Current Report

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(c) On August 30, 2011, the Board of Directors of the Company (the “Board”) appointed Julie A. Shiflett as Executive Vice President, Chief Financial Officer, effective as of September 1, 2011. Ms. Shiflett previously acted as Vice President, Finance for the Company in a consulting role since October 2010. Ms. Shiflett founded and has been a principal of NW CFO since January 2008. She served as Chief Financial Officer of Signature Genomic Laboratories in Spokane, Washington from February 2009 to July 2010, Vice President and Chief Financial Officer of Columbia Paint and Coatings from August 2006 to January 2009 and Vice President of Finance and Administration of Riley Creek Lumber Company from February 2001 to July 2006.

(e)(1) On August 30, 2011, the Compensation Committee of the Board approved a letter agreement with Ms. Shiflett under which she is entitled to an annual salary of $250,000 and a grant of restricted stock units under the Company’s 2006 Stock Incentive Plan having a value of $125,000. The restricted stock units will be granted on September 2, 2011 based on the closing price of the Company’s common stock on September 1, 2011, and will vest in full on the first anniversary of the date of grant, provided that Ms. Shiflett is still employed with the Company at that time. Commencing in 2012, Ms. Shiflett will be entitled to participate in the Company’s Variable Pay Plan (“VPP”) on the same basis as other executives.

If Ms. Shiflett is terminated without cause prior to September 1, 2013, then:

If there is a constructive termination of Ms. Shiflett’s employment by the Company without cause within twelve months after a change of control, then:

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The term “cause” means (i) Ms. Shiflett’s willful and intentional failure or refusal to perform or observe any of her material duties, responsibilities or obligations, if such breach is not cured within 30 days after notice thereof to her by the Company, which notice shall state that such conduct shall, without cure, constitute cause; (ii) any willful and intentional act by Ms. Shiflett involving fraud, theft, embezzlement or dishonesty affecting the Company; or (iii) Ms. Shiflett’s conviction of (or a plea of novo contendere to) an offense which is a felony in the jurisdiction involved.

The term “change of control” means the occurrence of any one of the following events: any merger or consolidation involving the acquisition of 50% or more of the combined voting power of the outstanding securities of the Company by an investor group, adoption of a sale or liquidation plan of substantially all of the assets of the Company or other similar transaction or series of transactions involving the Company, or the acquisition of 50% or more of the combined voting power of the outstanding securities of the Company by an investor group.

The term “constructive termination” will be deemed to occur if (A) without Ms. Shiflett’s consent, (i) there is a significant reduction in her overall scope of duties, authorities and responsibilities (it being understood that a new position within a larger combined company is not a constructive termination if it is in the same area of operations and involves similar scope of management responsibility notwithstanding that Ms. Shiflett may not retain as senior a position overall within the larger combined company as her prior position within the Company), (ii) Ms. Shiflett is required to relocate her place of employment, other than a relocation within 40 miles of Spokane, Washington, or (iii) there is a reduction of more than 20% of Ms. Shiflett’s base salary or target bonus (other than any such reduction consistent with a general reduction of pay across the Company’s or its successor’s executive staff as a group, as an economic or strategic measure due to poor financial performance by the Company) and (B) within the thirty (30) day period immediately following such material adverse change or reduction, Ms. Shiflett elects to terminate her employment voluntarily.

A copy of the August 31, 2011 press release announcing the appointment of Ms. Shiflett is included as Exhibit 99.1 to this report.

(e)(2) Ms. Shiflett will be replacing Dan Jackson, whose last day at the Company is August 31, 2011. On August 30, 2011, the Compensation Committee of the Board accelerated the vesting of 8,400 restricted stock units held by Mr. Jackson, which were scheduled to vest on November 15, 2011.

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