under Section 3 hereof and to advance to Officer certain amounts under
Section 4(a) hereof, the Company shall obtain upon the occurrence of any Triggering Event, an irrevocable standby letter of credit naming Officer as the sole beneficiary, in an appropriate amount not less than $500,000, issued by a financial institution having assets in excess of $100 million and containing terms and conditions reasonably acceptable to Officer (the "Letter of Credit"). The Letter of Credit shall provide that Officer may from time to time draw certain amounts thereunder, upon the presentation to the issuer thereof of a certificate executed by Officer certifying (i) that Officer has made demand upon the Company for an amount not less than the amount he is drawing upon under the Letter of Credit and that the Company has refused to provide Officer with such amount and (ii) that Officer believes that he is entitled under the terms of this Agreement to the amount which he is drawing upon under the Letter of Credit.

(c) Term of Letter of Credit. Once the Company has obtained the Letter of Credit required by Section 4(b) hereof, the Company shall maintain and renew the Letter of Credit or a substitute letter of credit meeting the criteria of Section 4(b) hereof during the term of this Agreement in a manner such that the Letter of Credit shall have an initial term of five years, be renewed for successive five-year terms, and shall always have at least one year of its term remaining.

Section 5. Procedure for Determination of Entitlement to Indemnification.

(a) Whenever Officer believes that he is entitled to indemnification pursuant to this Agreement, Officer shall submit a written request for indemnification to the Company to the attention of the Chairman of the Board and Chief Executive Officer or the Vice Chairman of the Board with a copy to the Secretary. This request shall include documentation or information which is necessary for the determination of entitlement to indemnification and which is reasonably available to Officer. Determination of Officer's entitlement to indemnification shall be made not later than 60 days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceeding or any other event which could enable the Company to determine Officer's entitlement to indemnification. The Chairman of the Board and Chief Executive Officer, the Vice Chairman of the Board or the Secretary shall, promptly upon receipt of Officer's request for indemnification, advise the Board in writing that Officer has made such request for indemnification.

(b) The Company shall be entitled to select the forum in which Officer's entitlement to indemnification will be heard unless a Triggering Event has occurred, in which case Officer shall be entitled to select the forum. The Company or Officer, as the case may be, shall notify the other party in writing as to the forum selected, which selection shall be from among the following:

(i) The stockholders of the Company;

(ii) A quorum of the Board consisting of Disinterested Directors;

(iii) Independent Counsel selected by Officer, and reasonably approved by the Board, which counsel shall make the determination in a written opinion; or

(iv) A panel of three arbitrators, one of whom is selected by the Company, another of whom is selected by Officer and the last of whom is selected by the first two arbitrators so selected; or if for any reason three arbitrators are not selected within thirty days after the appointment of the first arbitrator, then selection of additional arbitrators to complete the three person panel shall be made by the American

Arbitration Association under its commercial arbitration rules now in effect.

Section 6. Presumptions and Effect of Certain Proceedings. Upon making a request for indemnification, Officer shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption in reaching any contrary determination. If the person or persons so empow- ered to make the determination shall have failed to make the requested indemnification within 60 days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceed- ing or any other event which could enable the Company to determine Officer's entitlement to indemnification, the requisite determination of entitlement to indemnification shall be deemed to have been made and Officer shall be abso- lutely entitled to indemnification under this Agreement, absent (i) misrepresentation by Officer of a material fact in the request for indemnification or (ii) a specific finding that all or any part of such indemnification is expressly prohibited by law. The termination of any Pro- ceeding by judgment, order, settlement, arbitration award or conviction, or upon a plea of nolo contendere or its equi- valent, shall not of itself (a) adversely affect the rights of Officer to indemnification except as may be provided herein, (b) create a presumption that Officer did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, or (c) with respect to any criminal action or proceeding, create a presumption that Officer had reasonable cause to believe that his conduct was unlawful.
Section 7. Remedies of Officer in Cases of Determination not to Indemnify or to Advance Expenses.

(a) In the event that (i) an initial determina- tion is made that Officer is not entitled to indemnifica- tion, (ii) advances are not made pursuant to this Agreement,
(iii) payment has not been timely made following a deter- mination of entitlement to indemnification pursuant to this Agreement or (iv) Officer otherwise seeks enforcement of this Agreement, Officer shall be entitled to a final adjudi- cation in an appropriate court of the State of Delaware of his entitlement to such indemnification or advance. Alter- natively, Officer at his option may seek an award in arbi- tration to be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American Arbitration Association now in effect, which award is to be made within ninety (90) days following the filing of the demand for arbitration. The Company shall not oppose Officer's right

to seek any such adjudication or arbitration award. In any such proceeding or arbitration Officer shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption.

(b) In the event an initial determination has been made, in whole or in part, that Officer is not entitled to indemnification, the decision in the judicial proceeding or arbitration provided in paragraph (a) of this Section 7 shall be made de novo and Officer shall not be prejudiced by reason of a determination that he is not entitled to indemnification.

(c) If an initial determination is made or deemed to have been made pursuant to the terms of this Agreement that Officer is entitled to indemnification, the Company shall be bound by such determination in the absence of (i) a misrepresentation of a material fact by Officer or (ii) a specific finding (which has become final) that all or any part of such indemnification is expressly prohibited by law.

(d) The Company shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding and enforceable. The Company shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

(e) Expenses incurred by Officer in connection with his request for indemnification under, seeking enforcement of or to recover damages for breach of this Agreement shall be borne by the Company.

Section 8. Other Rights to Indemnification. Officer's rights of indemnification and advancement of expenses provided by this Agreement shall not be deemed exclusive of any other rights to which Officer may now or in the future be entitled under applicable law, the Restated Certificate of Incorporation, By-laws, agreement, vote of stockholders, resolution of directors, or otherwise.

Section 9. Limitations on Indemnity. The Company shall not be liable under this Agreement to make any payment to Officer to the extent that Officer has already been reimbursed pursuant to such D & O Insurance as the Company may maintain for Officer's benefit. Notwithstanding the availability of such insurance, Officer may also claim indemnification from the Company pursuant to this Agreement by assigning to the Company any claims under such insurance to the extent Officer is paid by the Company.

Section 10. Duration and Scope of Agreement; Binding Effect. This Agreement shall continue so long as Officer shall be subject to any possible Proceeding by reason of the fact that he is or was an Agent and shall be applicable to Proceedings commenced or continued after execution of this Agreement, whether arising from acts or omissions occurring before or after such execution. This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Officer and his spouse, assigns, heirs, devisees, executors, administrators and other legal representatives.

Section 11. Severability. If any provision or provisions of this Agreement (or any portion thereof) shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

Section 12. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

Section 13. Interpretation of Agreement. It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Officer to the fullest extent now or hereafter permitted by law.

Section 14. Headings. The headings of the Sections and paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 15. Definitions. For purposes of this Agreement:

(a) "Agent" shall mean any person who (i) is or was a director, officer or employee of the Company or a subsidiary of the Company whether serving in such capacity or as a director, officer, employee, agent, fiduciary or other official of another entity at the request of, for the convenience of, or to represent the interests of the Company or a subsidiary of the Company or (ii) was a director,

officer or employee of a corporation which was a predecessor corporation of the Company or a subsidiary of the Company whether serving in such capacity or as a director, officer, employee, agent, fiduciary or other official of another entity at the request of, for the convenience of, or to represent the interests of such predecessor corporation.

(b) "Disinterested Director" shall mean a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by Officer.

(c) "Expenses" shall include all direct and indirect costs (including, without limitation, attorneys' fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or out-of-pocket expenses and reasonable compensation for time spent by Officer for which he is otherwise not compensated by the Company or any third party) actually and reasonably incurred in connection with either the investigation, defense, settlement or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement, applicable law or otherwise; provided, however, that "Expenses" shall not include any judgments, fines or ERISA excise taxes or penalties.

(d) "Independent Counsel" shall mean a law firm or a member of a law firm that neither is presently nor in the past five years has been retained to represent: (i) the Company or Officer in any matter material to either party, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Officer in an action to determine Officer's right to indemnification under this Agreement.

(e) "Liabilities" shall mean liabilities of any type whatsoever, including, but not limited to, judgments, fines, ERISA excise taxes and penalties, and amounts paid in settlement.

(f) "Proceeding" shall mean any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative.

(g) "Triggering Event" shall mean the acquisition by any person (other than the Company) of 30% or more of the outstanding shares of common stock of the Company unless a majority of the entire Board, which shall include the affirmative vote of at least one director from each class of the Board, shall have earlier approved such acquisition.

Section 16. Pronouns. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

Section 17. Modification and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties to this Agreement. No waiver of any provision of this Agreement shall be deemed to constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 18. Notice by Officer and Defense of Claims. Officer agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter which may be subject to indemnification hereunder, whether civil, criminal, administrative or investigative; but the omission so to notify the Company will not relieve it from any liability which it may have to Officer if such omission does not prejudice the Company's rights and if such omission does prejudice the Company's rights, it will relieve the Company from liability only to the extent of such prejudice; nor will such omission relieve the Company from any liability which it may have to Officer otherwise than under this Agreement. With respect to any Proceeding as to which Officer notifies the Company of the commencement thereof:

(a) The Company will be entitled to participate therein at its own expense; and

(b) Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Officer. After notice from the Company to Officer of its election so to assume the defense thereof, the Company will not be liable to Officer under this Agreement for any Expenses subsequently incurred by Officer in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Officer shall have the right to employ his counsel in such Proceeding but the fees and expenses of such counsel incurred after notice from the Company of its assumption of

the defense thereof shall be at the expense of Officer unless
(i) the employment of counsel by Officer has been authorized by the Company, (ii) Officer shall have reasonably concluded that there may be a conflict of interest between the Company and Officer in the conduct of the defense of such action or that counsel may not be adequately representing Officer, (iii) a Triggering Event shall have occurred or (iv) the Company shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Company. The Company shall not be entitled to assume the defense of any Proceeding as to which Officer shall have made the conclusion provided for in (ii) above or if an event specified in (iii) above shall have occurred.

(c) The Company shall not be liable to indemnify Officer under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Company shall not settle any action or claim in any manner which would impose any penalty or limitation on Officer without Officer's written consent. Neither the Company nor Officer will unreasonably withhold their consent to any proposed settlement.

Section 19. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Officer, to:

(b) If to the Company, to:

Potlatch Corporation
P.O. Box 3591
San Francisco, CA 94119
Attn: Chairman of the Board and Chief Executive Officer
or Vice Chairman of the Board

With a copy to:

Secretary

or to such other address as may have been furnished to Officer by the Company or to the Company by Officer, as the case may be.

Section 20. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within Delaware.

Section 21. Consent to Jurisdiction. The Company and Officer each hereby irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding which arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

By ______________________      By _________________________

                               Officer

                               ____________________________

                      Address: ____________________________

Schedule A to Exhibit (10)(k) February 1, 1997

Form of Indemnification Agreement dated as of:

(i) December 11, 1986, with the following officers:

John M. Richards, Chairman and Chief Executive Officer

L. Pendleton Siegel, President and Chief Operating \ Officer

Sandra T. Powell, Vice President

(ii) October 1, 1989, with George E. Pfautsch, Senior Vice President

(iii) April 1, 1990, Ralph M. Davisson, Vice President

(iv) March 14, 1991, with Charles R. Pottenger, Group Vice President

(v) March 1, 1992, with Thomas J. Smrekar, Group Vice President

(vi) January 1, 1993, with Richard L. Paulson, Vice President

(vii) April 10, 1995, with Gerald L. Zuehlke, Treasurer

(viii) April 10, 1995, with Kenneth L. Clark, Vice President

(ix) June 14, 1995, with John W. Bacon, Vice President and Betty R. Fleshman, Secretary

(x) May 29, 1996, with Craig H. Nelson, Vice President

Exhibit A
ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1995 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 (check one):

__ An Incentive Stock Option

__ A Nonqualified Stock Option

5. The Vesting Schedule for this Option is (check one):

__ The schedule specified in Paragraph 3 of the Stock Option Agreement except that no exercise or call will be permitted for a fractional Share.

__ As follows:

The document entitled Stock Option Agreement - Potlatch Corporation 1995 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.

Date:____________________       By_________________________________
                                 Vice President Employee Relations

Date:____________________       By_________________________________
                                  Employee

                                                 effective 12/05/96

                               -3-
                                                 Exhibit (10)(n)(ii)

ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN

Name of Outside Director:

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 Option is (check one):

__ 1,000 Shares (Director Election)

__ 500 Shares (Annual Grant)

This number is subject to adjustment as provided in
Section 13 of the Plan and Paragraph 6 of this stock option agreement.

The document entitled Stock Option Agreement - Potlatch Corporation 1995 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 of its duly authorized representative and the Outside Director has executed the same on the date indicated below.

Date:_____________________         By____________________________
                                            Secretary

Date:_____________________         By____________________________
                                         Outside Director


                                          Effective 12/05/96

                               -3-

                                          Exhibit (10)(n)(iii)

ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN

Name of Outside Director:

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 Option is (check one):

__ 1,000 Shares (Plan Approval/Director Election)

__ 500 Shares (Annual Grant)

This number is subject to adjustment as provided in
Section 13 of the Plan and Paragraph 6 of this stock option agreement.

The document entitled Stock Option Agreement - Potlatch Corporation 1995 Stock Incentive Plan is incorporated by this reference into this addendum.

The options specified in Section 3 of this Addendum shall be canceled and the Agreement with respect to the options specified in this Addendum shall be without force and effect if the 1995 Stock Incentive Plan adopted by the Board of Directors of this Corporation on December 7, 1995 is not approved by the stockholders of this Corporation at the 1996 annual meeting of stockholders or any adjournment thereof.

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 Outside Director has executed the same on the date indicated below.

Date:___________________     By_____________________________
                                        Secretary

Date:___________________     By_____________________________
                                     Outside Director

                                             Effective 12/07/95
                               -4-

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.

(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

Outside Director Option

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.

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.

 Number of Shares                            Vesting Schedule*

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

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 Corpora- tion 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 "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

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

Outside Director Option

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 in not exercised during any 30-day period described in (a) or (d) above, the option shall terminate at the close of business on the last day of the 30-day period; provided that if periods described in (a) and (d) are contiguous or overlap, unexercised options shall terminate at the close of business on the last day of the second 30-day period,

4. In the event of a Change in Control, this Option shall automatically include a stock appreciation right that may be called only during the periods described in Subparagraphs (a), (b), (c) or (d) of Paragraph 3. During any such period, Outside Director 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 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, Outside Director 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 during either of the 30-day periods described in Paragraph 3(a) or 3(d), for purposes of measuring the value of the stock appreciation right, "Fair Market Valuer" shall be the greater of (a) the value of the consideration per share that the Outside Director 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 prior to the consummation of such transaction, or (b) the value determined in good faith by the Committee (as composed on the day preceding the date of consummation of the transaction described in 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

Outside Director 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. 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 if called.

5. The term of this Option shall end and this Option shall not be exercisable after 10 years from the Date of Grant or, if earlier, upon the termination of Outside Director's services as a director of the Corporation, subject to the following provisions:

(a) If the termination of services if caused by Outside Director'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 within 36 months after Outside Director's death by Outside Director's executors or administrators or by any person or persons who shall have acquired this Option directly from Outside Director by bequest or inheritance.

(b) If the termination of services is caused by retirement after five years of service as an outside director of the Corporation, 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 within 36 months after the date of such termination.

(c) If the termination of services is for any reason other than death or retirement, 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 Outside Director's services terminate unless Outside Director 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 services is for cause, the option shall cease to be exercisable or callable at the time of such termination. The Board shall determine whether Outside Director's services are terminated for cause in accordance with the Corporation's Restated Certificate of Incorporation.

Outside Director Option

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 the surviving corporation in 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. Except to the extent Paragraph 3 (and Paragraph 4) permit the exercise of Options (and stock appreciation rights) within a specified time period before or after a Change in Control, a dissolution or liquidation of the Corporation or a merger, consolidation or other reorganization in which the Corporation is not the surviving corporation shall cause this Option to terminate on the effectlve date of such dissolution, liquidation or reorganization, unless the agreement of merger, consolidation or reorganization shall otherwise provide. In the event that the Corporation undergoes a reverse merger transaction, Outside Director (or Outside Director's representative) shall be entitled to receive the same consideration in such transaction (including, without limitation, cash) as other stockholders are entitled to receive.

8. Outside Director, or Outside Director's representative, may exercise this Option by giving written notice to the Corporation at San Francisco, California, attention of the Secretary, 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

Outside Director Option

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 Outside Director, 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. 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, Outside Director will make arrangements satisfactory to the Corporation to enable it to satisfy such withholding requirements.

10. Neither Outside Director nor Outside Director'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 Outside Director or Outside Director's representative.

11. Unless at the time Outside Director 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

Outside Director Option

registered pursuant to the provisions of that Act or if an exemption from registration is available."

12. 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.

13. Nothing in this Agreement shall be construed as giving Outside Director the right to be retained as a director of the Corporation.

14. This Agreement shall be interpreted and construed in accordance with the laws of the State of California.

Outside Director Option