EXHIBIT 10.4
[Severance Agreement —
Grandfathered VP — Dec. 2007]
SEVERANCE AGREEMENT
AGREEMENT between FOREST OIL CORPORATION , a New
York corporation (the “Company”), and
(“Executive”),
W
I T N
E S S E T
H:
WHEREAS,
the Company and Executive
have heretofore entered into that certain Severance Agreement dated
April 26, 2001 (the “Severance Agreement”);
and
WHEREAS,
the Company and Executive
desire to terminate the Severance Agreement and replace it with
this Agreement; and
WHEREAS
, the Company desires to attract and retain
certain key employee personnel and, accordingly, the Board of
Directors of the Company (the “Board”) has approved the
Company entering into a severance agreement with Executive in order
to encourage his continued service to the Company; and
WHEREAS
, Executive is prepared to commit such
services in return for specific arrangements with respect to
severance compensation and other benefits;
WHEREAS , Executive will receive and/or has
received proprietary and confidential trade secret information of
the Company; and
WHEREAS , Executive will serve and/or has
served as an executive, management personnel, or officer of the
Company;
NOW, THEREFORE,
in consideration of the
foregoing and for other good and valuable consideration, the
Company and Executive agree as follows:
1.
Definitions.
(a)
“Annual Compensation” shall mean an amount equal
to the greater of:
(i)
Executive’s annual base salary at the annual rate in effect
at the date of his Involuntary Termination;
(ii)
Executive’s annual base salary at the annual rate in effect
sixty days prior to the date of his Involuntary Termination;
or
(iii)
Executive’s annual base salary at the annual rate in effect
immediately prior to a Change of Control if Executive’s
employment shall be subject to an Involuntary Termination within
two years after such Change of Control.
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(b)
“Change in Duties” shall mean:
(i)
The occurrence, prior to a Change of Control or after the date
which is two years after a Change of Control occurs, of any one or
more of the following:
(1)
A significant change in the nature or scope of Executive’s
authorities or duties from those previously applicable to
him;
(2)
A reduction in Executive’s base salary from that provided to
him immediately prior to the effective date of this Agreement (or
the effective date of any extension of this Agreement pursuant to
Paragraph 7(a)); or
(3)
A diminution in employee benefits (including but not limited to
medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Executive from those substantially
similar to the employee benefits and perquisites provided by the
Company (including its subsidiaries) to executives with comparable
duties; or
(ii)
The occurrence, within two years after the date upon which a Change
of Control occurs, of any one or more of the following:
(1)
A significant change in the nature or scope of Executive’s
authorities or duties from those applicable to him immediately
prior to the date on which a Change of Control occurs;
(2)
A reduction in Executive’s base salary from that provided to
him immediately prior to the date on which a Change of Control
occurs;
(3)
A diminution in Executive’s eligibility to participate in
bonus, stock option, incentive award and other compensation plans
which provide opportunities to receive compensation which are the
greater of (A) the opportunities provided by the Company
(including its subsidiaries) for executives with comparable duties
or (B) the opportunities under any such plans under which he
was participating immediately prior to the date on which a Change
of Control occurs;
(4)
A diminution in employee benefits (including but not limited to
medical, dental, life insurance and long-term disability plans) and
perquisites applicable to Executive from the greater of
(A) the employee benefits and perquisites provided by the
Company (including its subsidiaries) to executives with comparable
duties or (B) the employee benefits and perquisites to which
he was entitled immediately prior to the date on which a Change of
Control occurs; or
(5)
A change in the location of Executive’s principal place of
employment by the Company (including its subsidiaries) by more than
50 miles from the location
2
where he was
principally employed immediately prior to the date on which a
Change of Control occurs.
(c)
“Change of Control” shall mean the occurrence of any
one of the following events:
(i)
Any one person, or more than one person Acting as a Group (as
hereinafter defined), acquires ownership of stock of the Company
that, together with stock held by such person or group, constitutes
more than 50% of the total fair market value or total voting power
of the stock of the Company; provided, however, that if any one
person, or more than one person Acting as a Group, is considered to
own more than 50% of the total fair market value or total voting
power of the stock of the Company, the acquisition of additional
stock by the same person or group does not cause a Change of
Control within the meaning of this Paragraph 1(c)(i); and provided,
further, that an increase in the percentage of stock owned by any
one person, or persons Acting as a Group, as a result of a
transaction in which the Company acquires its stock in exchange for
property will be treated as an acquisition of stock for purposes of
this Paragraph 1(c)(i); and provided, further, that this Paragraph
1(c)(i) applies to cause a Change of Control only when there
is a transfer of stock of the Company (or issuance of stock of the
Company) and stock in the Company remains outstanding after the
transaction; and provided, further, that, if any person, or more
than one person Acting as a Group, is considered to have met the
control requirements of Paragraph 1(c)(ii) below, the
acquisition of additional control by the same person or group will
not cause a Change of Control within the meaning of this Paragraph
1(c)(i); or
(ii)
A majority of the members of the Board is replaced during any
12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board before the date
of such appointment or election; provided, however, that, if any
person, or more than one person Acting as a Group, is considered to
have met the control requirements of this Paragraph 1(c)(ii), the
acquisition of additional control by the same person or group will
not cause a Change of Control within the meaning of this Paragraph
1(c)(ii); or
(iii)
Any one person, or more than one person Acting as a Group, acquires
(or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person or group) assets from
the Company that have a total “gross fair market value”
equal to or more than 60% of the total “gross fair market
value” of all the assets of the Company immediately before
such acquisition or acquisitions; provided, however, that there is
no Change of Control under this Paragraph 1(c)(iii) where
there is a transfer to an entity that is controlled by the
shareholders of the Company immediately after the transfer, as
provided in the following proviso; and, provided, further, that a
transfer of assets by the Company shall not be treated as change in
the ownership of such assets if the assets are transferred to
(1) a shareholder of the Company (immediately before the asset
transfer) in exchange for or with respect to its stock, (2) an
entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the Company, (3) a person,
or more than one person Acting as a Group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all
the outstanding stock of the Company, or (4) an entity, at
least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in clause (3) of
this proviso. For purposes of this Paragraph 1(c)(iii),
“gross fair market value” means the value of the assets
of the Company,
3
or
the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.
For purposes of this
Paragraph 1(c), (x) Section 318(a) of the Code
applies to determine stock ownership, and (y) the term
“Acting as a Group” means “acting as a
group” within the meaning of Treasury Regulation section
1.409A-3(i)(5)(v)(B), (vi)(D), or (vii)(C), as applicable.
The definition of Change of Control under this Paragraph
1(c) is intended to comply with applicable definitions and
requirements of Section 409A(a)(2)(A)(v) of the Code and
Treasury Regulation section 1.409A-3(i)(5) that correspond to
the change of control events described above, and shall be
interpreted consistently therewith.
(1)
“ Code” shall mean the Internal Revenue Code of
1986, as amended.
(d)
“Compensation Committee” shall mean the
Compensation Committee of the Board.
(e)
“Disability” shall mean that, as a result of
Executive’s incapacity due to physical or mental illness, he
shall have been absent from the full-time performance of his duties
for six consecutive months and he shall not have returned to
full-time performance of his duties within thirty days after
written notice of termination is given to Executive by the Company
(provided, however, that such notice may not be given prior to
thirty days before the expiration of such six-month
period).
(f)
“Involuntary Termination” shall mean any
termination of Executive’s employment with the Company
which:
(i)
does not result from a resignation by Executive (other than a
resignation pursuant to clause (ii) of this subparagraph (f));
or
(ii)
results from a resignation by Executive on or before the date which
is sixty days after the date upon which Executive receives notice
of a Change in Duties;
provided, however, the
term “Involuntary Termination” shall not include
a Termination for Cause or any termination as a result of death,
Disability, or Retirement. For all purposes of this
Agreement, Executive shall be considered to have terminated
employment with the Company when Executive incurs a
“separation from service” with the Company within the
meaning of Section 409A(a)(2)(A)(i) of the Code and
applicable administrative guidance issued thereunder.
(g)
“Monthly Severance Amount” shall mean an amount
equal to one-twelfth of Executive’s Annual
Compensation.
(h)
“Retirement” shall mean Executive’s
resignation on or after the date he reaches age
sixty-five.
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(i)
“Severance Amount” shall mean an amount equal to
2.5 times Executive’s Annual Compensation.
(j)
“Severance Period” shall mean:
(i)
in the case of an Involuntary Termination which occurs prior to a
Change of Control or after the date which is two years after a
Change of Control occurs, a period commencing on the date of such
Involuntary Termination and continuing for a number of months (not
in excess of thirty months) equal to the whole number of times that
Executive’s Annual Compensation can be divided by $10,000;
or
(ii)
in the case of an Involuntary Termination which occurs within two
years after the date upon which a Change of Control occurs, a
period commencing on the date of such Involuntary Termination and
continuing for twenty-four months.
(k)
“Termination for Cause” shall mean termination
of Executive’s employment by the Company (or its
subsidiaries) by reason of Executive’s (i) gross
negligence in the performance of his duties, (ii) willful and
continued failure to perform his duties, (iii) willful
engagement in conduct which is materially injurious to the Company
or its subsidiaries (monetarily or otherwise) or
(iv) conviction of a felony or a misdemeanor involving moral
turpitude.
2.
Services. Executive
agrees that he will render services to the Company (as well as any
subsidiary thereof or successor thereto) during the period of his
employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same
time, efforts and dedication to his duties as heretofore
devoted.
3.
Termination Other Than Within Two
Years After a Change of Control. Subject to
the provisions of Paragraph 7(i) hereof, if Executive’s
employment by the Company or any subsidiary thereof or successor
thereto shall be subject to an Involuntary Termination which occurs
prior to a Change of Control or after the date which is two years
after a Change of Control occurs, then the Company will, as
additional compensation for services rendered to the Company
(including its subsidiaries), pay to Executive the following
amounts (subject to any applicable payroll or other taxes required
to be withheld and any employee benefit premiums) and take the
following actions after the last day of Executive’s
employment with the Company:
(a)
Pay Executive the Monthly Severance Amount on the first day of each
month throughout the Severance Period; provided, however, that in
the event Executive obtains new employment during the
Severance
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