Executive Severance Agreement (Tier I) Weyerhaeuser Company January 1, 2007
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 |
6 | |||
Article 7. Dispute Resolution |
6 | |||
Article 8. Outplacement Assistance |
7 | |||
Article 9. Successors and Assignments |
7 | |||
Article 10. Section 409A |
7 | |||
Article 11. Miscellaneous |
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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
Subject to the provisions of Article 10 hereof, 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. Notwithstanding the foregoing, this Agreement is subject to
annual review and may be amended or otherwise modified by the Committee in its sole discretion
subsequent to such annual review prior to the Effective Date of Termination.
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. | ||
| (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 |
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| 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(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 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. | ||
| (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 on behalf of the Company, 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 . |
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| (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). | ||
| (p) | “Qualifying Termination” means any of the events described in Section 4.2, the occurrence of which triggers the payment of Severance Benefits under Section 4.3. | ||
| (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 Severance Benefits. | ||
| (r) | “Retirement” shall mean early or normal retirement under the Company’s Retirement Plan for Salaried Employees. | ||
| (s) | “Severance Benefits” means Severance Benefits described in Section 4.3. |
Article 3. Participation and Continuing Eligibility under this Agreement
3.1 Participation. Subject to Section 3.2, 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, if
(a) the Executive’s employment with the Company shall end for any reason specified in Section
4.2, and
(b) the Executive is not (i) reemployed by the Company or any subsidiary or affiliate of the
Company whether in a salaried, hourly, temporary or full-time capacity or, (ii) retained as a
consultant or contractor by the Company or any subsidiary, or affiliate of the Company, or (iii)
retained as a consultant or contractor by an entity acquiring assets from the Company, unless the
participation by the Executive has the prior written approval of the Senior Vice President, Human
Resources of the Company.
If the Executive’s employment with the Company is terminated as a result of the acquisition
(either through the sale of assets or the sale of stock) or the outsourcing of the services
previously provided internally by Company employees of the unit in which the executive was
employed, and the Executive is employed by the acquiring entity, the Executive is not eligible to
receive Severance Benefits hereunder. The Executive is not eligible to receive both severance
benefits under the CIC
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Agreement and Severance Benefits hereunder. Accordingly, if the Executive receives severance
benefits under the CIC Agreement, he shall not 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).
4.2 Qualifying Termination. An involuntary termination of the Executive’s employment by the
Company, authorized by the Company’s Senior Vice President of Human Resources, for reasons other
than Cause, mandatory retirement under the Company’s applicable policies or the Executive’s death,
Disability or voluntary termination of employment (whether by retirement or otherwise)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) full calendar months following the effective date of a CIC, shall trigger
the payment of Severance Benefits to the Executive under 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, 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 last day the Executive worked. | ||
| (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 bonuses otherwise payable under the Company’s applicable annual incentive plans. | ||
| (e) | A lump sum payment of $10,000 (net of required payroll and income tax withholding) in order to assist the Executive in paying for replacement health and welfare coverage. |
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4.4 Termination for Cause or by the Executive. If the Executive’s employment is terminated
either: (i) by the Company for Cause; or (ii) by the Executive, the Company shall pay the Executive
his full Base Salary and accrued vacation through the last day worked, 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 under this Article 4 shall be
communicated by a Notice of Termination, unless the Executive is terminated for Cause in which case
no Notice of Termination is required. 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.
4.6 Delivery of Release Agreement. The payment of Severance Benefits is conditioned on the
Executive’s timely execution of the Release Agreement. The Company will deliver the Release
Agreement when it provides a Notice of Termination to the Executive. The Release Agreement shall
be deemed effective upon the expiration of the required waiting periods under any applicable state
and/or Federal laws, as more specifically described therein.
To support the enforcement of the Release Agreement, the parties agree that 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.
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, 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 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, but
in no event beyond thirty (30) days from the later of the Effective Date of Termination and the
successful expiration of the waiting periods described in Section 4.6.
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).
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Article 6. The Company’s Payment Obligation
6.1 Payment Obligations Absolute. Except as provided in this Section 6 and Section 7,
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 5.1, this Section 6 and Section 7,
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.
6.2 Contractual Rights to Benefits. Subject to Section 3.2, 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
7.1 Claims Procedure. The Executive may file a written claim with the Company’s Senior
Vice President of Human Resources, who shall consider such claim and notify the Executive in
writing of his decision with respect thereto within ninety (90) days (or within such longer period
not to exceed one hundred eighty (180) days, as the Senior Vice President of Human Resources
determines is necessary to review the claim, provided that the Senior Vice President of Human
Resources notifies the Executive in writing of the extension within the original ninety (90) day
period). If the claim is denied, in whole or in part, the Executive may appeal such denial to the
Committee, provided the Executive does so in writing within sixty (60) days of receiving the
determination by the Senior Vice President of Human Resources. The Committee shall consider the
appeal and notify the Executive in writing of its decision with respect thereto within sixty (60)
days (or within such longer period not to exceed one hundred twenty (120) days as the Committee
determines is necessary to review the appeal, provided that the Committee notifies the Executive in
writing of the extension within the original sixty (60) day period).
7.2 Finality of Determination. The determination of the Committee with respect to any
question arising out of or in connection with the administration, interpretation, and application
of the Plan shall be final, binding, and conclusive upon all persons and shall be given the
greatest deference permitted by law.
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Article 8. Outplacement Assistance
Following a Qualifying Termination (as described in Section 4.2) 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.
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 and
pursuant to such other procedures as the Committee may decide. If no such designation is on file
with the Company at the time of the Executive’s death, or if no designated Beneficiaries survive
the Executive for more than 14 days, any Severance Benefits owing to the Executive under this
Agreement shall be paid to the Executive’s estate.
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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, no provision of this
Agreement may be modified, waived, or discharged following the Effective Date of Termination 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 the CIC Agreement, 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 a termination that entitles the Executive to
severance benefits under the terms of the CIC Agreement. In addition, Severance Benefits shall not
be counted as “compensation,” or any equivalent term, for purposes of determining benefits under
other agreements, plans, provisions, or practices owing to the Executive from the Company, except
to the extent expressly provided therein. Except as otherwise specifically provided for in this
Agreement, a Participant’s rights under all such agreements, plans, provisions, and practices
continue to be subject to the respective terms and conditions thereof.
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 the dates appearing below.
| Weyerhaeuser Company | Executive | |||||||||
By:
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Its:
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Date:
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