8-K

0001193125-14-057121.txt : 20140218 0001193125-14-057121.hdr.sgml : 20140217 20140218162854 ACCESSION NUMBER: 0001193125-14-057121 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20140211 ITEM INFORMATION: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140218 DATE AS OF CHANGE: 20140218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Clearwater Paper Corp CENTRAL INDEX KEY: 0001441236 STANDARD INDUSTRIAL CLASSIFICATION: PAPERBOARD MILLS [2631] IRS NUMBER: 203594554 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34146 FILM NUMBER: 14622531 BUSINESS ADDRESS: STREET 1: 601 WEST RIVERSIDE AVENUE STREET 2: SUITE 1100 CITY: SPOKANE STATE: WA ZIP: 99201 BUSINESS PHONE: 509.344.5900 MAIL ADDRESS: STREET 1: 601 WEST RIVERSIDE AVENUE STREET 2: SUITE 1100 CITY: SPOKANE STATE: WA ZIP: 99201 FORMER COMPANY: FORMER CONFORMED NAME: Potlatch Forest Products CORP DATE OF NAME CHANGE: 20080728 8-K 1 d675587d8k.htm 8-K 8-K

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 (Date of earliest event reported): February 11, 2014

CLEARWATER PAPER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

001-34146

20-3594554

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

601 West Riverside Ave., Suite 1100

Spokane, WA

99201

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (509) 344-5900

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:

¨	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)

Approval of Long Term Incentive Plan Form Agreement

On February 11, 2014, the Compensation Committee of the Board of Directors of Clearwater Paper Corporation (the “Company”) approved a form of Performance Share Agreement, a form of Restricted Stock Unit Agreement and a form of Stock Option Agreement to be used from time to time by the Company under the Company’s 2008 Stock Incentive Plan. Copies of the Performance Share Agreement, Restricted Stock Unit Agreement and Stock Option Agreement forms are attached hereto as Exhibits 10.1, 10.2 and 10.3, respectively, and are incorporated herein by reference.

Approval of Amended and Restated Annual Incentive Plan

On February 11, 2014, the Compensation Committee also approved amendments to the Company’s Annual Incentive Plan (the “Incentive Plan”). The Incentive Plan is designed to link compensation to annual company performance by awarding cash bonuses for achieving pre-established performance goals. The amendments approved by the Compensation Committee included the elimination of a separate bonus pool for divisional performance and the inclusion of a clawback provision.

The above summary is qualified in its entirety by reference to the text of the Incentive Plan, which is attached hereto as Exhibit 10.4 and incorporated herein by reference.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


10.1		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement, as amended and restated February 11, 2014, to be used for annual performance share awards approved subsequent to December 31, 2013.

10.2		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Agreement, as amended and restated February 11, 2014, to be used for annual restricted stock unit awards approved subsequent to December 31, 2013.

10.3		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Stock Option Agreement, as amended and restated February 11, 2014, to be used for annual restricted stock unit awards approved subsequent to December 31, 2013.

10.4		Clearwater Paper Corporation Amended and Restated Annual Incentive Plan, effective as of January 1, 2014.

SIGNATURES

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.

Date: February 18, 2014


CLEARWATER PAPER CORPORATION

By:		/s/ Michael S. Gadd
		Michael S. Gadd, Corporate Secretary

EXHIBIT INDEX


Exhibit		Description

10.1		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Performance Share Agreement, as amended and restated February 11, 2014, to be used for annual performance share awards approved subsequent to December 31, 2013.

10.2		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Restricted Stock Unit Agreement, as amended and restated February 11, 2014, to be used for annual restricted stock unit awards approved subsequent to December 31, 2013.

10.3		Clearwater Paper Corporation 2008 Stock Incentive Plan—Form of Stock Option Agreement, as amended and restated February 11, 2014, to be used for annual restricted stock unit awards approved subsequent to December 31, 2013.

10.4		Clearwater Paper Corporation Amended and Restated Annual Incentive Plan, effective as of January 1, 2014.

EX-10.1 2 d675587dex101.htm EX-10.1 EX-10.1

Exhibit 10.1

CLEARWATER PAPER CORPORATION

PERFORMANCE SHARE AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS PERFORMANCE SHARE AGREEMENT (this “Agreement”) is made and entered into on the Grant Date specified in the attached Addendum to this Agreement by and between CLEARWATER PAPER CORPORATION, a Delaware corporation (the “Corporation”), and the Employee named in the Addendum (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Corporation maintains the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Employee has been selected to receive a contingent grant of Performance Shares under Section 11 of the Plan;

NOW, THEREFORE, for valuable consideration, the parties agree as follows:

1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms used in this Agreement shall have the meanings set forth in this Section 1. Capitalized terms not defined in this Agreement shall have the same definitions as in the Plan.

(a) “Addendum” means the attached Addendum.

(b) “Disability” means a condition pursuant to which the Employee is—

(i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or

(ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Corporation.

(c) “Grant Date” means the effective date of the Award of the Performance Shares to the Employee, as specified in the Addendum.

(d) “Retirement” means (i) the Employee’s early or normal retirement and commencement of benefit payments under the Retirement Plan, or (ii) if the Employee does not have an accrued benefit under the Retirement Plan, the Employee’s termination of Service on or after the earlier of his or her (A) attainment of age 65 or (B) attainment of age 55 and completion of 10 years of Service.

(d) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

(e) “Service” shall have the meaning given such term under the Plan, except that as used in this Agreement the term “Service” shall be limited to employment and shall exclude service performed as an Outside Director or as a Consultant.

2. Award. Subject to the terms of this Agreement and the Addendum, the Employee is hereby awarded a target contingent grant of Performance Shares in the number set forth in the attached Addendum (the “Award”). The number of Shares actually payable to the Employee is contingent on the performance achieved as specified in the Addendum and in this Agreement. This Award has been granted pursuant to the Plan and is subject to all the terms and provisions thereof, a copy of which is attached and the terms and conditions of which are incorporated by reference into this Agreement.

3. Performance Measure. The Performance Measure is a comparison of the percentile ranking of the Corporation’s total stockholder return (stock price appreciation plus dividends as calculated pursuant to Section 5 below, as the same may be adjusted pursuant to Section 12 below) as compared to the total stockholder return performance of a selected group of companies as specified in the Performance Schedule contained in the Addendum.

4. Performance Period. Subject to Section 12 below (which provides for a shortened Performance Period in the event of a Change of Control), the Performance Period is the period specified in the Addendum and represents the period during which the total stockholder return for the Corporation and the selected comparison group of companies is measured.

5. Calculation of Total Stockholder Return. Subject to the adjustment to the forty trading day measurement period as set forth in Section 12 below, total stockholder return for a Share and for the stock of a member of the comparison group of companies shall be expressed as a percentage and calculated by:

(i)

subtracting (a) the beginning average stock price for one share of stock (determined by calculating the average closing stock price during the forty trading days preceding the beginning of the Performance Period) from (b) the ending average stock price for such share of stock (determined by calculating the average closing stock price during the final forty trading days of the Performance Period, after taking into account the effect of any of the events described in Section 12 of the Plan occurring with respect to the Corporation or any member of the comparison group); and

(ii)

adding to the difference determined under subparagraph (i) above all cash dividends actually paid on such share of stock during the Performance Period (and assuming any such cash dividends are reinvested to purchase common stock of the dividend paying company at the closing price on the last trading date of the month during which such dividends are paid and including the value of such additional shares of common stock); and

(iii)

dividing the sum determined by subparagraphs (i) and (ii) above by the beginning average stock price determined pursuant to clause (a) of subparagraph (i) above.

6. Dividend Equivalents. During the Performance Period, dividend equivalents shall be converted into additional Performance Shares based on the closing price of the Corporation’s Common Stock on the New York Stock Exchange on the last trading day of the month during which such dividends are paid. Such additional Performance Shares shall vest or be forfeited in the same manner as the underlying Performance Shares to which they relate.

7. Settlement of Awards. Pursuant to Section 5 above, the Corporation shall deliver to the Employee one Share for each earned Performance Share (and, as applicable, for the accrued dividend equivalents) as determined in accordance with the provisions set forth in the Addendum and this Agreement. Any earned Performance Shares payable to the Employee (including Shares payable pursuant to Section 6 above) shall be paid solely in Shares. Any fractional Share will be rounded to the closest whole Share.

8. Time of Payment. Except as otherwise provided in this Agreement, the Shares issuable for the earned Performance Shares (and any accrued dividend equivalents) shall be delivered to the Employee (or, in the case of the Employee’s death before delivery, to the Employee’s beneficiary or representative) as soon as practicable after the end of the Performance Period as set forth in the Addendum, but in no event later than March 15 of the calendar year following the year in which the Performance Period ends.

9. Committee Discretion to Reduce Award. Notwithstanding any provision in this Agreement to the contrary, the Committee retains the right, at its sole and absolute discretion, to reduce or eliminate any Award that may become payable hereunder if the Committee determines that any one or more of the following conditions have occurred:

(a)

The stockholder return to the Corporation’s stockholders has been insufficient;

(b)

The stockholder return to the Corporation’s stockholders has been negative;

(c)

The financial performance of the Corporation has been inadequate; or

(d)

The operational performance of the Corporation has been inadequate.

In addition, the Committee may reduce or eliminate the Award granted hereby based on the Employee’s individual performance.

10. Retirement, Disability, or Death During the Performance Period.

(a) If the Employee’s Service terminates during the first year of the Performance Period because of the Employee’s Retirement, his or her Disability or his or her death, then the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) shall be entitled to receive, upon settlement of his or her Award after the end of the Performance Period in accordance with Section 8 (subject to the other terms of this Agreement, including Section 9), a prorated number of Shares determined at the end of the Performance Period in accordance with the following equation: X = A * (Y/12); where

X is the prorated number of Shares to be delivered upon settlement of the Award after the end of the Performance Period;

A is the number of Shares that would have been delivered upon settlement of the Award at the end of the Performance Period had the Employee’s Service not terminated during the first year of the Performance Period; and

Y is the number of full calendar months the Employee is employed during the first year of the Performance Period.

(b) If the Employee’s Service terminates after the first year of the Performance Period because of the Employee’s Retirement, his or her Disability or his or her death, then the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) shall be entitled to receive, upon settlement of his or her Award after the end of the Performance Period in accordance with Section 8 (subject to the other terms of this Agreement, including Section 9), the number of Shares that would have been delivered upon settlement of the Award after the end of the Performance Period had the Employee’s Service not terminated.

11. Termination of Service During the Performance Period. If the Employee’s Service terminates during the Performance Period for any reason other than as described in Section 10, the entire Award granted under this Agreement shall be automatically terminated as of the date of such termination of Service.

12. Change of Control.

(a) Upon a Change of Control that occurs during the first year of the Performance Period, the Award will be deemed payable (and shall be settled immediately prior to such Change of Control), with the number of Shares payable determined according to the following equation: X = A * (Y/12); where

X is the number of shares payable upon the Change of Control;

A is the number of shares that would be issuable assuming for these purposes that the Performance Period ends as of the date of the Change of Control (in connection with such calculation, the words “determined by calculating the average closing stock price during the final forty trading days of the Performance Period” in Section 5(a)(i) above shall be replaced the following words “determined by calculating the average closing stock price during the forty trading days ending on the third business day prior to the date of the Change of Control”); and

Y is the number of full months that have elapsed in the first year of the Performance Period prior to the date of the Change of Control.

(b) Upon a Change of Control that occurs after the first year of the Performance Period, the Award will be deemed payable (and shall be settled immediately prior to such Change of Control), with the number of Shares payable determined by assuming that the Performance Period ends as of the date of the Change of Control (in connection with such calculation, the words “determined by calculating the average closing stock price during the final forty trading days of the Performance Period” in Section 5(a)(i) above shall be replaced the following words “determined by calculating the average closing stock price during the forty trading days ending on the third business day prior to the date of the Change of Control”).

13. Available Shares. The Corporation agrees that it will at all times during the term of this Agreement reserve and keep available sufficient authorized but unissued or reacquired Shares to satisfy the requirements of this Agreement.

14. Applicable Taxes. In the event the Corporation determines that it is required to withhold state or federal income taxes, social security taxes or any other applicable taxes as a result of the payment of the Shares, the Corporation will satisfy such withholding requirements by withholding of Shares otherwise payable upon the settlement of the Award, which Shares will have a Fair Market Value (determined as of the date when taxes would otherwise be withheld in cash) not in excess of the legally required minimum amount of tax withholding.

15. Relationship to Other Benefits. Performance Shares shall not be taken into account in determining any benefits under any pension, savings, disability, severance, group insurance or any other pay-related plan of the Corporation or its Subsidiaries or Affiliates.

16. Required Deferral. In the event the Award would cause the Employee to qualify as a “covered employee” pursuant to Section 162(m) of the Code, that portion of the Award that would exceed the amount deductible by the Corporation under Section 162(m) of the Code shall be automatically deferred until the Employee’s compensation is no longer subject to Section 162(m) of the Code. Any portion of the Award so deferred shall be converted to Restricted Stock Units (which such Restricted Stock Units, for the avoidance of doubt, shall be deemed outstanding as of immediately prior to any Change in Control so as to be subject to Section 12 of the Plan) and dividend equivalents shall accrue on the Restricted Stock Units (or any replacement thereof issued in accordance with Section 12 of the Plan) and be paid out as additional shares (or any replacements thereof issued in accordance with Section 12 of the Plan) in the first calendar year in which the Corporation reasonably anticipates that deduction of the payment will not be barred by application of Section 162(m) of the Code. Any such deferral of the Award is intended to comply with Section 409A of the Code.

17. Stockholder Rights. Neither the Employee nor the Employee’s beneficiary or representative shall have any rights as a stockholder with respect to any Shares subject to this Agreement until such Shares shall have been issued to the Employee or the Employee’s beneficiary or representative.

18. Transfers, Assignments, Pledges. Except as otherwise provided in this Agreement, 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 the Award, or of any right or privilege conferred by this Agreement, contrary to the provisions of this Section 18, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Agreement, the Award and the rights and privileges conferred by this Agreement shall immediately become null and void. However, this Section 18 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee or benefits distributable to the Employee under this Agreement not distributed at the time of the Employee’s death; or (ii) a transfer of any Award hereunder by will or the laws of descent or distribution. In that regard, any such rights shall be

exercisable by the Employee’s beneficiary, and such benefits shall be distributed to the beneficiary, in accordance with the provisions of this Agreement and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. If a deceased Employee has not designated a beneficiary, or if the designated beneficiary does not survive the Employee, any benefits distributable to the Employee shall be distributed to the legal representative of the estate of the Employee. If a deceased Employee has designated a beneficiary and the designated beneficiary survives the Employee but dies before the complete distribution of benefits to the designated beneficiary under this Agreement, then any benefits distributable to the designated beneficiary shall be distributed to the legal representative of the estate of the designated beneficiary.

19. No Employment Rights. Nothing in this Agreement shall be construed as giving the Employee the right to be retained as an employee or as impairing the rights of the Corporation or a Subsidiary or an Affiliate to terminate his or her employment at any time, with or without cause.

20. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding.

21. Interpretation/Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

22. Term of the Agreement. The term of this Agreement shall end upon the earlier of (i) the delivery of all of the Shares or other consideration to be issued in exchange for Performance Shares (and accrued dividend equivalents) or (ii) upon the termination of the Employee’s Service for any reason other than Retirement, or the Employee’s Disability or death.

[remainder of page intentionally left blank]

IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.


CORPORATION:

Clearwater Paper Corporation, a Delaware corporation

By:
Name:
Title:
Date:

EMPLOYEE:


[Name of Employee]

Date:

STOCK INCENTIVE PLAN

ADDENDUM TO PERFORMANCE SHARE AGREEMENT

and RESTRICTED STOCK UNIT AGREEMENT

Name of Employee:

1.	Date of Grant:

2.	Target Grant of Performance Shares:

Target Grant of Restricted Stock Units:

3.	Performance Period:

Performance Measure: The performance measure is a comparison of the percentile ranking of Clearwater Paper Corporation’s total stockholder return (TSR), which includes stock price appreciation plus cash dividends paid during the Performance Period, to the TSR performance of a selected group of companies described on Exhibit 1 hereto.

Performance Schedule: The performance schedule displayed on Exhibit 2 shows the percentage of the target grant that will be awarded at the end of the Performance Period depending upon the actual TSR percentile ranking achieved by the Corporation during the Performance Period with regard to the selected comparison group.

The RSU award, along with all additional shares attributable to dividend equivalents shall vest on .

The Performance Share Agreement and Restricted Stock Unit Agreement are incorporated by reference into this Addendum and the terms of the Performance Share and Restricted Stock Unit Agreements shall be controlling in the event of any discrepancy.

IN WITNESS WHEREOF, the Corporation has caused this Addendum to the Performance Share and Restricted Stock Unit Agreements to be executed on its behalf by its duly authorized representative, and the Employee has executed the same on the date indicated below.


		CLEARWATER PAPER CORPORATION

Date:	By:
		[Officer Title]

Date:	By:
		Employee

EX-10.2 3 d675587dex102.htm EX-10.2 EX-10.2

Exhibit 10.2

CLEARWATER PAPER CORPORATION

RESTRICTED STOCK UNIT AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made and entered into on the Grant Date specified in the attached Addendum to this Agreement, by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

W I T N E S S E T H:

WHEREAS, the Corporation maintains the Clearwater Paper Corporation 2008 Stock Incentive Plan (the “Plan”), which is incorporated into and forms a part of this Agreement, and the Employee has been selected to receive a grant of Restricted Stock Units under Section 10 of the Plan;

NOW, THEREFORE, for valuable consideration, the parties agree as follows:

(a) “Addendum” means the attached Addendum.

(b) “Cause” means the occurrence of any one or more of the following: (i) the Employee’s conviction of any felony or any crime involving fraud, dishonesty or moral turpitude; (ii) the Employee’s participation in a fraud or act of dishonesty against the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that results in material harm to the business of the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation; (iii) the Employee’s intentional, material violation of any contract between the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation and the Employee, or any statutory duty the Employee owes the Corporation, its Affiliates or any successor to the Corporation, in either case that the Employee does not correct within 30 days after written notice thereof has been provided to the Employee, (iv) the commission of an act by the Employee that could (either alone or with other acts) be considered harassment or discrimination on the basis of gender, race, age, religion, sexual orientation or other protected category; or (v) the commission by the Employee of an alcohol or drug offense in violation of the Corporation’s, or a Subsidiary’s or an Affiliate’s Substance Abuse Policy for salaried employees.

(d) “Double Trigger Event” means the Employee’s Service with the Corporation or a Subsidiary or an Affiliate is involuntarily terminated without Cause or voluntarily terminated for Good Reason within one month prior to or 24 months following the effective date of a Change of Control.

(e) “Good Reason” means that one or more of the following are undertaken by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation without the Employee’s written consent: (i) the assignment to the Employee of any duties or responsibilities that results in a material diminution in the Employee’s position or function as in effect immediately prior to the effective date of a Change of Control; provided, however, that a change in the Employee’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a 10% or greater reduction, other than in connection with an across-the-board reduction applicable to other similarly situated employees, by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation in the Employee’s base salary and/or target bonus, and/or target long-term incentive opportunity, all as in effect on the effective date of the Change of Control or as increased thereafter; (iii) any failure by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation to continue in effect (or substantially replace in the aggregate) any material benefit plan or program in which the Employee was participating immediately prior to the effective date of the Change of Control (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that would adversely affect the Employee’s participation in or reduce the Employee’s benefits under the Benefit Plan; provided, however, that no voluntary termination of Service with Good Reason shall be deemed to have occurred if the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation provide for the Employee’s participation in benefit plans and programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of the Employee’s business office to a location more than 50 miles from the location at which the Employee performs duties as of the effective date of the Change of Control, except for required travel by the Employee on the Corporation’s, its Subsidiaries’ or Affiliates’ or any successor to the Corporation’s business; or (v) a material breach by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation concerning the terms and conditions of the Employee’s employment.

(f) “Grant Date” means the effective date of the Award of the Restricted Stock Units to the Employee, as specified in the Addendum.

(g) “Retirement” means (i) the Employee’s early or normal retirement and commencement of benefit payments under the Retirement Plan, or (ii) if the Employee does not have an accrued benefit under the Retirement Plan, the Employee’s termination of Service on or after the earlier of his or her (A) attainment of age 65 or (B) attainment of age 55 and completion of 10 years of Service.

(h) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

(i) “Service” shall have the meaning given such term under the Plan, except that as used in this Agreement the term “Service” shall be limited to employment and shall exclude service performed as an Outside Director or as a Consultant.

(j) “Vesting Period” means the period specified in the Addendum.

2. Award. Subject to the terms of this Agreement and the Addendum, the Employee is hereby awarded a grant of Restricted Stock Units in the number set forth in the attached Addendum (the “Award”). Except as otherwise set forth herein, the number of Shares actually payable to the Employee is contingent on the Employee’s continuous Service for the duration of the Vesting Period. This Award has been granted pursuant to the Plan and is subject to all the terms and provisions thereof, a copy of which is attached and the terms and conditions of which are incorporated by reference into this Agreement.

3. Dividend Equivalents. During the Vesting Period, dividend equivalents shall be converted into additional Restricted Stock Units based on the closing price of the Stock on the New York Stock Exchange on the dividend payment date. Such additional Restricted Stock Units shall vest or be forfeited in the same manner as the underlying Restricted Stock Units to which they relate.

4. Settlement of Awards. Pursuant to Section 5 of this Agreement, the Corporation shall deliver to the Employee one Share for each vested Restricted Stock Unit included in the Award and, as applicable, one share for each vested Restricted Stock Unit that corresponds to an accrued dividend equivalent. Any vested Restricted Stock Units payable to the Employee (including Shares payable pursuant to Section 3 above) shall be paid solely in Shares. Any fractional Share will be rounded to the closest whole Share.

5. Time of Payment. Except for Shares issuable pursuant to Section 8, the Shares issuable for the vested Restricted Stock Units shall be delivered to the Employee (or, in the case of the Employee’s death, to the Employee’s beneficiary or representative) as soon as practicable after the end of the Vesting Period (but in no event late than the 15^th day of the third calendar month following the date on which the Vesting Period ends). With respect to Shares issuable in connection with Restricted Stock Units that become vested pursuant to Section 8, such Shares shall be delivered to the Employee as soon as practicable after (but no later than the 15^th day of the third calendar month after) the date on which the Double Trigger Event occurs; provided however, that if the Employee’s Service with the Corporation, a Subsidiary or an Affiliate is involuntarily terminated without Cause or voluntarily terminated for Good Reason on or prior to the date of the Change of Control to which the Double Trigger Event relates, then such Shares shall be delivered immediately prior to the consummation of such Change of Control.

6. Retirement, Disability, or Death During the Vesting Period. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates during the first year of the Vesting Period because of the Employee’s Retirement, due to his or her Disability or due to his or her death, the Employee (or, in the case of the Employee’s death, the Employee’s beneficiary or representative) will be entitled to a prorated number of Shares, determined by multiplying the number of Restricted Stock Units subject to this Agreement by a fraction, the numerator of which is the number of full months completed in the first year of the Vesting Period as of the

date of termination, and the denominator of which is twelve. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates after the first year of the Vesting Period because of the Employee’s Retirement, due to his or her Disability or due to his or her death, the Restricted Stock Units shall become immediately vested in full and payable in accordance with Sections 4 and 5 above.

7. Termination of Service During the Vesting Period. If the Employee’s Service terminates during the Vesting Period for any reason other than as described in Section 6 or Section 8, this Agreement shall be terminated automatically as of the date of such termination of Service and the Employee shall not become vested in any of the Restricted Stock Units subject to this Agreement.

8. Change of Control. If a Double Trigger Event occurs during the first year of the Vesting Period, the Employee will be entitled to a prorated number of Shares, determined by multiplying the number of Restricted Stock Units subject to this Agreement by a fraction, the numerator of which is the number of full months in the first year of the Vesting Period prior to the month in which the Double Trigger Event occurred, and the denominator of which is twelve. If a Double Trigger Event occurs after the first year of the Vesting Period, the Restricted Stock Units shall become immediately vested in full and payable in accordance with Sections 4 and 5 above.

9. Available Shares. The Corporation agrees that it will at all times during the term of this Agreement reserve and keep available sufficient authorized but unissued or reacquired Shares to satisfy the requirements of this Agreement.

10. Applicable Taxes. In the event the Corporation determines that it is required to withhold state or federal income taxes, Social Security taxes, or any other applicable taxes as a result of the payment of the Shares, the Corporation will satisfy such withholding requirements by withholding of Shares otherwise payable upon the settlement of the Award, which Shares will have a Fair Market Value (determined as of the date when taxes would otherwise be withheld in cash) not in excess of the legally required minimum amount of tax withholding.

11. Relationship to Other Benefits. Restricted Stock Units shall not be taken into account in determining any benefits under any pension, savings, disability, severance, group insurance or any other pay-related plan of the Corporation or its Subsidiaries or Affiliates.

12. Required Deferral. In the event that, as of the end of the Vesting Period, the value of the Shares issuable for the vested Restricted Stock Units exceeds the amount that would be deductible by the Corporation due to the application of Section 162(m) of the Code, the payment of that portion of such Shares having a value in excess of the amount deductible by the Corporation under Section 162(m) of the Code shall be automatically deferred until the first calendar year in which the Corporation reasonably anticipates that deduction of the payment will not be barred by application of Section 162(m) of the Code. Any portion of such Shares so deferred shall be credited with dividend equivalents which shall be paid out as additional Shares at the same time as the underlying Shares with respect to which the dividend equivalents are credited.

13. Stockholder Rights. Neither the Employee nor the Employee’s beneficiary or representative shall have any rights as a stockholder with respect to any Shares subject to this Agreement until such Shares shall have been issued to the Employee or the Employee’s beneficiary or representative.

14. Transfers, Assignments, Pledges. Except as otherwise provided in this Agreement, 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 the Award, or of any right or privilege conferred by this Agreement, contrary to the provisions of this Section 14, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Agreement, the Award and the rights and privileges conferred by this Agreement shall immediately become null and void. However, this Section 14 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee or benefits distributable to the Employee under this Agreement not distributed at the time of the Employee’s death; or (ii) a transfer of any Award hereunder by will or the laws of descent or distribution. In that regard, any such rights shall be exercisable by the Employee’s beneficiary, and such benefits shall be distributed to the beneficiary, in accordance with the provisions of this Agreement and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. If a deceased Employee has not designated a beneficiary, or if the designated beneficiary does not survive the Employee, any benefits distributable to the Employee shall be distributed to the legal representative of the estate of the Employee. If a deceased Employee has designated a beneficiary and the designated beneficiary survives the Employee but dies before the complete distribution of benefits to the designated beneficiary under this Agreement, then any benefits distributable to the designated beneficiary shall be distributed to the legal representative of the estate of the designated beneficiary.

15. No Employment Rights. Nothing in this Agreement shall be construed as giving the Employee the right to be retained as an employee or as impairing the rights of the Corporation or a Subsidiary or an Affiliate to terminate his or her employment at any time, with or without cause.

16. Administration. The authority to manage and control the operation and administration of this Agreement shall be vested in the Committee, and the Committee shall have all powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of this Agreement by the Committee and any decision made by it with respect to this Agreement is final and binding.

17. Interpretation/Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan, the terms and conditions of the Plan shall control.

18. Term of the Agreement. The term of this Agreement shall end upon the earlier of (i) the delivery of all of the Shares or other consideration to be issued in exchange for the Restricted Stock Units (and accrued dividend equivalents) subject to the Award granted to the Employee or (ii) upon the termination of the Employee’s Service for any reason other than retirement under the Retirement Plan, the Employee’s Disability or death or in connection with a Double Trigger Event.

19. Compliance with Section 409A of the Code. The provisions of this Agreement regarding the payments to be provided to the Employee are intended to comply with Section 409A of the Code or an exemption therefrom, and any ambiguity in any such provision shall be resolved in a manner that supports compliance with Section 409A or an exemption therefrom. Without limiting the foregoing,

The provisions of Sections 5 and 8 requiring payment after a Double Trigger Event or otherwise upon an Employee’s termination of Service shall be construed to require that the Employee “separate from service” with Clearwater and its Affiliates within the meaning of Treasury Regulation Section 1.409A-1(h) as a condition to the Employee receiving such payment.

If the Employee is entitled to receive a payment subject to Section 409A of the Code after a Double Trigger Event or otherwise upon a termination of Service, and the Corporation determines in good faith that the Employee is a “specified employee” as defined in Section 409A as of the date his Service terminates, then such payment shall be deferred and paid 6 months and 1 day following the date of the Employee’s termination of Service (or if earlier, payment shall be made within 60 days after the date of the Employee’s death).

Any deferrals of payment required under Section 12 are intended to comply with Section 409A of the Code.

[remainder of page intentionally left blank]

IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.


CORPORATION:

Clearwater Paper Corporation, a Delaware corporation

By:
Name:
Title:
Date:

EMPLOYEE:


[Name of Employee]

Date:

STOCK INCENTIVE PLAN

ADDENDUM TO PERFORMANCE SHARE AGREEMENT

and RESTRICTED STOCK UNIT AGREEMENT

Name of Employee:

1.	Date of Grant:

2.	Target Grant of Performance Shares:

Target Grant of Restricted Stock Units:

3.	Performance Period:

The RSU award, along with all additional shares attributable to dividend equivalents shall vest on .


		CLEARWATER PAPER CORPORATION

Date:	By:
		[Officer Title]

Date:	By:
		Employee

EX-10.3 4 d675587dex103.htm EX-10.3 EX-10.3

Exhibit 10.3

CLEARWATER PAPER CORPORATION

STOCK OPTION AGREEMENT

2008 STOCK INCENTIVE PLAN

THIS STOCK OPTION AGREEMENT is made and entered into the day specified in the attached Addendum by and between Clearwater Paper Corporation, a Delaware corporation (the “Corporation”), and the Employee named in the attached Addendum (the “Employee”).

W I T N E S S E T H:

That to encourage stock ownership by employees of the Corporation and for other valuable consideration, the parties agree as follows:

(a) “Addendum” means the attached Addendum.

(d) “Disability” means a condition pursuant to which the Employee is—

(e) “Double Trigger Event” means the Employee’s Service with the Corporation or a Subsidiary or an Affiliate is involuntarily terminated without Cause or voluntarily terminated for Good Reason within one month prior to or 24 months following the effective date of a Change of Control.

(f) “Exercise Price” means the price per Share designated in the Addendum at which this Option may be exercised.

(g) “Good Reason” means that one or more of the following are undertaken by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation without the Employee’s written consent: (i) the assignment to the Employee of any duties or responsibilities that results in a material diminution in the Employee’s position or function as in effect immediately prior to the effective date of a Change of Control; provided, however, that a change in the Employee’s title or reporting relationships shall not provide the basis for a voluntary termination with Good Reason; (ii) a 10% or greater reduction, other than in connection with an across-the-board reduction applicable to other similarly situated employees, by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation in the Employee’s base salary and/or target bonus, and/or target long-term incentive opportunity, all as in effect on the effective date of the Change of Control or as increased thereafter; (iii) any failure by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation to continue in effect (or substantially replace in the aggregate) any material benefit plan or program in which the Employee was participating immediately prior to the effective date of the Change of Control (hereinafter referred to as “Benefit Plans”), or the taking of any action by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation that would adversely affect the Employee’s participation in or reduce the Employee’s benefits under the Benefit Plan; provided, however, that no voluntary termination of Service with Good Reason shall be deemed to have occurred if the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation provide for the Employee’s participation in benefit plans and programs that, taken as a whole, are comparable to the Benefit Plans; (iv) a relocation of the Employee’s business office to a location more than 50 miles from the location at which the Employee performs duties as of the effective date of the Change of Control, except for required travel by the Employee on the Corporation’s, its Subsidiaries’ or Affiliates’ or any successor to the Corporation’s business; or (v) a material breach by the Corporation, its Subsidiaries or Affiliates or any successor to the Corporation concerning the terms and conditions of the Employee’s employment.

(h) “Purchase Price” means the Exercise Price times the number of whole shares with respect to which this Option is exercised.

(i) “Retirement” means (i) the Employee’s early or normal retirement and commencement of benefit payments under the Retirement Plan, or (ii) if the Employee does not have an accrued benefit under the Retirement Plan, the Employee’s termination of Service on or after the earlier of his or her (A) attainment of age 65 or (B) attainment of age 55 and completion of 10 years of Service.

(j) “Retirement Plan” means the Clearwater Paper Salaried Retirement Plan.

(k) “Vesting Start Date” means the date specified in the Addendum.

2. Grant of Option. The Corporation grants to Employee the option to purchase that number of shares of Stock specified in the Addendum for the Exercise Price specified in the Addendum, on the terms and conditions stated in this Agreement. This Option has been granted pursuant to the Plan, a copy of the text of which Employee may obtain upon request to the Corporation.

3. Vesting.

(a) General Vesting. Subject to the conditions stated in this Agreement, unless a different vesting schedule or arrangement is specified in the Addendum, the Option shall be subject to three-year “cliff” vesting, i.e., the Option shall become exercisable for 100% of the number of shares specified in the Addendum only after the Employee completes three years of Service from the Vesting Start Date. Except as set forth below in Section 3(b), Section 3(c), Section 3(d) and Section 3(e), the Option may not be exercised, and shall not become vested, with respect to any of the underlying shares prior to completion of such three years of Service.

(b) Death. If Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates during the one year period beginning on the Vesting Start Date because of the Employee’s death, the Employee’s beneficiary or representative may exercise the Option in accordance with Section 4(a) with respect to a prorated number of the shares specified in the Addendum, determined by multiplying the number of shares specified in the Addendum by a fraction, the numerator of which is the number of full months completed during the one year period beginning on the Vesting Start Date as of the date of termination, and the denominator of which is twelve. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates after the one year anniversary of the Vesting Start Date because of the Employee’s death, the Option shall become immediately vested in full and exercisable in accordance with Section 4(a).

(c) Disability. If Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates during the one year period beginning on the Vesting Start Date because of the Employee’s Disability, the Employee may exercise the Option in accordance with Section 4(b) with respect to a prorated number of the shares specified in the Addendum, determined by multiplying the number of shares specified in the Addendum by a fraction, the numerator of which is the number of full months completed during the one year period beginning on the Vesting Start Date as of the date of termination, and the denominator of which is twelve. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates after the one year anniversary of the Vesting Start Date because of the Employee’s Disability, the Option shall become immediately vested in full and exercisable in accordance with Section 4(b).

(d) Double Trigger Event. Subject to Section 12 of the Plan, if a Double Trigger Event occurs during the one year period beginning on the Vesting Start Date, the Option will become exercisable in accordance with Section 4(c) with respect to a prorated number of the shares specified in the Addendum, determined by multiplying the number of shares specified in the Addendum by a fraction, the numerator of which is the number of full months following the Vesting Start Date prior to the month in which the Double Trigger Event occurred, and the denominator of which is twelve. If a Double Trigger Event occurs after the one year anniversary of the Vesting Start Date, the Option shall become immediately vested in full and exercisable in accordance with Section 4(c).

(e) Retirement. If Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates during the one year period beginning on the Vesting Start Date because of the Employee’s Retirement, the Employee may exercise the Option in accordance with Section 4(d) with respect to a prorated number of the shares specified in the Addendum, determined by multiplying the number of shares specified in the Addendum by a fraction, the numerator of which is the number of full months completed during the one year period beginning on the Vesting Start Date as of the date of termination, and the denominator of which is twelve. If the Employee’s Service with the Corporation or a Subsidiary or an Affiliate terminates after the one year anniversary of the Vesting Start Date because of the Employee’s Retirement, the Option shall become immediately vested in full and exercisable in accordance with Section 4(d).

4. Option Term; Exercise After Termination of Service. The term of this Option shall end and this Option shall not be exercisable after 10 years from the Date of Grant (the “Expiration Date”) or, if earlier, upon the termination of Employee’s Service, subject to the following provisions:

(a) If the termination of Employee’s Service is caused by the Employee’s death, the vested portion of this Option may be exercised at any time by Employee’s executors or administrators (or by any person or persons who shall have acquired this Option directly from Employee by bequest or inheritance) at any time on or before the date that is five years after the date of such termination or, if earlier, the Expiration Date.

(b) If the termination of Employee’s Service is caused by Disability, the vested portion of this Option may be exercised at any time on or before the date that is five years after the date of such termination or, if earlier, the Expiration Date.

(c) If the termination of Employee’s Service is in connection with a Double Trigger Event, then subject to Section 12 of the Plan, the vested portion of this Option may be exercised at any time on or before the Expiration Date.

(d) If the termination of Employee’s Service is caused by Retirement, the vested portion of this Option may be exercised at any time during the period beginning on the date that is three years following the Vesting Start Date and ending on the Expiration Date (and may not, for the avoidance of doubt, be exercised prior to the date that is three years following the Vesting Start Date).

(e) If the termination of Employee’s Service is for any reason other than death, Disability, Retirement, Cause or a Double Trigger Event, this Option, to the extent that it was vested under Section 3 of this Agreement at the date of such termination and had not previously been exercised, may be exercised at any time on or before the date that is 90 days after the date of such termination or, if earlier, the Expiration Date. If the termination of Employee’s Service is for Cause, this Option shall be immediately cancelled and cease to be exercisable (including with respect to any vested portion of the Option) at the time of such termination.

5. Share Reserve. The Corporation agrees that it will at all times during the period during which this Option may be exercised reserve and keep available sufficient authorized but unissued or reacquired Common Stock to satisfy the requirements of this Agreement.

6. Manner of Exercise. Employee, or Employee’s representative, may exercise 20% or more of the portion of this Option that has become vested under Section 3 of this Agreement by giving written notice to the Corporation at Spokane, Washington, attention of the Human Resources Department, or by giving electronic notice in a manner approved by the Committee, 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; or

(b) If the Committee has established a broker-assisted cashless exercise program, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Corporation in payment of the Purchase Price.

The notice shall be signed by the person or persons exercising this Option, and in the event this Option is being exercised by the representative of Employee, shall be accompanied by proof satisfactory to the Corporation of the right of the representative to exercise the Option. No Share shall be issued until full payment has been made. The Corporation may permit such other payment forms as it deems appropriate (including 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), subject to applicable laws, regulations and rules. Notwithstanding anything to the contrary contained herein, the exercise of the Option shall be subject to the terms of the Corporation’s Insider Trading Policy.

7. Withholding Taxes. The Employee will not be allowed to exercise this Option unless the Employee pays, or makes acceptable arrangements to pay, any taxes required to be withheld as a result of the Option exercise or the sale of Shares acquired upon exercise of this Option. Employee hereby authorizes withholding from payroll or any other payment due Employee from the Corporation to satisfy any such withholding tax obligation. The Corporation may determine in its sole discretion to satisfy such withholding taxes by withholding of Shares otherwise issuable upon the exercise of the Option, which Shares will have a Fair Market Value (determined as of the date when taxes would otherwise be withheld in cash) not in excess of the legally required minimum amount of tax withholding.

8. No Stockholder Rights; No Assignment; Corporate Transaction. The Employee shall have no rights as a stockholder with respect to any Share subject to this Option until such Shares shall have been issued to the Employee. Except as otherwise provided in this Option, the rights and privileges conferred by this Option 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 the Option, or of any right or privilege conferred by this Option, contrary to the provisions of this Section 8, or upon any attempted sale under any execution, attachment or similar process upon the rights and privileges conferred by this Option, the Option and the rights and privileges conferred by this Option shall immediately become null and void. However, this Section 8 shall not preclude: (i) an Employee from designating a beneficiary to succeed, after the Employee’s death, to any rights of the Employee at the time of

the Employee’s death; or (ii) a transfer of the Option by will or the laws of descent or distribution. In that regard, any such rights shall be exercisable by the Employee’s beneficiary in accordance with the provisions of this Option and the Plan. The beneficiary shall be the named beneficiary or beneficiaries designated by the Employee in writing filed with the Corporation in such form and at such time as the Corporation shall require. Regardless of any marital property settlement agreement, the Corporation is not obligated to honor an exercise notice from the Employee’s spouse or former spouse, nor is the Corporation obligated to recognize such individual’s interest in the Option in any other way. Notwithstanding anything to the contrary contained herein, in the event of a Corporate Transaction, the Option shall be treated in the manner provided in the agreement relating to the Corporate Transaction (including as the same may be amended).

9. Legal Restrictions. Unless at the time Employee gives notice of the exercise of this Option, the Shares to be issued are registered under the Securities Act, the notice shall include a statement to the effect that all Shares for which this Option is being exercised are being purchased for investment, and without present intention of resale, and will not be sold without registration under the Securities Act or exemption from registration, and such other representations as the Committee may require. The Corporation may permit the sale or other disposition of any Shares acquired pursuant to any such representation if it is satisfied that such sale or other disposition would not contravene applicable state or federal securities laws. Unless the Corporation shall determine that, in compliance with the Securities Act or other applicable statute or regulation, it is necessary to register any of the Shares for which this Option has been exercised, and unless such registration, if required has been completed, transaction advices to be provided upon the exercise of this Option shall contain the following legend on the face thereof:

“The Shares represented by this transaction advice have not been registered under the Securities Act of 1933 and may be offered, sold or transferred only if registered pursuant to the provisions of that Act or if an exemption from registration is available.”

10. No Employment Rights. Nothing in this Agreement shall be construed as giving Employee the right to be retained as an employee or as impairing the rights of the Corporation to terminate his or her employment at any time, with or without cause.

11. Interpretation; Applicable Law. This Agreement shall be interpreted and construed in a manner consistent with the terms of the Plan and in accordance with the laws of the State of Delaware (without regard to choice of law principles). If there is any discrepancy between the terms and conditions of this Agreement and the terms and conditions of the Plan (including, without limitation, Section 12 of the Plan), the terms and conditions of the Plan shall control.

[remainder of page intentionally left blank]

IN WITNESS WHEREOF, each party has or has caused this Agreement to be executed as of the respective date set forth below.


CORPORATION:

Clearwater Paper Corporation, a Delaware corporation

By:
Name:
Title:
Date:


EMPLOYEE:


[Name of Employee]

Date:

ADDENDUM TO STOCK OPTION AGREEMENT

CLEARWATER PAPER CORPORATION 2008 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 12 of the Plan.

4. This Option is: Non-Qualified Stock Option.

5. The Vesting Schedule for this Option is: The schedule specified in Section 3 of the Stock Option Agreement, except that no exercise will be permitted for a fractional Share.

6. Vesting Start Date: January 1 of the year of the Date of Grant.

The document entitled Clearwater Paper Corporation Stock Option Agreement 2008 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.

IN WITNESS WHEREOF, each party has or has caused this Addendum to be executed as of the respective date set forth below.


CORPORATION:

Clearwater Paper Corporation, a Delaware corporation

By:
Name:
Title:
Date:


EMPLOYEE:


[Name of Employee]

Date:

EX-10.4 5 d675587dex104.htm EX-10.4 EX-10.4

Exhibit 10.4

CLEARWATER PAPER CORPORATION

ANNUAL INCENTIVE PLAN

Effective January 1, 2009

Amended and Restated Effective January 1, 2014

CLEARWATER PAPER CORPORATION

ANNUAL INCENTIVE PLAN

Effective January 1, 2009

Amended and Restated Effective January 1, 2014

1.	ESTABLISHMENT AND PURPOSE

(a) The Clearwater Paper Corporation Annual Incentive Plan (the “Plan”) was adopted by the Board of Directors of Clearwater Paper Corporation and approved by its sole stockholder on December 1, 2008, to become effective January 1, 2009, to provide rewards to those employees of Clearwater Paper Corporation and its subsidiaries who are in a position to contribute to the achievement by Clearwater Paper Corporation and its subsidiaries of certain business performance objectives. The Plan was subsequently amended and restated effective as of January 1, 2010, and is hereby further amended and restated effective as of January 1, 2014.

(b) The Plan is intended to comply with the requirements of Section 409A of the Code, to the extent applicable, and, in the case of covered employees, the exception for “qualified performance-based compensation” under Section 162(m) of the Code.

2.	DEFINITIONS

(a) “Applicable Severance Plan” means the Clearwater Paper Change of Control Plan, the Clearwater Paper Executive Severance Plan, the Clearwater Paper Salaried Severance Plan or a separate, written employment agreement providing severance benefits, whichever is applicable to the Participant at the time of his or her termination of employment from the Corporation, including any successor severance plan or agreement provided by Clearwater Paper or a successor thereto following a Change of Control.

(b) “Award” means an award under the Plan.

(d) “Board of Directors” means the Board of Directors of Clearwater Paper Corporation.

(e) “CEO” means the Chief Executive Officer of Clearwater Paper Corporation.

(f) “Change of Control” means the effective date of any one of the following events:

(i) Upon consummation of a merger or consolidation involving Clearwater Paper (a “Business Combination”), in each case, unless, following such Business Combination,

(A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the then outstanding shares of common stock of Clearwater Paper (the “Outstanding Common Stock”) and the then outstanding voting securities of Clearwater Paper 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 or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns Clearwater Paper either directly or through one or more subsidiaries),

(B) no 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”) (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) sponsored or maintained by Clearwater Paper or any of its Subsidiaries or such other corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock or common equity of the corporation or other entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation or other entity 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 or similar governing body of the corporation or other entity resulting from such Business Combination were members of the Board of Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination; or

(ii) On the date that individuals who, as of 12:01 a.m. (Pacific) on the Effective Date, constitute the Board of Directors (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that any individual who becomes a member of the Board of Directors on or subsequent to the day immediately following the Effective Date whose election, or nomination for election by Clearwater Paper’s stockholders, was approved by a vote of at least a majority of the members of the Board of Directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for purposes of this proviso, any such individual whose appointment to the Board of Directors occurs as a result of an actual or threatened election contest with respect to the election or removal of a member or members of the Board 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 Incumbent Board; or

(iii) Upon the acquisition on or after the Effective Date by any 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 Outstanding Voting Securities;

provided, however, that the following acquisitions shall not be deemed to be covered by this paragraph (iii):

(I)

any acquisition of Outstanding Common Stock or Outstanding Voting Securities by the Corporation,

(II)

any acquisition of Outstanding Common Stock or Outstanding Voting Securities by any employee benefit plan (or related trust) sponsored or maintained by the Corporation, or

(III)

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, lease or exchange of all or substantially all of the assets of Clearwater Paper; or

(v) Upon the approval by the stockholders of Clearwater Paper of a complete liquidation or dissolution of Clearwater Paper.

(g) “Clearwater Paper” means Clearwater Paper Corporation, a Delaware corporation.

(h) “Code” means the Internal Revenue Code of 1986, as amended.

(i) “Committee” means the committee which shall administer the Plan in accordance with Section 3.

(j) “Corporation” means Clearwater Paper Corporation and its Subsidiaries.

(k) “Covered Employee” means a “covered employee” within the meaning of Section 162(m) of the Code and the regulations thereunder.

(l) “Effective Date” means January 1, 2014.

(m) “Employee” means a full-time salaried employee (including any Executive Officer) of the Corporation.

(n) “Exchange Act” means the Securities and Exchange Act of 1934, as amended.

(o) “Executive Officer” means any Employee of the Corporation designated as an “executive officer” by the Board of Directors with respect to the applicable Award Year.

(p) “Guidelines” means the Clearwater Paper Corporation Stock Ownership Guidelines.

(q) “Management Deferred Compensation Plan” means the Clearwater Paper Corporation Management Deferred Compensation Plan, and any successor plan.

(r) “Participant” means any Executive Officer and any other Employee actively employed by the Corporation during an Award Year in a position designated as a participating position in accordance with rules and regulations adopted by the Committee.

(s) “Retirement” means (i) the Participant’s early or normal retirement and commencement of benefit payments under the Clearwater Paper Salaried Retirement Plan, or (ii) if the Participant does not have an accrued benefit under such Retirement Plan, the Participant’s termination of service for the Corporation on or after the earlier of his or her (A) attainment of age 65 or (B) attainment of age 55 and completion of 10 years of service for the Corporation.

(t) “Subsidiary” means any corporation fifty percent (50%) or more of the voting stock of which is owned by Clearwater Paper or by one or more of such corporations.

(u) “Year” means the calendar year.

3.	ADMINISTRATION OF THE PLAN

The Plan shall be administered by the Compensation 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. Notwithstanding the foregoing, with respect to Participants who are Executive Officers or who are otherwise Covered Employees, except in the case of a Change of Control as explained below, the Committee shall consist solely of “outside directors” within the meaning of Section 162(m). 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, the Senior Vice President, Legal or the Senior Vice President, Human Resources of Clearwater Paper (or in the event of a restructuring or vacancy in any such position, the officer of Clearwater Paper to whom has been delegated the responsibilities of such restructured or vacant position).

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.

4.	ELIGIBILITY AND PARTICIPATION

The CEO shall designate the individuals who will participate in the Plan for an Award Year, in accordance with the Committee’s rules and regulations.

AWARDS

Awards shall be determined in accordance with Sections 6, 7 and 8 following the close of the Award Year and, unless deferred in accordance with the Management Deferred Compensation Plan, shall be paid no later than March 15 following the close of the Award Year.

6.	DETERMINING THE TARGET BONUS POOLS AND PERFORMANCE TARGETS

Prior to or during the first 90 days of each Award Year, the Committee shall approve, in accordance with this Section 6 and the Committee’s rules and regulations,

•

the methodology for determining each Participant’s target bonus for the Award Year;

•

the methodology for determining separate target bonus pools for corporate performance (based on performance of the Corporation as a whole) and for individual performance;

•

the extent to which Participants shall participate in each target bonus pool; and

•

the performance criteria and specific performance targets that will be used to determine the percentage of each target bonus pool that will be funded.

(a) Individual Target Bonuses. A Participant’s target bonus for an Award Year 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) Target Bonus Pools.

(i) The target “Corporate Performance” bonus pool for an Award Year shall consist of the sum of the individual target bonuses for all Participants multiplied by a percentage approved by the Committee.

(ii) The target “Individual Performance” bonus pool for an Award Year shall equal the sum of the individual target bonuses for all Participants multiplied by a percentage approved by the Committee.

(iii) The sum of the target bonus pools determined for an Award Year shall equal 100% of the individual target bonuses determined under Section 6(a) for all of the Participants for that Award Year.

(c) Participation in Bonus Pools. Participants shall participate in each of the bonus pools to the extent approved by the Committee and provided in the Committee’s rules and regulations. A Participant’s participation in the Individual Performance pool shall not exceed a specified percentage of his or her target bonus for the Award Year. The extent to which the Participant may actually earn that percentage or a lesser percentage of the Individual Performance pool shall depend on his or her attainment of pre-established individual performance targets for the Award Year approved by the Participant’s supervisor, or by the Committee with respect to the CEO.

(d) Funding Percentages. The extent to which each target bonus pool is to be funded shall be determined based on the Corporation’s performance for the Award Year, measured using one or more of the performance criteria permitted under Section 6(e).

(i) For the Corporate Performance pool, the Committee shall specify levels of performance using one or more of the performance criteria permitted under Section 6(e) which shall determine the percentage of the target bonus pool to be funded. Such levels shall include (but need not be limited to) a “threshold” level of performance below which none of the bonus pool shall be funded, a “target” level of performance at which 100% of the target bonus pool shall be funded, and if the Committee provides that more than 100% of a target bonus pool may be funded for an Award Year, the level or levels of performance necessary to achieve such funding and the maximum percentage of the target bonus pool that may be funded. In no event shall more than 200% of any target bonus pool be funded.

(ii) The Individual Performance pool shall be funded at 100% of the target Individual Performance pool, provided that the Corporation achieves at least the threshold level of Corporate Performance approved by the Committee for the Award Year. If the Corporation fails to achieve the applicable threshold level of Corporate Performance for the Award Year, none of the Individual Performance pool shall be funded.

(e) Qualifying Performance Criteria. For the purpose of measuring performance for an Award Year, the Committee shall provide in its rules and regulations for the use of one or more of the following performance criteria for an Award Year, either individually, alternatively or in any combination, applied either to the Corporation as a whole or to Clearwater Paper, an organization unit or Subsidiary, either individually, alternatively or in any combination, and measured on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group or index, in each case as specified by the Committee: (i) cash flow (including operating cash flow), (ii) earnings per share, (iii) (A) earnings before interest, (B) earnings before interest and taxes, (C) earnings before interest, taxes and depreciation, (D) earnings before interest, taxes, depreciation and amortization, or (E) earnings before any combination of such expenses or deductions, (iv) return on equity, (v) total stockholder return, (vi) share price performance, (vii) return on capital, (viii) return on assets or net assets, (ix) revenue, (x) income or net income, (xi) operating income or net operating income, (xii) operating profit or net operating profit, (xiii) operating margin or profit margin (including as a percentage

of revenue), (xiv) return on operating revenue, (xv) return on invested capital, (xvi) market segment shares or (xvii) economic profit (“Qualifying Performance Criteria”). After the end of the Award Year the Committee shall determine and certify the extent to which the Qualifying Performance Criteria have been met. The Committee may appropriately adjust any evaluation of performance under a Qualifying Performance Criteria to exclude any of the following events that occur during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs, and (v) any extraordinary, nonrecurring items to be disclosed in the Corporation’s financial statements (including footnotes) for the applicable year and/or in management’s discussion and analysis of the financial condition and results of operations appearing in the Corporation’s annual report to stockholders for the applicable year.

7.	CERTIFICATION OF PERFORMANCE AND FUNDING OF BONUS POOLS

After the end of the Award Year and prior to the payment of any Award to any Participant for the Award Year, the Committee shall certify in writing (a) the actual level of performance achieved by the Corporation with respect to the Qualifying Performance Criteria selected in accordance with Section 6, and (b) based on those actual levels of performance and the funding percentages previously approved by the Committee in accordance with Section 6, the percentage of each target bonus pool that shall be funded.

8.	PAYMENT OF FUNDED BONUS POOLS TO PARTICIPANTS

The funded bonus pools shall be paid to Participants based on the Committee’s rules and regulations, previously approved pursuant to Section 6(c), for determining the extent to which Participants participate in the different bonus pools.

(a) A Participant’s individual performance shall be measured against the pre-established targets for the Participant’s individual performance set pursuant to Section 6(c). The Executive Officer with responsibility for the Participant’s department or operating unit shall approve the final determination of the Participant’s share of the funded Individual Performance pool, provided that the Participant’s share of such funded pool shall not exceed the pre-established percentage of his or her target bonus for the Award Year determined pursuant to Section 6(c).

(b) Notwithstanding the foregoing, each Participant who is an Executive Officer or who is otherwise a Covered Employee shall be deemed to have earned a share of the funded Individual Performance pool equal to the pre-established percentage of his or her target bonus for the Award Year determined pursuant to Section 6(c). The Committee in its discretion may reduce (and may not increase) that percentage in determining the final payment to any such Participant from the funded Individual Performance pool.

(c) Each Participant’s Award, consisting of his or her eligible share of each of the funded bonus pools, shall be subject to review by and approval of the CEO (or by the Committee in the case of the CEO’s Award). Notwithstanding the foregoing, the final determination to adjust an Award payable to any Executive Officer or any other Covered Employee shall be made

solely by the Committee. The Award of any Executive Officer or any other Covered Employee shall not be increased based on the Committee’s (or the CEO’s or another individual’s) exercise of discretion to reduce the Awards payable to other Participants.

(d) In no event shall the Award granted to the CEO exceed $2.5 million, or the Award granted to any other Participant exceed $1.5 million.

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 Clearwater Paper if the Participant has not reached his or her required ownership level 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 Clearwater Paper’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. Subject to the Applicable Severance Plan, a Participant whose employment is terminated before the end of an Award Year for any reason other than death, disability (within the meaning of Section 409A(a)(2)(C) of the Code) or Retirement shall not be entitled to receive an Award. Notwithstanding any other provision of this Plan, in no event may the achievement of performance goals for any Participant who is an Executive Officer or who is otherwise a Covered Employee be waived except in the event of such Participant’s death or disability (within the meaning of Section 409A(a)(2)(C) of the Code) or pursuant to Section 14 below.

(b) Notwithstanding the foregoing, a Participant may be permitted to elect to defer receipt of payment of all or a portion of an Award subject to, and in accordance with, the terms of the Management Deferred Compensation Plan.

(c) Notwithstanding any other provision of the Plan, the Board of Directors or the Committee 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.

10.	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.

11.	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.

12.	AMENDMENT OR TERMINATION OF THE PLAN

The Board of Directors or the Committee 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. 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 Senior Vice President, Legal or the Senior Vice President, Human Resources of Clearwater Paper (or in the event of a restructuring or vacancy in either such position, the officer of Clearwater Paper to whom has been delegated the responsibilities of such restructured or vacant position) 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 Corporation 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.

13.	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.

14.	CHANGE OF CONTROL

Notwithstanding any other provision of the Plan to the contrary, this Section 14 shall apply with respect to the determination of Awards and the payment of Awards following a Change of Control.

(a) 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 occurs, each Participant shall be paid his or her Award determined in accordance with Sections 5 through 8 based on the performance results for the applicable Award Year. Such Award shall be paid at the time prescribed in Sections 5 and 9(a) for the applicable Award Year.

(b) In the event that the employment of a Participant terminates following a Change of Control and the Participant has met the conditions for receiving severance payments under the

Applicable Severance Plan, such Participant shall be paid a prorated Award for the Award Year in which the Change of Control occurs based on the Participant’s target bonus for such Award Year. The prorated Award shall be calculated by multiplying the Participant’s target bonus for such Award Year by a fraction, the numerator of which is the number of days the Participant was employed by the Corporation during such Award Year and the denominator of which is 365. Such prorated Award shall be paid at such time as the Participant is paid cash severance benefits pursuant to the Applicable Severance Plan.

15.

CLAWBACK

Notwithstanding any other provision of this Plan to the contrary, the Committee reserves the right to cancel or adjust the amount of any Award if the financial statements of the Corporation on which the calculation or determination of the Award was based are subsequently restated due to error or misconduct and, in the judgment of the Committee, the financial statements as so restated would have resulted in a smaller or no Award if such information had been known at the time the Award had originally been calculated or determined. In addition, in the event of such a restatement, the Corporation reserves the right to require a Participant to repay to the Corporation the amount by which the Award as originally calculated or determined exceeds the Award as adjusted pursuant to the preceding sentence.