Form of
Executive Severance Agreement
(Tier I)
Weyerhaeuser Company
1999
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 Not Related to a Change
In Control 6
Article 5. Change-in-Control Severance Benefits 7
Article 6. Form and Timing of Severance Benefits 10
Article 7. Excise Tax Equalization Payment 10
Article 8. The Company's Payment Obligation 13
Article 9. Legal Remedies 13
Article 10. Outplacement Assistance 14
Article 11. Deferral Opportunity 14
Article 12. Successors and Assignment 14
Article 13. Miscellaneous 15
Weyerhaeuser Company
______________ (Executive)
Executive Severance Agreement
THIS AGREEMENT 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;
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 for three (3) full calendar years. However, at
any time prior to the end of such three-year (3) period and, at
any time prior to the end of any extended term, the Committee
may, in its discretion, extend the term of this Agreement for any
period of time up to three (3) additional years. If the
Committee elects not to extend the term of this Agreement, it
must deliver written notice six (6) months prior to the end of
such term, or extended term, to the Executive, that the Agreement
will not be extended. In such case, the Agreement will terminate
at the end of the term, or extended term, then in progress.
However, in the event a Change in Control occurs during the
original or any extended term, this Agreement will remain in
effect for the longer of: (i) twenty-four (24) months beyond the
month in which such Change in Control occurred; (ii) until all
obligations of the Company to the
1
Executive hereunder have been fulfilled, and until all benefits
required hereunder have been paid to the Executive.
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.
(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 a Executive pursuant to Section 13.2
herein.
(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
2
opinion of the Board Executive is guilty of the conduct described in
subsection (i) or (iii) above and specifying the particulars
thereof in detail.
(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 sponsored or maintained by the Company or any
subsidiary of the Company (including any trustee of
such plan acting as trustee), directly or indirectly,
becomes the Beneficial Owner of securities of the
Company representing twenty percent (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 thirty (30) days
(with the end of such period being deemed the
effective date of the CIC); or
(ii) During any twenty-four (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 thereof, provided,
however, that a director who was not a director at
the beginning of such twenty-four (24) month period
shall be deemed to have satisfied such twenty-four
(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 (2/3) 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(g); 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 with or involving any other corporation,
other than a merger, consolidation, or reorganization
that would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) more than sixty-
five percent (65%) 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) "CIC-Related Severance Benefits" means the Severance
Benefits associated with a Qualifying CIC-Related
Termination, as described in Section 5.3 herein.
(i) "Code" means the United States Internal Revenue Code of
1986, as amended.
3
(j) "Committee" means the Compensation Committee of the
Board, or any other committee appointed by the Board to
perform the functions of the Compensation Committee.
(k) "Company" means Weyerhaeuser Company, a Washington
corporation (including any and all subsidiaries), or any
successor thereto as provided in Article 12 herein.
(l) "Disability" shall have the meaning ascribed to it in the
Company's Retirement Plan for Salaried Employees, or in
any successor to such plan.
(m) "Effective Date" means the date this Agreement is
executed, or such other date as the Board shall
designate.
(n) "Effective Date of Termination" means the date on which a
Qualifying Termination occurs which triggers the payment
of Severance Benefits hereunder.
(o) "Exchange Act" means the United States Securities
Exchange Act of 1934, as amended.
(p) "Executive" means ____________________________________________________.
(q) "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
existing prior to the Effective Date (for this
purpose, changes to the Executive's title, reporting
relationships, or status will not constitute Good
Reason unless they result in a material diminution
in position with the Company);
(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 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 Executive's level
of participation 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
4
opportunities" are reduced by twenty percent (20%)
or more); 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;
(v) 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 11 herein; or
(vi) 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 5.2 herein.
(r) "Non-CIC-Related Severance Benefits" means the Severance
Benefits associated with a Qualifying Non-CIC-Related
Termination, as described in Section 4.3 herein.
(s) "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).
(t) "Qualifying CIC-Related Termination" means any of the
events described in Section 5.2 herein, the occurrence of
which triggers the payment of Severance Benefits under
Section 5.3 hereunder.
(u) "Qualifying Non-CIC-Related Termination" means any of the
events described in Section 4.2 herein, the occurrence of
which triggers the payment of Severance Benefits under
Section 4.3 hereunder.
(v) "Qualifying Termination" means either a Qualifying CIC-
Related Termination or a Qualifying Non-CIC-Related
Termination.
(w) "Retirement" shall mean early or normal retirement under
the Company's Retirement Plan for Salaried Employees.
(x) "Severance Benefits" means either CIC-Related Severance
Benefits (as provided in Section 5.3 herein), or Non-CIC-
Related Severance Benefits (as provided in Section 4.3
herein).
5
Article 3. Participation and Continuing Eligibility under
this Agreement
3.1 Participation. Subject to Section 3.2 hereunder, 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 Not Related to a Change In
Control
4.1 Right to Non-CIC-Related Severance Benefits. The Executive
shall be entitled to receive from the Company Non-CIC-Related
Severance Benefits, as described in Section 4.3 herein, if the
Executive's employment with the Company shall end for any reason
specified in Section 4.2 herein.
The Executive shall not be entitled to receive Non-CIC-
Related 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.
The Executive is not eligible to receive both CIC-Related
Severance Benefits and Non-CIC-Related Severance Benefits.
Accordingly, if the Executive receives CIC-Related Severance
Benefits, he shall be ineligible to also receive Non-CIC-Related
Severance Benefits. However, if the Executive suffers a
Qualifying Non-CIC-Related Termination, and if the Company
subsequently undergoes a CIC such that the Executive's
termination date falls within the window period described in
Section 5.2 herein, the Executive's total Severance Benefit shall
equal the amounts described as CIC-Related Severance Benefits
(potentially requiring additional payments to the extent the
amounts already paid as Non-CIC-Related Severance Benefits do not
equal the amounts described as CIC-Related Severance Benefits).
4.2 Qualifying Non-CIC-Related 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 Non-CIC 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.
6
4.3 Description of Non-CIC-Related Severance Benefits. In the
event that the Executive becomes entitled to receive Non-CIC-
Related Severance Benefits, as provided in Sections 4.1 and 4.2
herein, the Company shall pay to the Executive and provide him
with the following:
(a) An amount equal to ______________ 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 ______________ times 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).
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
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.
Article 5. Change-in-Control Severance Benefits
5.1 Right to CIC-Related Severance Benefits. The Executive
shall be entitled to receive from the Company CIC-Related
Severance Benefits, as described in Section 5.3 herein, 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 5.2 herein.
7
The Executive shall not be entitled to receive CIC-Related
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 CIC-Related Severance
Benefits shall disqualify the Executive from eligibility to
receive Non-CIC-Related Severance Benefits.
5.2 Qualifying CIC-Related 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 CIC-
Related 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 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.
5.3 Description of CIC-Related Severance Benefits. In the
event that the Executive becomes entitled to receive CIC-Related
Severance Benefits, as provided in Sections 5.1 and 5.2 herein,
and subject to the cap described in Section 7.1 herein, 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 Change in Control 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).
(e) Continuation of group term life insurance for six (6)
months. This coverage shall be at the same premium
cost, and at the same coverage level, as in effect
8
as of the Executive's Effective Date of Termination.
However, in the event the premium cost and/or level
of coverage shall change for all employees of the
Company who are similarly situated to the Executive,
the cost and/ or coverage level, likewise, shall
change for the Executive in a corresponding manner.
The continuation of group term life insurance shall
be discontinued prior to the end of the six (6) month
period in the event the Executive has available
similar benefits from a subsequent employer, as
determined by the Committee.
(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 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
Section 12(c) and/or Section 12(f)(ii) of the
Weyerhaeuser Company Comprehensive Incentive
Compensation Plan, in connection with the Executive's
CIC-Related Termination. If no such premiums are
forfeited under such Sections, then this Section
5.3(g) shall be null and void.
5.4 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.
5.5 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.
9
5.6 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.
5.7 Notice of Termination. Any termination by the Company for
Cause or by the Executive for Good Reason under this Article 5
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.
5.8 Pooling of Interests Accounting. Notwithstanding any other
provision of the Agreement to the contrary, in the event that the
consummation of a CIC is contingent on using pooling of interests
accounting methodology, the Board may take any action necessary
to preserve the use of pooling of interests accounting. Such
action may include, but shall not be limited to, restrictions on
forms or amounts of award settlements. When making such
adjustments, the Board shall modify outstanding awards in the
minimum amount necessary to preserve pooling.
Article 6. Form and Timing of Severance Benefits
6.1 Form and Timing of Severance Benefits. The Severance
Benefits described in Sections 4.3(a), 4.3(b), 4.3(c), 4.3(d),
5.3(a), 5.3(b), 5.3(c), 5.3(d), and 5.3(g) herein shall be paid
in cash to the Executive in a single lump sum as soon as
practicable following the Effective Date of Termination, but in
no event beyond thirty (30) days from such date.
6.2 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 7. Excise Tax Equalization Payment
7.1 Excise Tax Equalization Payment. In the event that the
Executive becomes entitled to CIC-Related Severance Benefits or
any other payment or benefit under this Agreement, or under any
other agreement with or plan of the Company (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 7.1
(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
10
termination, but in no event beyond thirty (30) days from such date;
provided, however, that the Executive's CIC-Related 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 Change-in-Control-
Related Severance Benefits at the maximum amount that may be paid
without incurring Excise Taxes. In the event that a gross-up of
the Executive's CIC-Related Severance Benefits under this
Agreement would result in less than fifty thousand dollars
($50,000) additional after-tax CIC-related amounts, the
Executive's CIC-Related Severance Benefits shall be capped at the
maximum amount that may be paid without incurring Excise Taxes.
If the CIC-Related Severance Benefit becomes subject to the cap
described above, the amount due to the Executive under Section
5.3(a), 5.3(b) or 5.3(d) (cash payments) shall be reduced
initially; thereafter, the Committee shall determine how the CIC-
Related Severance Benefits subject to the cap shall be paid.
7.2 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.
11
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.
7.3 Subsequent Recalculation. In the event the Internal
Revenue Service adjusts the computation of the Company under
Section 7.2 herein 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 follow the procedures set
forth in this Section 7.3.
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
12
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 7, 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 7.3) 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 7,
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.
Article 8. The Company's Payment Obligation
8.1 Payment Obligations Absolute. Except as provided in
Sections 9.1 and 9.2 herein, 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 Sections 9.1 and 9.2
herein, 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.
8.2 Contractual Rights to Benefits. Subject to Section 3.2
herein, 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 9. Legal Remedies
9.1Payment of Legal Fees. To the extent permitted by law, the
Company shall pay all legal fees, costs of litigation,
prejudgment interest, and other expenses incurred in good faith
by the Executive as a result of the Company's refusal to provide
the CIC-Related Severance Benefits to which the Executive becomes
entitled under this Agreement, or as a result of the Company's
contesting the validity, enforceability, or interpretation of the
CIC-Related Benefits
13
under this Agreement, or as a result of any conflict between the
parties pertaining to CIC-Related Severance Benefits under this
Agreement; provided, however, that the Company shall be reimbursed
by the Executive for all such fees and expenses in the event the
Executive fails to prevail with respect to any one (1) material
issue of dispute in connection with such legal action. The Company
shall not pay any legal fees or other costs incurred by the Executive
with respect to disputes associated with Non-CIC-Related Severance Benefits.
9.2 Arbitration. The Executive shall have the right and option
to elect (in lieu of litigation) to have any dispute or
controversy arising under or in connection with this Agreement
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 CIC-Related 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 in the event the
Executive fails to prevail with respect to any one (1) material
issue of dispute in connection with such legal action. The
Company shall not reimburse the Executive for any costs
associated with arbitration concerning Non-CIC-Related Severance
Benefits.
Article 10. Outplacement Assistance
Following a Qualifying Termination (as described in
Section 4.2 or Section 5.2 herein) 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 11. Deferral Opportunity
At the discretion of the Committee, Executives may be offered
the opportunity to defer some or all of the Severance Benefits
described herein, upon such terms as the Committee deems
appropriate.
Article 12. Successors and Assignment
12.1 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.
14
12.2 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 13. Miscellaneous
13.1 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.
13.2 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.
13.3 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.
13.4 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.
13.5 Modification. Except as provided in Article 1 and
Section 3.2 herein, 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.
13.6 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, 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.
15
13.7 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.
16
IN WITNESS WHEREOF, the parties have executed this Agreement
on this __ day of _________, 1999.
Weyerhaeuser Company Executive
By: ________________________________ ______________________________
Its: _______________________________
Attest: ____________________________
17
Executive Severance Agreement
(Tier I)
The following are the executive officers of Weyerhaeuser Company
who entered into Executive Severance Agreements with Weyerhaeuser
Company as of the end of 1999 and the multiple used to calculate
each executive officer's non change in control related benefits:
Xxxxxx X. Xxxxx, President and Chief Executive
Officer two times
Xxxxxxx X. Xxxxxx, Executive Vice President
Wood Products one and one half times
Xxxxxxx X. Xxxxx, Executive Vice President Pulp,
Paper & Packaging one and one half times
Xxxxxxx X. Xxxxxxx, Executive Vice President
& Chief Financial Officer one and one half times
Xxxxxxx X. Xxxxxx, Senior Vice President
Timberlands one and one half times
Xxxxxx X. Xxxx, Senior Vice President
Human Resources one and one half times
X. Xxxxxxx Xxxxxx, Senior Vice President Canada one and one half times
Xxxx X. Xxxxxx, Senior Vice President
Corporate Affairs one and one half times
Xxxxxx X. Xxxxxxxxxxxx, Xx., Senior Vice President
Technology one and one half times
