EXHIBIT 10.1
[Severance Agreement
— Grandfathered Senior VP Form —
Dec. 2007]
SEVERANCE AGREEMENT
SEVERANCE
AGREEMENT (the “Agreement”) dated as of
December 17, 2007 between FOREST OIL CORPORATION , a New
York corporation (the “Company”), with its offices
located at 707 Seventeenth Street, Suite 3600, Denver,
Colorado 80202 and
(“Executive”),
W I T N E S S E T H
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;
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.
Notwithstanding the foregoing, if
Executive’s employment shall be subject to an Involuntary
Termination within two years after such Change of Control, then the
amount determined pursuant to the preceding sentence shall be
increased by the amount of the Annual Bonus. For purposes of
the preceding sentence, the term ‘Annual Bonus’ shall
mean the annual bonus most recently paid by the Company to
Executive prior to the date of his Involuntary Termination;
provided, however, that if Executive was employed by the Company
for only a portion of the
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year with respect to which such bonus was paid,
then the ‘Annual Bonus’ shall equal an amount
determined by annualizing the bonus received by Executive based on
the ratio of the number of days Executive was employed by the
Company during such year to 365 days; provided, further, that if
Executive has not received an annual bonus from the Company at any
time prior to the date of his Involuntary Termination, then the
‘Annual Bonus’ shall equal the amount of
Executive’s target annual bonus for the year in which such
termination occurs.
(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
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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 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
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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, 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.
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(h)
“Retirement” shall mean Executive’s resignation
on or after the date he reaches age sixty-five.
(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 thirty 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
Period, each such monthly payment shall be reduced by 50% beginning
with the payment next due after the date Executive obtains such new
employment. Executive shall
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