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EXHIBIT 10.2
RAYONIER, INC.
SUPPLEMENTAL SENIOR EXECUTIVE
SEVERANCE PAY PLAN
Human Resources
July 1997
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RAYONIER INC.
SUPPLEMENTAL SENIOR EXECUTIVE SEVERANCE PAY PLAN
1. PURPOSE
The Compensation and Management Development Committee (the "Committee") of the
Board of Directors of Rayonier Inc. (the "Company") recognizes that, as with
many publicly held corporations, there exists the possibility of a Change in
Control of the Company. This possibility and the uncertainty it creates may
result in the loss or distraction of senior executives of the Company, to the
detriment of the Company and its shareholders.
Accordingly, the Committee has determined that appropriate steps should be taken
to assure the Company of the continued employment, attention and dedication to
duty of its senior executives -- including maintaining professionalism,
indifference and objectivity in negotiating with a potential acquirer and to
seek to ensure the availability of their continued service, notwithstanding the
possibility, threat, or occurrence of a Change in Control.
Therefore, in order to fulfill the above purposes, the Senior Executive
Severance Pay Plan adopted by the Rayonier Board of Directors on March 1, 1994
is hereby amended and restated as the Supplemental Senior Executive Severance
Pay Plan (the "Plan") as set forth as follows:
2. COVERED EMPLOYEES
Covered Employees under this Plan (each an "Executive") are those full-time,
regular Senior Executive salaried employees of the Company, who are identified
in Appendix "A" attached hereto and designated as Tier I or Tier II, as may be
amended from time to time prior to a Change in Control by the Committee.
An Executive shall only cease to be a participant in the Plan as a result of
termination or amendment of the Plan complying with Section 15 of the Plan, or
when he or she ceases to be an employee of the Company, unless, at the time he
or she ceases to be an employee, such Executive is entitled to payment of
Separation Benefits as provided in the Plan or there has been an event or
occurrence that constitutes Good Reason after a Change in Control that would
enable Executive to terminate his or her employment and receive Separation
Benefits. An Executive entitled to payment of Separation Benefits under the Plan
shall remain a participant in the Plan until the full amount of the Separation
Benefits have been paid to Executive.
3. SEPARATION BENEFITS UPON QUALIFYING TERMINATION OF EMPLOYMENT
If, within two years following a Change in Control, (a) an Executive terminates
his or her employment for Good Reason, or (b) the Company terminates an
Executive's employment, the Executive shall be provided Separation Benefits in
accordance with the terms of this Plan, except Separation Benefits shall not be
payable where Executive:
- is terminated for Cause;
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- terminates employment with the Company prior to the effective
date of this Plan;
- voluntarily resigns, other than for Good Reason;
- voluntarily fails to return from an approved leave of absence
(including a medical leave of absence); or
- terminates employment as a result of Executive's death or
Disability.
Any non-excepted termination is a "Qualifying Termination."
4. SEPARATION BENEFITS
For purposes of this Plan, Separation Benefits consist of both Scheduled
Severance Pay and Additional Severance.
Scheduled Severance Pay shall be determined in accordance with the
following schedule, which sets forth the months of Base Pay to be provided to an
Executive, based upon Executive's Years of Service as of the Effective Date, and
payable as provided in Section 5 below.
YEARS OF SERVICE MONTHS OF BASE PAY
---------------- ------------------
TIER I TIER II
EXECUTIVES EXECUTIVES
---------- ----------
Less than 4 24 12
4 25 13
5 26 14
6 27 15
7 28 16
8 29 17
9 30 18
10 31 19
11 32 20
12 33 21
13 34 22
14 35 23
15 or more 36 24
Additional Severance. In addition to Scheduled Severance Pay, upon a
Qualifying Termination Executive will be eligible to receive as Additional
Severance, the Benefits Continuation Amounts, as provided in Section 7 below,
and a Target Bonus Severance, as follows. The Target Bonus Severance shall be
based upon the Target Bonus Award established under the Rayonier Incentive Bonus
Plan during the year most recently ended prior to the Effective Date of the
Qualifying Termination. Tier I Executives are entitled to a Target Bonus
Severance which is three times Target Bonus Award, together with an additional
amount representing the prorated current year's bonus. Tier II Executives are
entitled to a Target Bonus Severance which is two times
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Target Bonus Award, together with an additional amount representing the prorated
current year's bonus. The prorated current year's bonus shall be determined by
multiplying one times the Target Bonus Award by a fraction of the numerator of
which the number of months or portion thereof lapsed in the then current year
prior to the qualifying termination and the denominator of which is twelve. The
Target Bonus Severance shall be paid to Executive by the Company as a lump sum
cash payment within 10-days after the Effective Date of the Qualifying
Termination.
5. LUMP SUM PAYMENT OF SCHEDULED SEVERANCE PAY
The Company shall pay the Scheduled Severance Pay to Executive in a lump sum not
later than 10 days after the Effective Date, except where Executive is entitled
to periodic payments of Salary Continuation under Section 6.
6. PERIODIC PAYMENT OF SCHEDULED SEVERANCE PAY
At Executive's option, subject to the conditions set forth in this Section 6,
the Scheduled Severance Pay shall be payable to Executive in the form of equal
periodic payments ("Salary Continuation") according to the Company's regular
payroll schedule or at any other intervals elected by Executive for a period
commencing on the first regular payroll pay date beginning after the Effective
Date of Executive's Qualifying Termination (the "Salary Continuation Period").
In order to receive Salary Continuation during a Salary Continuation Period, an
Executive must elect such Salary Continuation in writing prior to a Change in
Control and specify the Salary Continuation Period, which may not exceed the
number of months of Base Pay payable to Executive as Scheduled Severance Pay in
accordance with Section 4 above. During the Salary Continuation Period,
Executive agrees to perform advisory, consultative and such other services as
the Company may, from time to time, reasonably request in order to effect the
transition of Executive's duties as a result of Executive's Qualifying
Termination. The manner and time devoted to such service shall be determined in
the sole reasonable discretion of the Executive.
During such Salary Continuation Period, Executive will remain an active employee
of the Company, but Executive's benefits shall be limited as provided in Section
7 below. Notwithstanding Executive's status as an active employee of the Company
during the Salary Continuation Period, solely for the purposes of this Plan and
the Separation Benefits payable hereunder, Executive's Qualifying Termination
shall be deemed to occur as of the commencement of the Salary Continuation
Period.
In the event of Executive's death during the Salary Continuation Period, any
unpaid Salary Continuation shall be paid in a lump sum to such beneficiary or
beneficiaries designated by Executive in writing or, failing such designation,
to Executive's spouse if Executive is married or to Executive's estate if
Executive is unmarried.
7. BENEFITS CONTINUATION
Additional Severance shall include the Benefits Continuation Amounts, which are
comprised of the following:
A. If Executive is receiving Salary Continuation during a Salary
Continuation Period pursuant to Section 6 above, Executive will
continue to be eligible to participate
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in and shall receive credit for service during the Salary Continuation
Period under the following Company employee benefit plans:
(i) such employee welfare benefit plans, within the meaning of
Section 3(1) of ERISA, as the Company may maintain for the
benefit of the Company's employees during the Salary
Continuation Period, subject to the terms and conditions of
such plans; provided, however, that Executive shall not be
eligible to participate in any short or long-term disability
benefits plans or any business travel accident plans
maintained by the Company during the Salary Continuation
Period;
(ii) the Retirement Plan for Salaried Employees of Rayonier and the
Rayonier Investment and Savings Plan for Salaried Employees;
(iii) any excess benefit plan, within the meaning of Section 3(36)
of ERISA, or any supplemental executive retirement plan or
other employee pension benefit plan, within the meaning of
Section 3(2) of ERISA, not intended to be qualified under
Section 401(a) of the Code, maintained by the Company during
the Salary Continuation Period, subject to the terms and
conditions of such plans (collectively, the "Supplemental
Plans"); and
(iv) the Senior Executive Tax Plan, as applicable to Executive
immediately prior to the Qualifying Termination, and any
successor thereto.
During the period an Executive is receiving Salary Continuation,
Executive will not be eligible to accrue any vacation or participate in
any (i) bonus program, (ii) special termination programs, (iii) new
awards under any stock option or stock related plan for executives
(provided that Executive will be eligible to exercise any outstanding
stock options in accordance with the terms of any applicable stock
option plan), (iv) new or revised executive compensation programs that
may be introduced after the Effective Date and (v) any other executive
compensation program, plan, arrangement, practice, policy or
perquisites unless specifically authorized by the Company in writing.
The period during which an Executive is receiving Salary Continuation
does not count as service for the purpose of any Company long-term
incentive award program including, but not limited to, Rayonier's
Incentive Stock Plan and any similar plan.
If, for any reason at any time the Company is unable to treat Executive
as being eligible for ongoing participation in any Company employee
benefit plan as provided in this Section 7A, and if as a result thereof
Executive does not receive a benefit or receives a reduced benefit, the
Company shall provide such benefits outside such plan at no additional
cost (including without limitation tax cost) to Executive, or at the
Company's option, make available equal benefits from other sources.
If the length of Executive's Salary Continuation Period is less than 36 months,
by reason of:
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(i) the payment intervals elected by Executive pursuant to Section
6 above; or
(ii) fewer than 36 months of Base Pay being payable to Executive
pursuant to Section 4 above according to the Company's regular
payroll schedule; or
(iii) the acceleration of Executive's Salary Continuation as
provided in Section 10 below;
the Company shall pay to Executive in a lump sum not more than 10 days after the
end of Executive's Salary Continuation Period, as the same may be shortened by
reason of the acceleration of Executive's Salary Continuation as provided in
Section 10 below, an amount equal to the excess of (X) over (Y), where (X) is
the Equivalent Actuarial Value of the benefit to which Executive would have been
entitled under the Retirement Plan for Salaried Employees of Rayonier Inc., the
Retirement Plan for Salaried Employees of ITT Corporation, the Rayonier
Investment and Savings Plan for Salaried Employees, any excess benefit plan,
within the meaning of Section 3(36) of ERISA, or any supplemental executive
retirement plan within the meaning of Section 3(2) of ERISA, maintained by ITT
Corporation (the "ITT Supplemental Plans"), and the Supplemental Plans
(collectively, the "Plans") had Executive accumulated additional eligibility
service as a fully vested participant in the Plans and additional benefit
service in all the Plans other than the Retirement Plan for Salaried Employees
of ITT Corporation and the ITT Supplemental Plans equal to the difference
between 36 months and the number of months of eligibility and benefit service
credited to Executive under the Plans during the Salary Continuation Period and
as if Executive were three years older than his attained age at the beginning of
the Salary Continuation Period, solely for purposes of benefit eligibility and
determining the amount of reduction in benefit on account of payment commencing
prior to the Executive's normal retirement date, and by defining Executive's
Final Average Compensation as equal to the greater of Executive's Base Pay on
the Effective Date of Executive's Qualifying Termination or Executive's Final
Average Compensation as determined under the terms of the Retirement Plan for
Salaried Employees of Rayonier Inc. and (Y) is the Equivalent Actuarial Value of
the amounts otherwise actually payable to Executive under the Plans. The
Equivalent Actuarial Value shall be determined using the same assumptions
utilized under the Rayonier Inc. Excess Benefit Plan upon the date of payment of
the lump sum and based on Executive's age on such date.
Notwithstanding the foregoing, for purposes of calculating the above lump sum,
Executive shall not be required to contribute to the Rayonier Investment and
Savings Plan for Salaried Employees or the Rayonier Inc. Excess Savings and
Deferred Compensation Plan as a condition to receiving such lump sum nor shall
the Company be required to include in such lump sum amounts attributable to
contributions Executive would have made under the Rayonier Investment and
Savings Plan for Salaried Employees or the Rayonier Inc. Excess Savings and
Deferred Compensation Plan had Executive continued to participate in those
plans. The Company shall only be obligated to include in such lump sum the
Company contributions that would have been made under the Rayonier Investment
and Savings Plan for Salaried Employees and the Rayonier Inc. Excess Savings and
Deferred Compensation Plan had Executive continued to participate in those plans
at the level of compensation and rate of contribution in effect as of the pay
date immediately preceding the termination of the
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Salary Continuation Period, without allocating any deemed earnings to said
Company contributions.
B. If the Executive has not elected Salary Continuation under Section 6,
the Company shall pay the Executive in a lump sum in cash on the
Effective Date, in addition to amounts to which Executive is entitled
under the Retirement Plan for Salaried Employees of Rayonier Inc., the
Retirement Plan for Salaried Employees of ITT Corporation, the Rayonier
Investment and Savings Plan for Salaried Employees and the Supplemental
Plans (collectively, the "Plans"), in effect on the Effective Date, an
amount equal to the excess of (X) over (Y), where (X) is the Equivalent
Actuarial Value of the benefit to which Executive would have been
entitled under the terms of such Plans, without regard to "vesting"
thereunder, had Executive accumulated an additional 3 years of
eligibility service as a fully vested participant in the Plans and an
additional 3 years of benefit service in all the Plans other than the
Retirement Plan for Salaried Employees of ITT Corporation and the ITT
Supplemental Plans and as if Executive were 3 years older, solely for
purposes of benefit eligibility and determining the amount of reduction
in benefit on account of payment commencing prior to the Executive's
normal retirement date, and by defining Executive's Final Average
Compensation as equal to the greater of Executive's Base Pay on the
Effective Date of Executive's Qualifying Termination or Executive's
Final Average Compensation as determined under the terms of the
Retirement Plan for Salaried Employees of Rayonier Inc. and (Y) is the
Equivalent Actuarial Value of the amounts otherwise actually payable to
Executive under the Plans. The Equivalent Actuarial Value shall be
determined using the same assumptions utilized under the Rayonier Inc.
Excess Benefit Plan upon the date of payment of the lump sum and based
on Executive's age on such date.
Notwithstanding the foregoing, for purposes of calculating the above
lump sum, Executive shall not be required to contribute to the Rayonier
Investment and Savings Plan for Salaried Employees or the Rayonier Inc.
Excess Savings and Deferred Compensation Plan as a condition to
receiving such lump sum nor shall the Company be required to include in
such lump sum amounts attributable to contributions Executive would
have made under the Rayonier Investment and Savings Plan for Salaried
Employees or the Rayonier Inc. Excess Savings and Deferred Compensation
Plan had Executive continued to participate in those plans. The Company
shall only be obligated to include in such lump sum the Company
contributions that would have been made under the Rayonier Investment
and Savings Plan for Salaried Employees and the Rayonier Inc. Excess
Savings and Deferred Compensation Plan had Executive continued to
participate in those plans at the level of compensation and rate of
contribution in effect as of the pay date immediately preceding the
Effective Date, without allocating any deemed earnings to said Company
contributions.
C. Regardless of whether Executive has elected Salary Continuation
pursuant to Section 6 or is receiving a lump sum payment of Scheduled
Severance Pay pursuant to Section 5, the Company shall provide to
Executive the following additional benefits:
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(i) Ensure that options to purchase the Common Shares of the
Company ("Stock Options") granted to Executive prior to the
Effective Date by the Company will become immediately
exercisable in full in accordance with the respective Plan,
provided that no option shall be exercisable after the
termination date of such option.
(ii) Immediately vest in and grant to Executive all outstanding
Performance Shares and Restricted Stock ("Common Shares")
awarded to Executive prior to the Effective Date by the
Company without remaining restrictions as if all performance
objectives had been achieved in accordance with the respective
Plan documents.
(iii) Outplacement services, the scope and provider of which shall
be selected by Executive in his or her sole discretion, until
Executive is employed on a full time, comparable work basis,
for a period not to extend beyond the second anniversary of
the Effective Date of Executive's Qualifying Termination.
D. If there has been a Change in Control and any dispute arises between
Executive and the Company as to the validity, enforceability and/or
interpretation of any right or benefit afforded by this Plan, at
Executive's option such dispute shall be resolved by binding
arbitration proceedings in accordance with the rules of the American
Arbitration Association. The arbitrators shall presume that the rights
and/or benefits afforded by this Plan which are in dispute are valid
and enforceable and that Executive is entitled to such rights and/or
benefits. The Company shall be precluded from asserting that such
rights and/or benefits are not valid, binding and enforceable and shall
stipulate before such arbitrators that the Company is bound by all the
provisions of this Plan. The burden of overcoming by clear and
convincing evidence the presumption that Executive is entitled to such
rights and/or benefits shall be on the Company. The results of any
arbitration be conclusive on both parties and shall not be subject to
judicial interference or review on any ground whatsoever, including
without limitation any claim that the Company was wrongfully induced to
enter into this agreement to arbitrate such a dispute.
The Company shall pay the cost of any arbitration proceedings under
this Plan. Executive shall be entitled (within two (2) business days of
requesting such advance) to an advance of the actual legal fees and
expenses incurred by such Executive in connection with such proceedings
and Executive shall be obligated to reimburse the Company for such fees
and expenses in connection with such arbitration proceedings only if it
is finally and specifically determined by the arbitrators that
Executive's position in initiating the arbitration was frivolous and
completely without merit. The arbitrators shall have discretion to
award punitive damages to the Executive if it is found that the
Company's actions or failures to act which led to the Executive
submitting a dispute to arbitration and/or the Company's actions or
failures to act during the pendency of the arbitration proceeding make
such an award appropriate in the circumstances.
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In the event Executive is required to defend in any legal action or
other proceeding the validity or enforceability of any right or benefit
afforded by this Plan, the Company will pay any and all actual legal
fees and expenses incurred by such Executive regardless of the outcome
of such action and, if requested by Executive, shall (within two
business days of such request) advance such expenses to Executive. The
Company shall be precluded from asserting in any judicial or other
proceeding commenced with respect to any right or benefit afforded by
this Plan that such rights and benefits are not valid, binding and
enforceable and shall stipulate in any such proceeding that the Company
is bound by all the provisions of this Plan.
8. DEFINITIONS
The following terms not otherwise defined in this Plan have the indicated
meaning:
"Base Pay" shall mean the annual base salary rate payable to Executive
at the Effective Date, including compensation converted to other
benefits under a flexible pay arrangement maintained by the Company or
deferred pursuant to a written plan or agreement with the Company. Such
annual base salary rate shall in no event be less than the highest
annual base salary rate paid to Executive at any time during the
twenty-four (24) month period immediately preceding the Effective Date.
"Target Bonus Award" shall mean the Standard Bonus Target Percentages
of base salaries as defined under the Rayonier Incentive Bonus Plan for
the respective executive salary grades as determined pursuant to
Company base salary compensation schedules in effect for eligible
executives at a 100 percent performance factor as of December 31 for
the year most recently ended prior to the Effective Date.
"Cause" shall mean with respect to any Executive: (i) the willful and
continued failure of Executive for a period of ninety (90) days to
perform substantially Executive's duties with the Company (other than
any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to Executive by the Board of Directors of the Company that
specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive's duties, or (ii)
the engaging by Executive in illegal conduct or gross misconduct that
is demonstrably injurious to the Company. For purposes of this
definition, no act or failure to act on the part of Executive shall be
considered "willful" unless it is done, or omitted to be done, by
Executive without reasonable belief that Executive's action or omission
was in the best interests of the Company. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the
Board of Directors or upon the instructions of the Chief Executive
Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by Executive in good faith and in the best
interests of the Company. An Executive shall be deemed to have engaged
in illegal conduct and shall be subject to termination for Cause if
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Executive has been indicted or charged by any prosecuting agency with
the commission of a felony.
"Change in Control" shall have the definition set forth in the
Retirement Plan for Salaried Employees of Rayonier Inc. as amended
effective July 18, 1997, and as the same may be thereafter amended from
time to time prior to the occurrence of a Change in Control.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Disability" shall mean an illness or injury that has prevented
Executive from performing his or her duties (as they existed
immediately prior to the illness or injury) on a full-time basis for
180 consecutive business days.
"Effective Date" is the date the Company selects as the Executive's
last day of active full-time employment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.
"Good Reason" shall mean, with respect to any Executive, (i) the
assignment to Executive of any duties inconsistent in any respect with
Executive's position (including status, offices, titles, and reporting
requirements), authority, duties or responsibilities immediately before
the Change in Control, or any other action by the Company that results
in a significant diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by
Executive; (ii) any material reduction in Executive's Base Pay,
opportunity to earn annual bonuses or other compensation or employee
benefits, other than as a result of an isolated and inadvertent action
not taken in bad faith and that is remedied by the Company promptly
after receipt of notice thereof given by Executive; (iii) the Company's
requiring Executive to relocate his or her principal place of business
to a place which is more than thirty-five miles from his or her
previous principal place of business; or (iv) any purported termination
of the Plan otherwise than as expressly permitted by this Plan. For
purposes of this Plan, any good faith determination of "Good Reason"
made by Executive shall be conclusive.
"Normal Retirement Date" shall mean the first of the month that
coincides with or follows Executive's 65th birthday.
"Separation Benefits" shall mean the benefits described in Sections 4
and 6 that are provided to Executive upon a Qualifying Termination
under this Plan.
"Years of Service" shall mean the total number of completed years of
employment, inclusive of credited ITT system service, from Executive's
date of hire to the Effective Date, rounded up or down to the nearest
whole year. The ITT system service date of hire is the date from which
employment in the ITT system is recognized in conjunction with Rayonier
service for purposes of determining eligibility and vesting under the
applicable ITT and Rayonier retirement plans covering Executive on the
Effective Date.
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9. Certain Additional Payments by the Company
(a) Anything in this Plan to the contrary notwithstanding and
except as set forth below, in the event it shall be determined
that any payment or distribution by the Company to or for the
benefit of any Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Plan or otherwise, but determined without regard to any
additional payments required under this Section 9) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties are
incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"),
then Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by such
nationally recognized certified public accounting firm as may
be designated by Executive (the "Accounting Firm"), which
shall provide detailed supporting calculations both to the
Company and Executive within fifteen business days of the
receipt of notice from Executive that there has been a
Payment, or such earlier time as is requested by the Company.
In the event that the Accounting Firm is serving as accountant
or auditor for the individual, entity, or group effecting the
Change of Control, Executive shall appoint another nationally
recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to Executive within five days of
the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made
by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.
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(c) Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after Executive is informed in
writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. Executive shall not pay such claim prior
to the expiration of the thirty-day period following the date
on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies
Executive in writing prior to the expiration of such period
that it desires to contest such claim, Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim;
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company;
(iii) cooperate with the Company in good faith in order
effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the
Company shall bear and pay directly all costs and
expenses (including additional interest and
penalties) incurred in connection with such contest
and shall indemnify and hold Executive harmless, on
an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect
thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation
on the foregoing provisions of this Section 9(c), the
Company shall control all proceedings taken in
connection with such contest and, at its sole option,
may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with
the taxing authority in respect of such claim and
may, at its sole option either direct Executive to
pay the tax claimed and sue for a refund or contest
the claim in a permissible manner, and the Executive
agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate
courts as the Company shall determine; provided,
however, that if the Company directs Executive to pay
such claim and sue for a refund, the Company shall
advance the amount of such payment to Executive on an
interest-free basis and shall indemnify and hold
Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income
with respect to such advance and
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further provided that an extension of the statute of
limitations relating to payment of taxes for the
taxable year of Executive with respect to which such
contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would
be payable hereunder and Executive shall be entitled
to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any
other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by
the Company pursuant to Section 9(c), Executive becomes
entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company's complying with the
requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after
the receipt by Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that
Executive shall not be entitled to any refund with respect to
such claim and the Company does not notify Executive in
writing of its intent to contest such denial of refund prior
to the expiration of thirty days after such determination,
then such advance shall be forgiven and shall not be required
to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to
be paid."
10. PAYMENT ACCELERATION
If during the period an Executive is receiving Salary Continuation, the Company,
in its reasonable judgment exercised by the Board of Directors determines that
the Executive (i) engages in any activity that is inimical to the best interests
of the Company, (ii) publicly disparages the Company; (iii) fails to comply with
any Company Covenant Against Disclosure and Assignment of Rights to Intellectual
Property; (iv) without Rayonier Inc.'s prior consent, engages in, becomes
affiliated with, or becomes employed by any business competitive with the
Company; or (v) fails to comply with applicable provisions of the Rayonier Code
of Corporate Conduct or applicable Rayonier Inc. corporate policies, then the
Company may, upon written notice to Executive, pay the entire unpaid balance of
the scheduled Severance Pay to Executive as a nondiscounted lump sum together
with the amounts payable as a result of the termination of the Salary
Continuation Period under Section 7A.
11. RELEASE
No Separation Benefits will be provided under this Plan unless Executive
executes and delivers to the Company a mutual release, satisfactory to the
Company, in which Executive discharges and releases the Company and the
Company's directors, officers, employees and employee benefit plans from all
claims (other than for benefits to which Executive is entitled under this Plan
or any Company employee benefit plan) arising out of Executive's employment or
termination of employment and the Company discharges and releases Executive from
any and all claims arising out of Executive's employment or termination of
employment with the Company.
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12. SUCCESSOR TO COMPANY
This Plan shall bind any successor of the Company, its assets, or its businesses
(whether direct or indirect, by purchase, merger, consolidation, or otherwise),
in the same manner and to the same extent that the Company would be obligated
under this Plan if no succession had taken place.
In the case of any transaction in which a successor would not by the foregoing
provision or by operation of law be bound by this Plan, the Company shall
require such successor expressly and unconditionally to assume and agree to
perform the Company's obligations under this Plan, in the same manner and to the
same extent that the Company would be required to perform if no such succession
had taken place. The term "Company," as used in this Plan, shall mean the
Company as hereinbefore defined and any successor or assignee to the business or
assets which by reason hereof becomes bound by this Plan.
13. ADMINISTRATION OF PLAN
The Company is the Named Fiduciary for the Plan under ERISA. The Rayonier Board
of Directors Compensation and Management Development Committee (the "Committee")
is the Plan Administrator, which shall have the exclusive right to interpret
this Plan, adopt any rules and regulations for carrying out this Plan as may be
appropriate and, except as otherwise provided in this Plan, decide any and all
matters arising under this Plan. All interpretations and decisions by the
Committee shall be final, conclusive and binding on all parties affected
thereby.
14. CLAIMS PROCEDURE
If an employee or former employee makes a written request alleging a right to
receive benefits under this Plan or alleging a right to receive an adjustment in
benefits being paid under the Plan, the Company shall treat it as a claim for
benefit. All claims for benefit under the Plan shall be sent to the Rayonier
Board of Directors Compensation and Management Development Committee and must be
received within thirty days after termination of employment. If the Company
determines that any individual who has claimed a right to receive benefits, or
different benefits, under the Plan is not entitled to receive all or any part of
the benefits claimed, it will inform the claimant in writing of its
determination and the reasons therefor in terms calculated to be understood by
the claimant. The notice will be sent within ninety days of the claim unless the
Company determines additional time, not exceeding ninety days, is needed. The
notice shall make specific reference to the pertinent Plan provisions on which
the denial is based, and describe any additional material or information as
necessary. Such notice shall, in addition, inform the claimant what procedure
the claimant should follow to take advantage of the review procedures set forth
below in the event the claimant desires to contest the denial of the claim. The
claimant may within ninety days thereafter submit in writing to the Company a
notice that the claimant contests the denial of his or her claim by the Company
and desires a further review. The Company shall within sixty days thereafter
review the claim and authorize the claimant to appear personally and review
pertinent documents and submit issues and comments relating to the claim to the
persons responsible for making the determination on behalf of the
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Company. The Company will render its final decision with specific reasons
therefor in writing and will transmit it to the claimant within sixty days of
the written request for review, unless the Company determines additional time,
not exceeding sixty days, is needed, and so notifies the employee. If the
Company fails to respond to a claim filed in accordance with the foregoing
within sixty days or any such extended period, the Company shall be deemed to
have denied the claim.
15. TERMINATION OR AMENDMENT
The Company's Board of Directors may terminate or amend this Plan ("Plan
Change") at any time, except that no such Plan Change may reduce or adversely
affect Separation Benefits for any Executive who has a Qualifying Termination
within two years of the effective date of such Plan Change provided that
Executive was a Covered Employee under this Plan on the date of the Plan Change.
Notwithstanding the foregoing, for two years after the occurrence of a Change in
Control event, this Plan may not be terminated or amended until after all
Executives who become entitled to any payments hereunder shall have received
such payments in full. Any extension, amendment, or termination of this Plan by
the Board in accordance with the foregoing shall be made by action of the Board
in accordance with the Company's charter and bylaws and applicable law, and
shall be evidenced by a written instrument signed by a duly authorized officer
of the Company, certifying that the Board has taken such action.
16. PLAN SUPERSEDES PRIOR PLANS
This Plan supersedes and replaces all prior severance policies, plans, or
practices maintained by the Company with respect to all Covered Employees other
than individualized written agreements executed by the Company and Executive.
17. UNFUNDED PLAN STATUS.
This Plan is intended to be an unfunded plan maintained primarily for the
purpose of providing deferred compensation for a select group of management or
highly compensated employees, within the meaning of Section 401 of ERISA. All
payments pursuant to the Plan shall be made from the general funds of the
Company and no special or separate fund shall be established or other
segregation of assets made to assure payment. No Participant or other person
shall have under any circumstances any interest in any particular property or
assets of the Company as a result of participating in the Plan. Notwithstanding
the foregoing, the Company may but shall not be obligated to create one or more
grantor trusts, the assets of which are subject to the claims of the Company's
creditors, to assist it in accumulating funds to pay its obligations under the
Plan.
18. MISCELLANEOUS
Except as provided in this Plan, Executive shall not be entitled to any notice
of termination or pay in lieu thereof.
In cases where Severance Pay is provided under this Plan, pay in lieu of any
unused current year vacation entitlement will be paid to Executive in a lump
sum.
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This Plan is not a contract of employment, does not guarantee Executive
employment for any specified period and does not limit the right of the Company
to terminate the employment of Executive at any time.
The section headings contained in this Plan are included solely from convenience
of reference and shall not in any way affect the meaning of any provision of
this Plan.
If, for any reason, any one or more of the provisions or part of a provision
contained in this Plan shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Plan not held so invalid,
illegal or unenforceable, and each other provision or part of a provision shall
to the full extent consistent with law remain in full force and effect.
19. ADOPTION DATE AND AMENDMENT
This Plan was first adopted by Rayonier Inc.'s Board of Directors, effective
March 1, 1994 ("Adoption Date") and does not apply to any termination of
employment that occurred or which was communicated to Executive prior to the
Adoption Date.
On May 16, 1997, the Committee approved changes to the Plan, effective as of
June 1,1997. Subsequently on July 18, 1997, the Committee approved additional
changes to the Plan as contained herein, effective retroactive to June 1, 1997.
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APPENDIX A
SENIOR EXECUTIVE OFFICERS
TIER I TIER II
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SCHEDULE 1
RAYONIER BENEFIT PLANS
1. The Retirement Plan for Salaried Employees of Rayonier Inc.
2. The Rayonier Excess Benefit (Retirement) Plan
3. The Rayonier Investment and Savings Plan for Salaried Employees
4. The Rayonier Excess Savings and Deferred Compensation Plan
5. The Rayonier 1994 Incentive Stock Plan
6. Rayonier Supplemental Senior Executive Severance Pay Plan
7. Vacation Benefits for Salaried Employees (Human Resources Practice 29.0)
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