EXHIBIT 10.5
EXECUTIVE
CHANGE IN CONTROL AGREEMENT
(TIER I)
Weyerhaeuser Company
MARCH 2006
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.
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CONTENTS
Article 1. Term of the Agreement 1
Article 2. Definitions 2
Article 3. Participation and Continuing Eligibility under this Agreement 6
Article 4. Severance Benefits 6
Article 5. Form and Timing of Severance Benefits 9
Article 6. Excise Tax Equalization Payment 9
Article 7. The Company's Payment Obligation 12
Article 8. Dispute Resolution 12
Article 9. Outplacement Assistance 12
Article 10. Section 409A 13
Article 11. Successors and Assignments 13
Article 12. Miscellaneous 13
WEYERHAEUSER COMPANY
______________ (EXECUTIVE)
CHANGE IN CONTROL AGREEMENT (TIER I)
THIS EXECUTIVE CHANGE IN CONTROL AGREEMENT (Tier I) is made and entered
into by and between Weyerhaeuser Company (hereinafter referred to as the
"Company") and _____________ (hereinafter referred to as the "Executive").
WHEREAS, the Board of Directors of the Company has approved the Company
entering into change in control agreements with certain key executives of the
Company;
WHEREAS, the Executive is a key executive of the Company;
WHEREAS, should the possibility of a Change in Control of the Company
arise, the Board believes it is imperative that the Company and the Board should
be able to rely upon the Executive to continue in his position, and that the
Company should be able to receive and rely upon the Executive's advice, if
requested, as to the best interests of the Company and its shareholders without
concern that the Executive might be distracted by the personal uncertainties and
risks created by the possibility of a Change in Control; and
WHEREAS, should the possibility of a Change in Control arise, in addition
to his regular duties, the Executive may be called upon to assist in the
assessment of such possible Change in Control, advise management and the Board
as to whether such Change in Control would be in the best interests of the
Company and its shareholders, and to take such other actions as the Board might
determine to be appropriate.
NOW THEREFORE, to assure the Company that it will have the continued
dedication of the Executive and the availability of his advice and counsel
notwithstanding the possibility, threat, or occurrence of a Change in Control of
the Company, and to induce the Executive to remain in the employ of the Company,
and for other good and valuable consideration, the Company and the Executive
agree as follows:
ARTICLE 1. TERM OF THE AGREEMENT
This Agreement will commence on the Effective Date and shall continue in
effect until December 31, 2006.
However, in the event a Change in Control occurs during the term of this
Agreement, this Agreement will remain in effect for the longer of: (i)
twenty-four (24) full calendar months beyond the month in which such Change in
Control occurred; (ii) until all obligations of the Company to the Executive
hereunder have been fulfilled, and until all benefits required hereunder have
been paid to the Executive.
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ARTICLE 2. DEFINITIONS
Whenever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "AGREEMENT" means this Executive Change in Control Agreement (Tier
I).
(b) "BASE SALARY" means the salary of record paid to the Executive as
annual salary, excluding amounts received under incentive or other
bonus plans, whether or not deferred.
(c) "BENEFICIAL OWNER" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.
(d) "BENEFICIARY" means the persons or entities designated or deemed
designated by an Executive pursuant to Section 12.2 hereof.
(e) "BOARD" means the Board of Directors of the Company.
(f) "CAUSE" means Executive's:
(i) Willful and continued failure to perform substantially
Executive's duties with the Company after the Company
delivers to Executive written demand for substantial
performance specifically identifying the manner in which
Executive has not substantially performed Executive's
duties;
(ii) Conviction of a felony; or
(iii) Willfully engaging in illegal conduct or gross
misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this Section 2(f), no act or omission by Executive shall
be considered "willful" unless it is done or omitted in bad faith or 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: (i) authority given
pursuant to a resolution duly adopted by the Board, or (ii) 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. For
purposes of subsections (i) and (iii) above, Executive shall not be deemed to be
terminated for Cause unless and until there shall have been delivered to
Executive a copy of a resolution duly adopted by the affirmative vote of not
less than three quarters (3/4) of the entire membership to the Board at a
meeting called and held for such purpose (after reasonable notice is provided to
Executive and Executive is given an opportunity, together with counsel, to be
heard before the Board) finding that in the good faith opinion of the Board
Executive is guilty of the conduct described in subsection (i) or (iii) above
and specifying the particulars thereof in detail.
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(g) "CHANGE IN CONTROL" or "CIC" of the Company shall be deemed to have
occurred as of the first day that any one or more of the following
conditions shall have been satisfied:
(i) Any Person, but excluding the Company and any subsidiary of the
Company and any employee benefit plan (or related trust) sponsored
or maintained by the Company or any subsidiary of the Company
(collectively, "Excluded Persons"), directly or indirectly, becomes
the Beneficial Owner of securities of the Company representing 20%
or more of the combined voting power of the Company's then
outstanding securities with respect to the election of directors of
the Company and such ownership continues for at least a period of 30
days (with the end of such period being deemed the effective date of
the CIC); or
(ii)During any 24-consecutive month period, the individuals who, at
the beginning of such period, constitute the Board (the "Incumbent
Directors") cease for any reason other than death to constitute at
least a majority of the Board, provided, however, that except as set
forth in the following sentence, an individual who becomes a member
of the Board subsequent to the beginning of the 24-month period
shall be deemed to have satisfied such 24-month requirement (and be
an Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either
actually (because they were directors at the beginning of such
period) or by prior operation of the provisions of this Section
2.4(b). Notwithstanding the proviso set forth in the preceding
sentence, if any such individual initially assumes office as a
result of or in connection with either an actual or threatened
solicitation with respect to the election of directors (as such
terms are used in Rule 14a-12(c) of Regulation 14A promulgated under
the Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board, then such individual shall not be considered an Incumbent
Director. For purposes of this Section 2.4(b), if at any time
individuals who initially assumed office as a result of or in
connection with an arrangement or understanding between the Company
and any Person (an "Entity Designee") constitute at least one-half
of the Board, none of such Entity Designees shall be considered
Incumbent Directors from that time forward; or
(iii) There is consummated:
(a) a plan of complete liquidation of the Company; or
(b) a sale or disposition of all or substantially all the
Company's assets in one or a series of related transactions;
or
(c) a merger, consolidation, or reorganization of the Company
or the acquisition of outstanding Common Stock and as a result
of or in connection with such transaction (A) 35% or more of
the outstanding Common Stock or the voting securities of the
Company outstanding immediately prior thereto or the
outstanding shares of common stock or the combined voting
power of the outstanding voting securities of the surviving
entity are owned, directly or indirectly, by any other
corporation or Person other than (x) an Excluded Person
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or (y) a Person who is, or if such Person beneficially owned
5% or more of the outstanding Common Stock would be, eligible
to report such Person's beneficial ownership on Schedule 13G
pursuant to the rules under Section 13(d) of the Exchange Act
or (z) a Person that has entered into an agreement with the
Company pursuant to which such Person has agreed not to
acquire additional voting securities of the Company (other
than pursuant to the terms of such agreement), solicit proxies
with respect to the Company's voting securities or otherwise
participate in any contest relating to the election of
directors of the Company, or take other actions that could
result in a Change in Control of the Company; provided that
this exclusion shall apply only so long as such agreement
shall remain in effect, or (B) the voting securities of the
Company outstanding immediately prior thereto do not
immediately after such transaction continue to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than sixty
percent (60%) of the combined voting power of the voting
securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.
(h) "CODE" means the United States Internal Revenue Code of 1986, as
amended.
(i) "COMMITTEE" means the Compensation Committee of the Board, or any
other committee appointed by the Board to perform the functions of
the Compensation Committee.
(j) "COMPANY" means Weyerhaeuser Company, a Washington corporation
(including any and all subsidiaries), or any successor thereto as
provided in Article 11 hereof.
(k) "DISABILITY" shall have the meaning ascribed to it in the Company's
Retirement Plan for Salaried Employees, or in any successor to such
plan.
(l) "EFFECTIVE DATE" means the date this Agreement is executed, or such
other date as the Board shall designate.
(m) "EFFECTIVE DATE OF TERMINATION" means the date on which a Qualifying
Termination occurs which triggers the payment of Severance Benefits
hereunder.
(n) "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended.
(o) "EXECUTIVE" means ________________________________________________.
(p) "GOOD REASON" shall mean, without the Executive's express written
consent, the occurrence of any one or more of the following in
conjunction with a "CIC":
(i) A material reduction in (or assignment of duties inconsistent
with) the Executive's position, title or reporting
responsibilities existing prior to the Effective Date;
(ii) Within two (2) years following a Change in Control, and
without the Executive's consent, the Company's requiring the
Executive to be based at a location which is at least fifty
(50) miles farther from the Executive's primary residence
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immediately prior to a Change in Control than is such
residence from the Company's headquarters, immediately prior
to a Change in Control, except for required travel on the
Company's business to an extent substantially consistent with
the Executive's business obligations as of the Effective Date;
(iii) A reduction by the Company in the Executive's Base Salary as
in effect on the Effective Date or as the same shall be
increased from time to time;
(iv) A material reduction in the benefit coverage provided to the
Executive; provided, however, that reductions in the level of
benefits coverage shall not be deemed to be "Good Reason" if
the Executive's overall benefits coverage is substantially
consistent with the average level of benefits coverage of
other executives who have positions commensurate with the
Executive's position at the acquiring company;
(v) A material reduction in the Executive's level of
participation, including the Executive's target-level
opportunities, in any of the Company's short- and/or long-term
incentive compensation plans in which the Executive
participates as of the Effective Date (for this purpose a
material reduction shall be deemed to have occurred if the
aggregate "incentive opportunities" are reduced by ten percent
(10%) or more); or a material increase in the relative
difficulty of the measures used to determine the payouts under
such plans (as reasonably determined by the Executive)
provided, however, that reductions in the levels of
participation in any such plans shall not be deemed to be
"Good Reason" if the Executive's reduced level of
participation in each such program remains substantially
consistent with the average level of participation of other
executives who have positions commensurate with the
Executive's position at the acquiring company;
(vi) The failure of the Company to obtain a satisfactory agreement
from any successor to the Company to assume and agree to
perform this Agreement, as contemplated in Article 10 hereof;
or
(vii) Any purported termination by the Company of the Executive's
employment otherwise than as permitted under this Agreement.
Under this Agreement, Good Reason shall not be deemed to exist
unless a "Change in Control" has occurred within the time frame
described in Section 4.2 hereof.
(q) "NON-COMPETITION AND RELEASE AGREEMENT" is an agreement, in
substantially the form attached hereto in Annex A, executed by and
between Executive and the Company as a condition to Executive's
receipt of the benefits described in Section 4.3.
(r) "PERSON" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d).
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(s) "QUALIFYING TERMINATION" means any of the events described in
Section 4.2 hereof, the occurrence of which triggers the payment of
Severance Benefits under Section 4.3 hereof.
(t) "RETIREMENT" shall mean early or normal retirement under the
Company's Retirement Plan for Salaried Employees.
(u) "SEVERANCE BENEFITS" means the Severance Benefits associated with a
Qualifying Termination, as described in Section 4.3 hereof.
ARTICLE 3. PARTICIPATION AND CONTINUING ELIGIBILITY UNDER THIS AGREEMENT
3.1 PARTICIPATION. Subject to Section 3.2 hereof, as well as the remaining
terms of this Agreement, Executive shall remain eligible to receive benefits
hereunder during the term of the Agreement.
3.2 REMOVAL FROM COVERAGE. In the event Executive's job classification is
reduced below the minimum level required for eligibility to continue to be
covered by severance protection as determined at the sole discretion of the
Committee, the Committee may remove the Executive from coverage under this
Agreement. Such removal shall be effective three (3) months after the date the
Company notifies the Executive of such removal. Removals occurring within six
(6) months prior to a CIC, or within two (2) years after a CIC, shall be null
and void for purposes of this Agreement.
ARTICLE 4. SEVERANCE BENEFITS
4.1 RIGHT TO SEVERANCE BENEFITS. The Executive shall be entitled to
receive from the Company Severance Benefits, as described in Section 4.3 hereof,
if there has been a CIC of the Company and if, within the six (6) full calendar
month period prior to the effective date of a CIC, or within twenty-four (24)
calendar months following the effective date of a CIC, the Executive's
employment with the Company shall end for any reason specified in Section 4.2
hereof.
The Executive shall not be entitled to receive Severance Benefits if he is
terminated for Cause, or if his employment with the Company ends due to death or
Disability, or due to a voluntary termination of employment by the Executive
without Good Reason. Further, receipt of Severance Benefits shall disqualify the
Executive from eligibility to receive severance benefits under any Executive
Severance Agreement between the Company and the Executive, as such agreement may
be amended, supplemented or otherwise modified from time to time, or, if such
agreement is no longer in effect, any successor agreement thereto.
4.2 QUALIFYING TERMINATION. The occurrence of any one or more of the
following events within the six (6) full calendar month period prior to the
effective date of a CIC, or within twenty-four (24) calendar months following
the effective date of a CIC of the Company shall trigger the payment of
Severance Benefits to the Executive under this Agreement:
(a) An involuntary termination of the Executive's employment by
the Company, authorized by the Senior Vice President of Human
Resources, for reasons other
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than Cause and other than mandatory retirement, or a voluntary
termination by the Executive for Good Reason; or
(b) The Company or any successor company breaches any material
provision of this Agreement.
4.3 DESCRIPTION OF SEVERANCE BENEFITS. In the event that the Executive
becomes entitled to receive Severance Benefits (and further contingent upon the
proper execution of the Non-Competition and Release Agreement as set forth in
Section 4.8 hereof), as provided in Sections 4.1 and 4.2 hereof, and subject to
the cap described in Section 6.1 hereof, the Company shall pay to the Executive
and provide him with the following:
(a) An amount equal to three (3) times the highest rate of the
Executive's annualized Base Salary rate in effect at any time
up to and including the Effective Date of Termination.
(b) An amount equal to three (3) times the Executive's target
annual bonus established for the bonus plan year in which the
Executive's Effective Date of Termination occurs (or, if
higher, the target annual bonus established for the bonus plan
year in which the CIC occurs).
(c) An amount equal to the Executive's unpaid Base Salary and
accrued vacation pay through the Effective Date of
Termination.
(d) An amount equal to the Executive's unpaid targeted annual
bonus, established for the plan year in which the Executive's
Effective Date of Termination occurs, multiplied by a
fraction, the numerator of which is the number of days
completed in the then - existing fiscal year through the
Effective Date of Termination, and the denominator of which is
three hundred sixty-five (365). Any payments hereunder are in
lieu of any bonuses otherwise payable under the Company's
applicable annual incentive plans.
(e) A continuation of the welfare benefits of health care, and
life insurance coverage for three (3) full years after the
Effective Date of Termination. These benefits shall be
provided to the Executive at the same premium cost, and at the
same coverage level, as in effect as of the Executive's
Effective Date of Termination. However, in the event that
substantially similar benefits are not practically able to be
provided by the acquiring company, the Company will pay the
Executive a lump sum equal to $25,000 for each year of
benefits coverage protection, or $75,000 in total.
Notwithstanding any of the above, such medical benefits shall
be secondary to any similar medical benefits provided by the
Participant's subsequent employer and Medicare, if applicable.
(f) Full vesting of the Executive's benefits under any and all
supplemental retirement plans in which the Executive
participates. For purposes of determining the amount of an
Executive's benefits in such plans, such benefits shall be
calculated under
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the assumption that the Executive's employment continued
following the Effective Date of Termination for three (3) full
years (i.e., three (3) additional years of age and service
credits shall be added); provided, however, that for purposes
of determining "final average pay" under such programs, the
Executive's actual pay history as of the effective date of
termination shall be used. Payout of such amounts shall occur
at the time established under such plans.
To the extent that the Executive is subject to a reduction of
such benefits due to application of early retirement
provisions, the three (3) additional years of age shall be
incorporated in the early retirement reduction calculation so
as to offset such reduction. Also, three (3) additional years
of age, but not any additional service, shall be used to
determine the Executive's eligibility for early retirement
benefits.
(g) An amount equal to the value of the stock equivalents
representing premiums (including any appreciation and dividend
equivalents) that are forfeited under the Weyerhaeuser Company
Comprehensive Incentive Compensation Plan, in connection with
the Executive's Qualifying Termination. If no such premiums
are forfeited under the Weyerhaeuser Company Comprehensive
Incentive Compensation Plan, then this Section 5.3(g) shall be
null and void.
4.4 TERMINATION FOR DISABILITY. Following a CIC of the Company, if the
Executive's employment is terminated due to Disability, the Executive shall
receive his Base Salary through the Effective Date of Termination, at which
point in time the Executive's benefits shall be determined in accordance with
the Company's disability, retirement, insurance, and other applicable plans and
programs then in effect.
4.5 TERMINATION FOR RETIREMENT OR DEATH. Following a CIC of the Company,
if the Executive's employment is terminated by reason of his Retirement or
death, the Executive's benefits shall be determined in accordance with the
Company's retirement, survivor's benefits, insurance, and other applicable
programs of the Company then in effect.
4.6 TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR GOOD REASON
OR RETIREMENT. Following a CIC of the Company, if the Executive's employment is
terminated either: (i) by the Company for Cause; or (ii) by the Executive (other
than for Retirement) and other than for Good Reason, the Company shall pay the
Executive his full Base Salary and accrued vacation through the Effective Date
of Termination, at the rate then in effect, plus all other amounts to which the
Executive is entitled under any compensation plans of the Company, at the time
such payments are due, and the Company shall have no further obligations to the
Executive under this Agreement.
4.7 NOTICE OF TERMINATION. Any termination by the Company for Cause or by
the Executive for Good Reason under this Article 4 shall be communicated by
Notice of Termination. For purposes of this Agreement, a "Notice of Termination"
shall mean a written notice which shall indicate the specific termination
provision in this Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
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4.8 DELIVERY OF NON-COMPETITION AND RELEASE AGREEMENT. In the event the
Company terminates Executive's employment for any reason other than for Cause,
Retirement or Disability, the Company shall, not later than the date it delivers
the Notice of Termination to Executive, present Executive with a Non-Competition
and Release Agreement for execution by Executive. Such release shall be deemed
effective upon the expiration of the required waiting periods under applicable
state and/or Federal laws.
The minimum value of the Non-Compete and Release Agreement at the time
this Agreement was entered into was at least 1.5 times the Executive's Base
salary which has been built into the severance formula in Section 4.3 hereof.
4.9 REMOVAL FROM REPRESENTATIVE BOARDS. In the event the terminating
Executive occupies any board of directors seats solely as a Company
representative, as a condition to receiving the severance set forth in Section
4.3 hereof the Executive shall immediately resign such position upon his
termination of employment with the Company, unless specifically requested in
writing by the Company otherwise.
ARTICLE 5. FORM AND TIMING OF SEVERANCE BENEFITS
5.1 FORM AND TIMING OF SEVERANCE BENEFITS. The Severance Benefits
described in Sections 4.3(a), 4.3(b), 4.3(c), 4.3(d), and 4.3(g) hereof shall be
paid in cash to the Executive in a single lump sum, subject to the Non-Compete
and Release Agreement referred to in Section 4.8, as soon as practicable
following the Effective Date of Termination (and successful expiration of the
waiting periods set forth in Sections 4.8 hereof), but in no event beyond thirty
(30) days from such date.
5.2 WITHHOLDING OF TAXES. The Company shall be entitled to withhold from
any amounts payable under this Agreement all taxes as legally shall be required
(including, without limitation, any United States Federal taxes, and any other
state, city, or local taxes).
ARTICLE 6. EXCISE TAX EQUALIZATION PAYMENT
6.1 EXCISE TAX EQUALIZATION PAYMENT. In the event that the Executive
becomes entitled to Severance Benefits or any other payment or benefit under
this Agreement, or under any other agreement with or plan of the Company
following a CIC (in the aggregate, the "Total Payments"), if any of the Total
Payments will be subject to the tax (the "Excise Tax") imposed by Section 4999
of the Code (or any similar tax that may hereafter be imposed), the Company
shall pay to the Executive in cash an additional amount (the "Gross-Up Payment")
such that the net amount retained by the Executive after deduction of any Excise
Tax upon the Total Payments and any Federal, state and local income tax and
Excise Tax upon the Gross-Up Payment provided for by this Section 6.1 (including
FICA), shall be equal to the Total Payments. Such payment shall be made by the
Company to the Executive as soon as practical following the effective date of
termination, but in no event beyond thirty (30) days from such date; provided,
however, that the Executive's Severance Benefits shall be grossed up only in the
event that application of the gross-up feature would result in the Executive
receiving additional after-tax CIC-related amounts of at least fifty thousand
dollars ($50,000) when compared with capping such Severance Benefits at the
maximum amount that may
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be paid without incurring Excise Taxes. In the event that a gross-up of the
Executive's Severance Benefits under this Agreement would result in less than
ten thousand dollars ($10,000) additional after-tax CIC-related amounts, the
Executive's Severance Benefits shall be capped at the maximum amount that may be
paid without incurring Excise Taxes. If the Severance Benefits become subject to
the cap described above, the amount due to the Executive under Section 4.3(a),
4.3(b) or 4.3(d) (cash payments) shall be reduced initially; thereafter, the
Committee shall determine how the Severance Benefits subject to the cap shall be
paid.
6.2 TAX COMPUTATION. In determining the potential impact of the Excise
Tax, the Company may rely on any advice it deems appropriate, including, but not
limited to, the counsel of its independent auditors. For purposes of determining
whether any of the Total Payments will be subject to the Excise Tax and the
amounts of such Excise Tax:
(a) Any other payments or benefits received or to be received by
the Executive in connection with a CIC of the Company or the
Executive's termination of employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement, or
agreement with the Company, or with any Person whose actions
result in a CIC of the Company or any Person affiliated with
the Company or such Persons) shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the
Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) shall be treated as subject to the
Excise Tax, unless in the opinion of the Company's independent
auditors, such other payments or benefits (in whole or in
part) do not constitute parachute payments, or unless such
excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within
the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the
Code, or are otherwise not subject to the Excise Tax;
(b) The amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the amount of
excess parachute payments within the meaning of Section
280G(b)(1) of the Code (after applying clause (a) above); and
(c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent
auditors in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made, and state and local income taxes at the highest marginal
rate of taxation in the state and locality of the Executive's residence on the
Effective Date of Termination, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.
6.3 SUBSEQUENT RECALCULATION. In the event the Internal Revenue Service
adjusts the computation of the Company under Section 6.2 hereof so that the
Executive did not receive the greatest net benefit, the Company shall reimburse
the Executive for the full amount necessary to make the Executive whole, plus a
market rate of interest, as determined by the Committee; provided, however, that
the Executive follows the procedures set forth in this Section 6.3.
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The 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 (10) business days after the later of either:
(i) the date the Executive has actual knowledge of such claim, or (ii) ten (10)
days after the Internal Revenue Service issues to the Executive either a written
report proposing imposition of the Excise Tax or a statutory notice of
deficiency with respect thereto, and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the thirty (30)
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 the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall:
(a) Give the Company any information reasonably requested by the
Company relating to such claim;
(b) 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;
(c) Cooperate with the Company in good faith in order effectively
to contest such claim; and
(d) Permit the Company to participate in any proceedings relating
to such claims.
Provided, however, that the Company shall directly bear and pay all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the 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 of the
foregoing provisions of this Section 7.3, the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings, and
conferences with the taxing authority in respect of such claim.
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to this Article 6, the Executive becomes entitled to receive
any refund with respect to such claim due to an overpayment of any Excise Tax or
income tax, including interest and penalties with respect thereto, the Executive
shall (subject to the Company's complying with the requirements of this Section
6.3) 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 the Executive of an amount advanced by the Company pursuant to this
Article 6, a determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) 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.
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ARTICLE 7. THE COMPANY'S PAYMENT OBLIGATION
7.1 PAYMENT OBLIGATIONS ABSOLUTE. Except as provided in Section 8 hereof,
the Company's obligation to make the payments and the arrangements provided for
hereof shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim,
recoupment, defense, or other right which the Company may have against the
Executive or anyone else. All amounts payable by the Company hereunder shall be
paid without notice or demand. Except as provided in Section 8 hereof, each and
every payment made hereunder by the Company shall be final, and the Company
shall not seek to recover all or any part of such payment from Executives or
from whomsoever may be entitled thereto, for any reasons whatsoever.
The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement.
7.2 CONTRACTUAL RIGHTS TO BENEFITS. Subject to Section 3.2 hereof, this
Agreement establishes and vests in the Executive a contractual right to the
benefits to which he may become entitled hereunder. However, nothing herein
contained shall require or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise set aside any funds or
other assets, in trust or otherwise, to provide for any payments to be made or
required hereunder.
ARTICLE 8. DISPUTE RESOLUTION
Any dispute or controversy arising under this Agreement shall be settled
by arbitration, conducted before a panel of three (3) arbitrators sitting in a
location selected by the Executive within fifty (50) miles from the location of
his job with the Company, in accordance with the rules of the American
Arbitration Association then in effect.
Judgment may be entered on the award of the arbitrator in any court having
proper jurisdiction. All expenses of any arbitration involving Severance
Benefits, including the fees and expenses of the counsel for the Executive,
shall be borne by the Company; provided, however, that the Company shall be
reimbursed by the Executive for all such fees and expenses, including the fees
and expenses of the Company, in the event the Executive fails to prevail with
respect to any one (1) material issue of dispute in connection with such legal
action.
ARTICLE 9. OUTPLACEMENT ASSISTANCE
Following a Qualifying Termination (as described in Section 4.2 hereof)
the Executive shall be reimbursed by the Company for the costs of all
outplacement services incurred by the Executive within the two (2) year period
after the Effective Date of Termination; provided, however, that the total
reimbursement shall be limited to twenty thousand dollars ($20,000).
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ARTICLE 10. SECTION 409A.
Notwithstanding anything to the contrary in this Agreement, to the extent
the Executive is treated as a "specified employee" within the meaning of Section
409A of the Code ("Section 409A"), any Severance Benefits payable in cash (as
described in Section 5.1 hereof) and due to the Executive on or within the
six-month period following the Executive's actual termination date will accrue
during such six-month period and will become payable in a lump sum payment on
the date six (6) months and one (1) day following the date of the Executive's
actual termination; provided, however, that such payments will be paid earlier,
at the times and on the terms set forth in the applicable provisions of this
Agreement, if the Company reasonably determines that the imposition of
additional tax under section 409A will not apply to an earlier payment of such
payments. In addition, this Agreement will be deemed amended, to the extent
necessary to avoid imposition of any additional tax or income recognition prior
to actual payment to the Executive under Section 409A and any temporary or final
Treasury regulations and guidance promulgated thereunder and the parties agree
to cooperate with each other and to take reasonably necessary steps in this
regard.
ARTICLE 11. SUCCESSORS AND ASSIGNMENT
11.1 SUCCESSORS TO THE COMPANY. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation, or otherwise)
of all or substantially all of the business and/or assets of the Company or of
any division or subsidiary thereof to expressly assume and agree to perform the
Company's obligations under this Agreement in the same manner and to the same
extent that the Company would be required to perform them if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effective date of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as he would be entitled to hereunder if he
had terminated his employment with the Company voluntarily for Good Reason.
Except for the purposes of implementing the foregoing, the date on which any
such succession becomes effective shall be deemed the Effective Date of
Termination.
11.2 ASSIGNMENT BY THE EXECUTIVE. This Agreement shall inure to the
benefit of and be enforceable by each Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If the Executive dies while any amount would still be
payable to him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement, to the Executive's Beneficiary. If the Executive has not named a
Beneficiary, then such amounts shall be paid to the Executive's devisee,
legatee, or other designee, or if there is no such designee, to the Executive's
estate.
ARTICLE 12. MISCELLANEOUS
12.1 EMPLOYMENT STATUS. Except as may be provided under any other
agreement between the Executive and the Company, the employment of the Executive
by the Company is "at will," and, prior to the effective date of a CIC, may be
terminated by either the Executive or the Company at any time, subject to
applicable law.
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12.2 BENEFICIARIES. The Executive may designate one or more persons or
entities as the primary and contingent Beneficiaries of any Severance Benefits
owing to the Executive under this Agreement. Such designation must be in the
form of a signed writing acceptable to the Committee. The Executive may make or
change such designations at any time.
12.3 GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular, and the singular shall include the plural.
12.4 SEVERABILITY. In the event any provision of this Agreement shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Agreement, and the Agreement shall be
construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
12.5 MODIFICATION. Except as provided in Article 1 and Section 3.2 hereof,
no provision of this Agreement may be modified, waived, or discharged unless
such modification, waiver, or discharge is agreed to in writing and signed by
the Executive and by an authorized member of the Committee, or by the respective
parties' legal representatives and successors.
12.6 EFFECT OF AGREEMENT. This Agreement shall completely supercede and
replace any and all portions of any contracts, plans, provisions, or practices
pertaining to severance entitlements owing to the Executive from the Company
other than the Executive Severance Agreement between the Company and the
Executive, and is in lieu of any notice requirement, policy or practice. Without
limiting the generality of the proceeding sentence, the Executive's potential
rights to severance pay, benefits and notice under the Weyerhaeuser Company
Severance Pay Plan following a CIC shall be completely replaced and superceded
by this Agreement. As such, the Severance Benefits described herein shall serve
as the Executive's sole recourse with respect to termination of employment by
the Company following a CIC.
12.7 APPLICABLE LAW. To the extent not preempted by the laws of the United
States, the laws of the state of Washington shall be the controlling law in all
matters relating to this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement on this __
day of _______________, 2006.
Weyerhaeuser Company Executive
By: _______________________________ ______________________________
Its: ______________________________
Attest: ___________________________
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