EXHIBIT 10.7
EXECUTIVE SEVERANCE AGREEMENT
(TIER I)
Weyerhaeuser Company
MARCH 2006
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CONTENTS
Article 1. Term of the Agreement 1
Article 2. Definitions 1
Article 3. Participation and Continuing Eligibility under this Agreement 3
Article 4. Severance Benefits 3
Article 5. Form and Timing of Severance Benefits 5
Article 6. The Company's Payment Obligation 5
Article 7. Dispute Resolution 6
Article 8. Outplacement Assistance 6
Article 9. Successors and Assignments 6
Article 10. Section 409A 7
Article 11. Miscellaneous 7
WEYERHAEUSER COMPANY
______________ (EXECUTIVE)
SEVERANCE AGREEMENT (TIER I)
THIS EXECUTIVE SEVERANCE 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 severance agreements with certain key executives of the Company;
WHEREAS, the Executive is a key executive of the Company;
NOW THEREFORE, for 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.
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 Severance 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) "BENEFICIARY" means the persons or entities designated or deemed
designated by an Executive pursuant to Section 11.2 hereof.
(d) "BOARD" means the Board of Directors of the Company.
(e) "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
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(iii) Willfully engaging in illegal conduct or gross
misconduct which is materially and demonstrably
injurious to the Company.
For purposes of this Section 2(e), 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.
(f) "CIC" of the Company shall have the definition set forth in the CIC
Agreement.
(g) "CIC AGREEMENT" means the Executive Change in Control Agreement
between the Executive and the Company,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.
(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 9.
(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) "EXECUTIVE" means _______________________________________________.
(o) "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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(p) "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 hereunder.
(q) "RELEASE AGREEMENT" is an agreement, in substantially the form
attached hereto in Annex B, executed by and between Executive and
the Company as a condition to Executive's receipt of the Severance
Benefits described in Section 4.3.
(r) "RETIREMENT" shall mean early or normal retirement under the
Company's Retirement Plan for Salaried Employees.
(s) "SEVERANCE BENEFITS" means Severance Benefits 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.
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 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, he meets the requirements of the Company's mandatory
retirement policy, or if his employment with the Company ends due to death or
Disability, or due to a voluntary termination of employment by the Executive.
The Executive is not eligible to receive both severance benefits under the
CIC Agreement and Severance Benefits hereunder. Accordingly, if the Executive
receives severance benefits under the CIC Agreement, he shall be ineligible to
also receive Severance Benefits hereunder. However, if the Executive suffers a
Qualifying Termination, and if the Company subsequently undergoes a CIC such
that the Executive's Effective Termination Date falls within the window period
described in Section 4.2 of the CIC Agreement, the Executive's total Severance
Benefit shall equal the amounts described as severance benefits under the CIC
Agreement (potentially requiring additional payments to the extent the amounts
already paid as Severance Benefits hereunder do not equal the amounts payable as
severance benefits under the CIC Agreement).
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4.2 QUALIFYING TERMINATION. The occurrence of any one or more of the
following events at any time other than (i) the six (6) full calendar month
period prior to the effective date of a CIC; or (ii) within twenty-four (24)
calendar months following the effective date of a CIC, 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 than Cause; or
(b) The Company or any successor company breaches any material
provision of this Agreement.
4.3 DESCRIPTION OF SEVERANCE BENEFITS. Subject to the conditions of
Section 4.6, in the event that the Executive becomes entitled to receive
Severance Benefits, as provided in Sections 4.1 and 4.2 hereof, the Company
shall pay to the Executive and provide him with the following:
(a) An amount equal to one and one-half (1-1/2) 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 one and one-half (1-1/2) the Executive's
target annual bonus established for the bonus plan year in
which the Executive's Effective Date of Termination 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 pro-rated bonuses required under the Company's
applicable short- and intermediate-term incentive plan.
(e) A lump sum payment of $10,000 (net) in order to assist the
Executive in paying for replacement health and welfare
coverage.
4.4 TERMINATION FOR CAUSE OR BY THE EXECUTIVE OTHER THAN FOR RETIREMENT.
If the Executive's employment is terminated either: (i) by the Company for
Cause; or (ii) by the Executive (other than for Retirement), 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.
4.5 NOTICE OF TERMINATION. Any termination by the Company for Cause under
this Article 4 shall be communicated by a Notice of Termination. For purposes of
this Agreement, a "Notice of
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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.
4.6 DELIVERY OF 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 Release Agreement for
execution by Executive. Such release shall be deemed effective upon the
expiration of the required waiting periods under any applicable state and/or
Federal laws.
The minimum value of the 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 contained in Section 4.3 hereof.
4.7 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), and 4.3(d) hereof shall be paid in
cash to the Executive in a single lump sum, subject to the Release Agreement
described in Section 4.6, as soon as practicable following the Effective Date of
Termination (and successful expiration of the waiting periods set forth in
Section 4.6 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. THE COMPANY'S PAYMENT OBLIGATION
6.1 PAYMENT OBLIGATIONS ABSOLUTE. Except as provided in Section 7 hereof,
the Company's obligation to make the payments and the arrangements provided for
herein 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 7 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
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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.
6.2 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 7. 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. The Company shall not reimburse the Executive for any costs
associated with arbitration hereunder.
ARTICLE 8. 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 obtained 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).
ARTICLE 9. SUCCESSORS AND ASSIGNMENT
9.1 SUCCESSORS TO THE COMPANY. This Agreement shall be binding on the
successors of the Company.
9.2 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.
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ARTICLE 10. SECTION 409A.
All Severance Benefits payable under this Agreement are intended to
comply with the "short term deferral" exception specified in Internal Revenue
Service Notice 2005-1, or otherwise be excepted from coverage under Section 409A
of the Code. Accordingly, this Agreement will be deemed amended to the extent
necessary to preserve this Agreement's excepted status 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. MISCELLANEOUS
11.1 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 may be terminated by either the Executive or
the Company at any time, subject to applicable law.
11.2 BENEFICIARIES. The Executive may designate one or more persons or
entities as the primary and/or 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.
11.3 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.
11.4 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.
11.5 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.
11.6 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 related to a CIC, 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 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 other than related to a CIC.
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11.7 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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