UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: February 20, 2008
(Date of Earliest Event Reported)
POTLATCH CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 001-32729 | 82-0156045 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification Number) |
| 601 W. First Avenue, Suite 1600, Spokane WA | 99201 | |
| (Address of principal executive offices) | (Zip Code) |
(509) 835-1500
(Registrant’s telephone number,
including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(e) At a meeting of the Board of Directors of Potlatch Corporation (the “Company”), held on February 20, 2008, the Board adopted amendments to the Potlatch Corporation Management Performance Award Plan II (the “MPAP”) which are effective for the 2008 award year.
As amended, corporate performance under the MPAP will now be measured against a funds from operations target and operating division performance will now be measured against an earnings before income tax, depreciation, depletion and amortization target. Prior to the amendment, corporate performance was measured by the return on stockholder’s equity relative to peer companies and operating division performance was measured against the return on invested capital relative to budget.
The corporate performance modifier has also been amended to consist of four categories of corporate performance: superior, target, threshold, and below threshold. Depending on the level of corporate performance, the target bonus pool under the MPAP will be funded as follows: superior corporate performance will result in 200% funding; target corporate performance will result in 100% funding; threshold corporate performance will result in 25%funding; and below threshold corporate performance will result in no funding.
The individual performance modifier has also been amended to range from 0% to 200%, with a threshold of 25%. Prior to the amendment, the individual performance modifier ranged from 0 to 1.4 times target, with a threshold of 0.5 times.
The definition of “change in control” under the MPAP has also been amended to include an acquisition by any person or entity of beneficial ownership of 30% or more in either the common stock of the Company or the combined voting power of the outstanding voting securities of the Company other than pursuant to a business combination allowable under the MPAP.
The above is a summary of the material amendments to the MPAP and does not purport to be complete. This summary is qualified in its entirety by reference to the Management Performance Plan II, a copy of which is attached as Exhibit (10)(r)(iv).
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
|
(10)(r)(iv) |
Potlatch Corporation Management Performance Award Plan II, adopted September 16, 2006, as amended through February 20, 2008. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: February 26, 2008 | POTLATCH CORPORATION | |||||||
| By: | /s/ Michael S. Gadd | |||||||
| Name: Michael S. Gadd | ||||||||
| Title: Corporate Secretary | ||||||||
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EXHIBIT INDEX
|
Exhibit No. |
Description of Exhibit |
|
|
(10)(r)(iv) |
Potlatch Corporation Management Performance Award Plan II, adopted September 16, 2006, as amended through February 20, 2008. |
Exhibit (10)(r)(iv)
POTLATCH CORPORATION
MANAGEMENT PERFORMANCE AWARD PLAN II
Effective January 1, 2005
As Amended through February 20, 2008
POTLATCH CORPORATION
MANAGEMENT PERFORMANCE AWARD PLAN II
Effective January 1, 2005
As Amended through February 20, 2008
| 1. | ESTABLISHMENT AND PURPOSE |
| (a) | The Potlatch Corporation Management Performance Award Plan II (the “Plan”) was adopted effective January 1, 2005, by the Board of Directors of Potlatch Corporation to provide meaningful financial rewards to those employees of Potlatch Corporation and its subsidiaries who are in a position to contribute to the achievement by Potlatch Corporation and its subsidiaries of significant improvements in profit performance and growth. |
| (b) | The Plan is the successor plan to the Potlatch Corporation Management Performance Award Plan (the “Prior Plan”). Effective December 31, 2004, the Prior Plan was frozen and no new Award deferrals will be made under it; provided, however, that any Award deferrals made under the Prior Plan before January 1, 2005, continue to be governed by the terms and conditions of the Prior Plan as in effect on December 31, 2004, or on the date of any later amendment, provide that such amendment is not a material modification of the Prior Plan under Section 409A of the Code and the regulations promulgated thereunder. |
| (c) | Any Award deferrals made under the Prior Plan after December 31, 2004, are deemed to have been made under the Plan and all such deferrals are governed by the terms and conditions of the Plan as it may be amended from time to time. |
| (d) | The Plan is intended to comply with the requirements of Section 409A of the Code, to the extent applicable. |
| 2. | DEFINITIONS |
| (a) | “Award” means an award under the Plan. |
| (b) | “Award Year” means a Year with respect to which Awards are made. |
| (c) | “Board of Directors” means the Board of Directors of Potlatch. |
| (d) | “CEO” means the Chief Executive Officer of Potlatch. |
| (e) | “Change of Control” means the effective date of any one of the following events: |
| (i) |
Upon consummation of a reorganization, merger or consolidation involving Potlatch (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals |
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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 Potlatch entitled to vote generally in the election of directors (the “Outstanding Voting Securities”) immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns Potlatch either directly or through one or more subsidiaries), (B) no Person (as defined in Section 2(e)(iii) below) (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by Potlatch or any direct or indirect wholly owned subsidiary of Potlatch or such other corporation resulting from such Business Combination) beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership is based on the beneficial ownership, directly or indirectly, of Outstanding Common Stock or Outstanding Voting Securities immediately prior to the Business Combination and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or |
| (ii) | On the date that individuals who, as of May 19, 2006, 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 May 19, 2006, whose election, or nomination for election by Potlatch’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors, an actual or threatened solicitation of proxies or consents or any other actual or threatened action by, or on behalf of any Person other than the Board; or |
| (iii) |
Upon the acquisition after May 19, 2006, 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 thirty percent (30%) or more of either (A) the then Outstanding Common Stock or (B) the combined voting power of the |
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Outstanding Voting Securities; provided, however, that the following acquisitions shall not be deemed to be covered by this Section 2(e)(iii): (x) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by Potlatch, (y) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by Potlatch or any direct or indirect wholly owned subsidiary of Potlatch or (z) any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of Section 2(e)(i); or |
| (iv) | Upon the consummation of the sale of all or substantially all of the assets of Potlatch or approval by the stockholders of Potlatch of a complete liquidation or dissolution of Potlatch. |
| (f) | “Code” means the Internal Revenue Code of 1986, as amended. |
| (g) | “Committee” means the committee which shall administer the Plan in accordance with Section 3. |
| (h) | “Corporation” means Potlatch and its Subsidiaries. |
| (i) | “Employee” means a full-time salaried employee (including any Officer) of the Corporation. |
| (j) | “Guidelines” means the Potlatch Corporation Stock Ownership Guidelines. |
| (k) | “Officer” means any Employee who is an elected officer of the Corporation and who is the chief manager of an Organization Unit. |
| (l) | “Organization Unit” means a major organizational component or profit center of the Corporation as determined in accordance with rules and regulations adopted by the Committee, the Employees of which are eligible to participate in the Plan. |
| (m) | “Participant” means any Employee actively employed by the Corporation during an Award Year in an Organization Unit in a position designated as a participating position in accordance with rules and regulations adopted by the Committee. |
| (n) | “Plan” means the Potlatch Corporation Management Performance Award Plan II, adopted effective January 1, 2005, as amended through February [DATE], 2008. |
| (o) | “Potlatch” means Potlatch Corporation, a Delaware corporation. |
| (p) | “Prior Plan” means the Potlatch Corporation Management Performance Award Plan, adopted July 20, 1973. |
| (q) |
“Separation from Service” means termination of a Participant’s employment as a common-law employee of the Corporation. A Separation from Service will not |
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be deemed to have occurred if a Participant continues to provide services to the Corporation in a capacity other than as an employee and if the Participant is providing services at an annual rate that is fifty percent (50%) or more of the services rendered, on average, during the immediately preceding three (3) full calendar years of employment with the Corporation (or if employed by the Corporation less than three (3) years, such lesser period) and the annual remuneration for such services is fifty percent (50%) or more of the annual remuneration earned during the final three (3) full calendar years of employment (or if less, such lesser period); provided, however, that a Separation from Service will be deemed to have occurred if a Participant’s service with the Corporation is reduced to an annual rate that is less than twenty percent (20%) of the services rendered, on average, during the immediately preceding three (3) full calendar years of employment with the Corporation (or if employed by the Corporation less than three (3) years, such lesser period) or the annual remuneration for such services is less than twenty percent (20%) of the annual remuneration earned during the three (3) full calendar years of employment with the Corporation (or if less, such lesser period). |
| (r) | “Subsidiary” means any corporation fifty percent (50%) or more of the voting stock of which is owned by Potlatch or by one or more of such corporations. |
| (s) | “Year” means the calendar year. |
| 3. | ADMINISTRATION OF THE PLAN |
The Plan shall be administered by the Executive Compensation and Personnel Policies Committee of the Board of Directors, or such other committee as may be designated and appointed by the Board of Directors, which shall consist of at least three (3) members of the Board of Directors. No member of the Committee shall be eligible to participate and receive Awards under the Plan while serving as a member of the Committee.
In addition to the powers and duties otherwise set forth in the Plan, the Committee shall have full power and authority to administer and interpret the Plan, to establish procedures for administering the Plan, to adopt and periodically review such rules and regulations consistent with the terms of the Plan as the Committee deems necessary or advisable in order to properly carry out the provisions of the Plan, to receive and review an annual report to be submitted by the CEO which shall describe and evaluate the operation of the Plan, and to take any and all necessary action in connection therewith. The Committee’s interpretation and construction of the Plan and its determination of the amount of any Award thereunder shall be conclusive and binding on all persons. In making such determinations, the Committee shall be entitled to rely on information and reports provided by the CEO.
Within thirty (30) days after a Change of Control, the Committee shall appoint an independent committee consisting of at least three (3) current (as of the effective date of the Change of Control) or former Corporation officers and directors, which shall thereafter administer all claims for benefits under the Plan. Upon such appointment the Committee shall cease to have any responsibility for claims administration under the Plan.
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| 4. | ELIGIBILITY AND PARTICIPATION |
In accordance with rules and regulations adopted by the Committee, the CEO shall designate the Organization Units and the individuals that are eligible to participate in the Plan.
| 5. | AWARDS |
Awards shall be determined in accordance with Sections 6, 7 and 8 and announced to Participants by March 1 following the close of the Award Year and, unless deferred in accordance with Section 9, shall be paid no later than March 15 following the close of the Award Year.
| 6. | DETERMINING THE ACTUAL FUNDED BONUS POOL |
The total amount of Awards made to all Participants with respect to any Award Year shall be determined pursuant to this Section 6.
| (a) | Target Bonus Pool . The Target Bonus Pool for an Award Year shall be determined first. The Target Bonus Pool for an Award Year shall be the sum of the Target Bonuses for all Participants for the Award Year. A Participant’s Target Bonus shall be an amount equal to a percentage of the Participant’s base salary, based on the position to which the Participant is assigned, as determined in accordance with rules and regulations adopted by the Committee. If a Participant does not qualify as a Participant for the entire period of the applicable Award Year, the Target Bonus will be prorated to reflect the number of half calendar months that the Employee was a Participant. |
| (b) | Actual Funded Bonus Pool . The Actual Funded Bonus Pool for an Award Year shall be determined next. The Actual Funded Bonus Pool for each Award Year shall be determined in accordance with rules and regulations adopted by the Committee. The Actual Funded Bonus Pool shall be represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Actual Funded Bonus Pool for an Award Year shall be equal to the Target Bonus Pool for the Award Year adjusted by one or more “Corporate Performance Modifiers”. A Corporate Performance Modifier shall be a percentage determined in accordance with rules and regulations adopted by the Committee. A Corporate Performance Modifier may range from a minimum of zero to a maximum of two hundred percent (200%). In its rules and regulations concerning the determination of the Corporate Performance Modifiers, the Committee may take into consideration certain financial measures of profit performance (including, without limitation, funds from operations (“FFO”), consolidated earnings per share, return on shareholder equity, and return on invested capital) and a comparison of the Corporation’s profit performance with the profit performance of other major competitors. |
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| 7. | ALLOCATING THE ACTUAL FUNDED BONUS POOL AMONG ORGANIZATION UNITS |
The Actual Funded Bonus Pool for each Award Year shall be allocated among the Organization Units in accordance with rules and regulations adopted by the Committee. In the case of the Organization Unit that includes corporate management employees (including the CEO), this allocation shall be based on the portion of the Target Bonus Pool that was attributable to the employees in that Organization Unit. In the case of Organization Units that include operating division employees, this allocation shall be based on what portion of the Target Bonus Pool was attributable to the employees in each Organization Unit (25% weight), and on the extent to which the division met its earnings before income tax, depreciation, depletion and amortization (“EBITDDA”) target (75% weight). The resulting allocations may be adjusted up or down at the discretion of the CEO.
| 8. | DETERMINING INDIVIDUAL AWARDS |
Each Officer shall determine the amount of the Award to each Participant who is assigned to such Officer’s Organization Unit in accordance with rules and regulations adopted by the Committee, by allocating such Organization Unit’s portion of the Actual Funded Bonus Pool among the Participants employed in such Organization Unit based on the amount of the Participant’s Target Bonus and the Participant’s individual performance. Each Participant’s Award shall be subject to review by and approval of the CEO. Notwithstanding the foregoing, in the case of an Award to an Officer, the CEO, or any individual who is subject to Section 16 of the Exchange Act , this determination shall be made solely by the Committee.
| 9. | FORM AND TIME OF PAYMENT OF AWARDS |
| (a) | All non-deferred Awards under the Plan shall be paid in cash to all Participants other than those subject to the Guidelines. For a Participant subject to the Guidelines, the Award shall be paid in a combination of fifty percent (50%) cash and fifty percent (50%) common stock of the Corporation if the Participant has not incrementally reached the required ownership level at the end of each of his or her first five (5) years under the Guidelines or has not maintained one hundred percent (100%) of the applicable guideline amount in subsequent years. The number of shares of common stock shall be determined by dividing the dollar value of the portion of the Award allocated as stock by the closing price of the Corporation’s common stock on the date of the Committee meeting at which the Award payments are approved. Award amounts shall be prorated for the portion of the Award Year the Employee was an eligible Participant in accordance with rules and regulations adopted by the Committee. A Participant whose employment is terminated before the payment of an Award for any reason other than death, disability or early, normal or deferred retirement under the Salaried Employees’ Retirement Plan shall not be entitled to receive an Award. |
| (b) (i) | Notwithstanding the foregoing, a Participant may elect to defer receipt of payment of a single Award or all future Awards until after his or her Separation from Service in accordance with rules and regulations adopted by the Committee and in compliance with Section 409A of the Code. |
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| (ii) | If the payment of the Award would cause the Participant’s annual compensation to exceed the amount deductible by the Corporation pursuant to the application of Section 162(m) of the Code, the Participant shall be required to defer receipt of the portion of the Award that would be non-deductible in the Award Year until after his or her Separation from Service. |
| (c) | An Award, the payment of which is deferred under subsection (b) above, shall be converted at the Participant’s election into cash and full and fractional stock units equal to the number of shares of the Corporation’s common stock determined by dividing the dollar value of the portion of the Award to be converted into stock units, if any, by the closing price of the Corporation’s common stock on the date of the Committee meeting at which the Award payments are approved (or the most recent trading day if the Committee does not meet on a trading day). If the Award is deferred under subsection (b)(ii) above, the election to defer all or a portion of the Award into stock units is voluntary, and the Participant is subject to the Corporation’s Securities Law Compliance Policy for Directors, Officers and Employees (the “Trading Policy”), then the portion of the Award to be deferred into stock units shall be held in cash subject to subsection (d) below and shall be converted into stock units as of the first day of the next open window period (the “Open Conversion Date”) under the Trading Policy, such stock units to be equal to the number of shares of the Corporation’s common stock determined by dividing the dollar value of the portion of the Award to be converted into stock units by the closing price of the Corporation’s common stock on the Open Conversion Date. |
On each dividend payment date, dividend equivalents shall be credited to each full and fractional stock unit to the extent such stock unit was in the Participant’s deferred account on the dividend record date immediately preceding the applicable dividend payment date. Such dividend equivalents shall be converted into stock units as of the dividend payment date by dividing the amount of the dividend equivalents by the closing price of the Corporation’s common stock on the dividend payment date.
In the event of a change in the number of outstanding shares of the Corporation’s common stock by reason of a stock split, stock dividend, reclassification or other distribution of shares or other similar changes in the capitalization of the Corporation, an appropriate adjustment shall be made in the number of each Participant’s stock units determined as of the date of such occurrence.
| (d) |
The cash portion of an Award, the payment of which was deferred under subsection (b) above, shall be credited with additional amounts during the period of deferral commencing on the first day of the month coinciding with or next following the date Awards are normally paid pursuant to Section 5 above, and continuing |
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during the period of deferral up to the last day of the month in which the amounts deferred hereunder are paid, and payable at the time that the deferred Awards are paid. Such additional amounts shall be computed at seventy percent (70%) of the higher of the following averages during the period of deferral; (i) the prime rate charged by the major commercial banks as of the first business day of each calendar month (as reported in an official publication of the Federal Reserve System), or (ii) the average monthly long-term rate of A rated corporate bonds (as published in Moody’s Bond Record), and shall be compounded annually. Notwithstanding the foregoing, in no event shall such additional amount exceed the maximum interest rate allowable by law. |
| (e) | Notwithstanding any other provision of the Plan, the Board of Directors may, in its sole discretion, determine limits on the amount and alter the time and form of payment of Awards with respect to an Award Year if any of the following conditions occurs: (i) Potlatch does not declare cash dividend with respect to its common stock during such Award Year, or (ii) the Actual Funded Bonus Pool determined pursuant to Section 6(b) for such Award Year exceeds six percent (6%) of Potlatch’s consolidated net earnings, before taxes, for such Award Year. Notwithstanding the foregoing, the Board of Directors shall not alter the time and form of payment of any Award for which a Participant has made a deferral election in accordance with this Section 9, unless such alteration is permissible under Section 409A of the Code. |
| 10. | SPECIAL AWARDS FUND |
| (a) | Creation of the Fund . A Special Awards Fund shall be established with respect to each Award Year in an amount determined by the Committee but not to exceed ten percent (10%) of the Target Bonus Pool for such Award Year. The Special Awards Fund shall be represented by a bookkeeping entry only and no Employee of the Corporation shall have any vested right therein. The Special Awards Fund shall be in addition to the Bonus Pool created under Sections 5-9 above. |
| (b) | Eligibility . Awards may be made in a total amount equal to the Special Awards Fund to those Employees of the Corporation who are not Participants with respect to such Award Year, but who in the judgment of an Officer have made outstanding contributions to the success of the Corporation. |
| (c) | Selection . After the close of the Award Year, recipients of Awards under the Special Awards Fund shall be selected by the CEO upon the recommendation of an Officer. The amount of each individual’s Award under the Special Awards Fund shall be determined by the CEO upon the recommendation of an Officer and shall fall within a range set forth in rules and regulations adopted by the Committee, expressed as minimum and maximum percentages of annualized salary at the end of the year. Awards under the Special Awards Fund shall be announced by March 1 following the close of the Award Year. |
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| (d) | Payment . Awards under the Special Awards Fund shall be paid in full in cash no later than March 15 following the close of the Award Year. |
| 11. | NO ASSIGNMENT OF INTEREST |
The interest of any person in the Plan or in payments to be received pursuant to it shall not be subject to option or assignable either by voluntary or involuntary assignment or by operation of law, and any act in violation of this section shall be void.
| 12. | EMPLOYMENT RIGHTS |
The selection of an Employee as a Participant shall not confer any right on such Employee to receive an Award under the Plan or to continue in the employ of the Corporation or limit in any way the right of the Corporation to terminate such Participant’s employment at any time.
| 13. | AMENDMENT OR TERMINATION OF THE PLAN |
The Board of Directors may amend, suspend or terminate the Plan at any time; provided, however, that any amendment adopted or effective on or after July 1 in any Award Year which would adversely affect the calculation of a Participant’s Award or the Participant’s eligibility for an Award for such Award Year shall be applied prospectively from the date the amendment was adopted or effective, whichever is later; provided, further that if the Plan is terminated effective on or after July 1 in any Award Year such termination shall not adversely affect any Participant’s eligibility for a pro rata share of an Award for the period of such Award Year before the date the termination was adopted or effective, whichever is later, subject to all other applicable terms and conditions of the Plan. In the event of termination of the Plan, Awards deferred under section 9(b) shall be paid at such times and in such amounts as provided in section 9(b) and the rules and regulations adopted by the Committee and in compliance with Section 409A of the Code. The foregoing notwithstanding, no amendment adopted nor termination of the Plan following the occurrence of a Change of Control shall be effective if it (a) would reduce a Participant’s Target Bonus for the Award Year in which the Change of Control occurs, (b) would reduce an Award earned and payable to a Participant in respect of the Award Year that ended immediately before the Award Year in which the Change of Control occurs, or (c) modify the provisions of this sentence.
Notwithstanding the foregoing, the Vice President, Human Resources of Potlatch Forest Products Corporation shall have the power and authority to amend the Plan with respect to any amendment that (i) does not materially increase the cost of the Plan to the Company or (ii) is required to comply with new or changed legal requirements applicable to the Plan, including, but not limited to, section 409A of the Code.
| 14. | SUCCESSORS AND ASSIGNS |
The Plan shall be binding upon the Corporation, its successors and assigns, and any parent corporation of the Corporation’s successors or assigns. Notwithstanding that the Plan may be binding upon a successor or assign by operation of law, the Corporation shall require any successor or assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Corporation would be if no succession or assignment had taken place.
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| 15. | CHANGE OF CONTROL |
Notwithstanding any other provision of the Plan to the contrary, this Section 15 shall apply with respect to the determination of Awards and the payment of Awards following a Change of Control. In the event that the employment of a Participant terminates following a Change of Control, such Participant shall be guaranteed payment of a prorated Award for the Award Year in which the Change of Control occurs determined in accordance with Section 8 based on the Participant’s Target Bonus. A prorated Target Bonus shall be calculated by multiplying the Participant’s Target Bonus for the applicable Award Year by a fraction, the numerator of which is the number of full months in the Award Year completed at the effective time of the Change of Control, and the denominator of which is twelve (12). With respect to any Award earned but not yet paid in respect of the Award Year that ended immediately before the Award Year in which a Change of Control that also is a change in the ownership or effective control the Corporation or a change in the ownership of a substantial portion of the assets of the Corporation as defined in the regulations promulgated under Section 409A of the Code (a “Code Section 409A Change of Control”) occurs, each Participant shall be guaranteed payment of his or her Award determined in accordance with Section 8 based on the performance results for the applicable Award Year. Awards paid pursuant to this Section 15 shall be paid in a lump sum in cash upon the earliest of (i) the time prescribed in Sections 5 and 9(a), (ii) the date the Participant Separates from Service for any reason other than “misconduct,” as defined in the Corporation’s Severance Program for Executive Employees or Salaried Employees’ Severance Benefits Plan, whichever applies to the Participant, following the Code Section 409A Change of Control, or (iii) with respect to an Award for which a Participant has made a deferral election in accordance with Section 9 of the Plan, within the twelve (12)-month period following the termination of the Plan, provided that the Plan is terminated within the period beginning thirty (30) days before and ending twelve (12) months following the effective date of the Code Section 409A Change of Control.
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