We are pleased to inform you that the Board of Directors of Pope MGP, Inc., the General Partner of Pope Resources (the “Company”), has recently authorized and approved a special severance benefit program for you and other key executives. The purpose...
Exhibit
10.29
▇▇▇▇▇
▇▇,
▇▇▇▇
▇▇.
_______________
[Title]
Dear
____________:
We
are
pleased to inform you that the Board of Directors of ▇▇▇▇ MGP, Inc., the
General
Partner of ▇▇▇▇ Resources (the “Company”), has recently authorized and approved
a special severance benefit program for you and other key executives. The
purpose of this letter agreement is to set forth the terms and conditions
of
your benefit package and to explain the limitations which will govern the
overall value of your benefits.
This
program is intended to be available to selected executives who are employed
by
the Company or any affiliate of the Company. Subsequent references to the
“Company” in this letter shall be deemed to include affiliates, to the extent
required by context, when they pertain directly to your own employment
relationship, but references to the “Company” that do not pertain directly to
that employment relationship shall be deemed to refer exclusively to ▇▇▇▇
Resources and not to any affiliate.
Your
severance benefits will become payable in the event your employment terminates
involuntarily within a specified time period following certain changes in
ownership or control of the Company. To understand the full scope of your
severance benefits, you should familiarize yourself with the definitional
provisions of Part One of this letter agreement. The benefits comprising
your
severance package are detailed in Part Two, and the dollar limitations on
the
overall value of your benefit package are specified in Part Three. Part Four
deals with ancillary matters affecting your severance arrangement. In any
circumstance in which severance benefits become payable to you pursuant to
this
letter agreement, those benefits will be your sole and exclusive severance
benefits to be paid to you by the Company as a result of your termination,
and
you will not be entitled to severance benefits under any other policy or
program
of the Company, unless the Board of Directors shall specifically approve
such
other severance benefits at that time.
PART
ONE —
DEFINITIONS
For
purposes of this letter agreement, the following definitions will be in
effect:
▇▇▇▇▇▇▇
Family
means
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, her parents, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇., and their lineal
descendants, any present or former spouse of such persons, any lineal
descendants of such spouses or former spouses, any estate of any of the
foregoing persons, any trust in which the foregoing persons collectively
have
all of the beneficial interests as income beneficiaries or remaindermen,
and any
corporation, partnership, or other entity in which any one or more of such
persons or entities own all of the interests.
Assets
means
all or substantially all of the assets of the Company and its affiliates,
as
they shall be held by the Company and its affiliates from time to time,
including the assets of all divisions, segments, and business units in existence
at such time.
Average
Compensation means
the
average of your W-2 wages from the Company for the five (5) calendar years
(or
such fewer number of calendar years of employment with the Company) completed
immediately prior to the calendar year in which the Change of Control is
effected. Any W-2 wages for a partial year of employment will be annualized,
in
accordance with the frequency which such wages are paid during such partial
year, before inclusion in your Average Compensation. If any of your compensation
from the Company during such five (5)-year or shorter period was not included
in
your W-2 wages for U.S. income tax purposes, either because you were not
a U.S.
citizen or resident or because such compensation was excludible from income
as
foreign earned income under Code Section 911, then such compensation will
nevertheless be included in your Average Compensation to the same extent
as if
it were part of your W-2 wages.
Base
Salary means
the
annual rate of base salary in effect for you immediately prior to the Change
in
Control or (if greater) the annual rate of base salary in effect at the time
of
your Involuntary Termination.
Change
in Control means:
(i) any
event
or circumstance that results in persons other than Controlling Persons
collectively being In Control of MGP and/or EGP unless, prior to the occurrence
of such event or circumstance, the Assets shall have been transferred
exclusively to Controlling Persons and/or to entities of which Controlling
Persons collectively are In Control; or
(ii) an
event
or circumstance that results in MGP and/or EGP collectively ceasing to act
as
the sole General Partners and the Managing General Partner of the Company
and to
have the sole and exclusive right to direct, manage, and conduct the business
of
the Company unless, prior to the occurrence of such event or circumstance,
the
Assets shall have been transferred exclusively to Controlling Persons and/or
to
entities of which Controlling Persons collectively are In Control;
or
(iii) the
Transfer of the Assets to any person or persons who are not Controlling Persons
and/or to any entity or entities of which Controlling Persons collectively
are
not In Control; or
(iv) any
merger or consolidation in which Controlling Persons collectively are not
In
Control of the surviving or resulting entity unless, prior to the occurrence
of
such event or circumstance, the Assets shall have been transferred exclusively
to Controlling Persons and/or to entities of which Controlling Persons
collectively are In Control; or
(v) the
dissolution and/or liquidation of the Company that results in ownership or
control of the Assets by any persons who are not Controlling Persons and/or
by
any entity or entities of which Controlling Persons collectively are not
In
Control.
Code
means
the
Internal Revenue Code of 1986, as amended.
Controlling
Persons
means
members of the ▇▇▇▇▇▇▇ Family and members of the ▇▇▇▇ Family,
collectively.
EGP
means
▇▇▇▇ EGP, a Delaware corporation and a standby general partner of the
Company.
Fair
Market Value means,
with respect to any Units subject to any of your Options, the closing selling
price per Unit on the date in question, as reported on the Nasdaq National
Market System. If there is no reported sale of Units on such date, then the
closing selling price on the Nasdaq National Market System on the next preceding
day for which there does exists such quotation will be determinative of Fair
Market Value.
Health
Care Coverage means
the
continued health care coverage to which you and your eligible dependents
may
become entitled under Part Two of this letter agreement upon the Involuntary
Termination of your employment.
In
Control
means
owning, and having the present and continuing right to exercise control over,
a
majority of the voting power of, and right to exercise control over management
of, any entity, which right is not subject to any material limitations,
qualifications, or exceptions (whether temporary or permanent) in excess
of
those applicable on the date of this letter agreement to the interests of
the
Controlling Persons in MGP and EGP.
Involuntary
Termination means
the
termination of your employment with the Company:
|
■
|
involuntarily
upon your discharge or dismissal (other than a Termination for
Cause),
or
|
|
■
|
voluntarily
upon your resignation following (I) a change in your position with
the
Company which materially reduces your duties or level of responsibility,
(II) a 20% or more reduction in your level of compensation (including
base
salary, fringe benefits and target bonus under any incentive performance
plan) or (III) a change in your place of employment which is more
than
fifty (50) miles from your place of employment prior to the Change
in
Control, provided and only if such change or reduction is effected
without
your written concurrence.
|
In
no
event shall an Involuntary Termination be deemed to occur should your employment
terminate by reason of your death or disability.
MGP
means
▇▇▇▇ MGP, Inc., a Delaware corporation and the Managing General Partner of
the
Company.
Option
means
any
option granted to you under the Plan which is outstanding at the time of
the
Change in Control or upon your subsequent Involuntary Termination.
Option
Parachute Payment means,
with respect to any Option, the portion of that Option deemed to be a parachute
payment under Code Section 280G and the Treasury Regulations issued thereunder.
The portion of such Option which is categorized as an Option Parachute Payment
will be calculated in accordance with the valuation provisions established
under
Code Section 280G and the applicable Treasury Regulations and will include
an
appropriate dollar adjustment to reflect the lapse of your obligation to
remain
in the Company’s employ as a condition to the vesting of the accelerated
installment. In no event, however, will the Option Parachute Payment
attributable to any Option (or accelerated installment) exceed the spread
(the
excess of the Fair Market Value of the accelerated option Units over the
option
exercise price payable for those Units) existing at the time of
acceleration.
Other
Parachute Payment means
any
payment in the nature of compensation (other than the benefits to which you
become entitled under Part Two of this letter agreement) which are made to
you
in connection with the Change in Control and which accordingly qualify as
parachute payments within the meaning of Code Section 280G(b)(2) and the
Treasury Regulations issued thereunder. Your Other Parachute Payment will
include (without limitation) the Present Value, measured as of the Change
in
Control, of the aggregate Option Parachute Payment attributable to your Options
(if any).
Partnership
Agreement
means
the Amended and Restated Limited Partnership Agreement of ▇▇▇▇ Resources,
A
Delaware Limited Partnership, as amended through the date of this letter
agreement and as hereafter amended or restated at any time.
Plan
means
(i) the Company’s Unit Option Plan adopted in 1997, as amended or restated
from time to time, and (ii) any successor equity incentive plan
subsequently implemented by the Company.
▇▇▇▇
Family
means
the lineal descendants or spouses of ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
any present or former spouse of such persons, any lineal descendants of such
spouses or former spouses, any estate of any of the foregoing persons, any
trust
in which the foregoing persons collectively have all of the beneficial interests
as income beneficiaries or remaindermen, and any corporation, partnership,
or
other entity in which any one or more of such persons or entities own all
of the
interests.
Present
Value means
the
value, determined as of the date of the Change in Control, of any payment
in the
nature of compensation to which you become entitled in connection with the
Change in Control or the subsequent Involuntary Termination of your employment,
including (without limitation) the Option Parachute Payment attributable
to your
Options and your Severance Payment under Part Two of this letter agreement.
The
Present Value of each such payment shall be determined in accordance with
the
provisions of Code Section 280G(d)(4), utilizing a discount rate equal to
one
hundred twenty percent (120%) of the applicable Federal rate in effect at
the
time of such determination, compounded semi-annually to the effective date
of
the Change in Control.
Severance
Payment means
the
severance payment to which you may become entitled under Part Two in the
event
of your Involuntary Termination following a Change in Control; subject, however,
to the dollar limitations of Part Three.
Termination
for Cause means
a
termination of your employment occasioned by reason of your having engaged
in
fraud or in any other intentional misconduct adversely affecting the business
reputation of the Company in a material manner.
Transfer
shall
mean the sale, transfer, or disposition of all or substantially all of the
Assets in a single transaction or group of related transactions, but shall
not
include the sale, transfer, or disposition of any of the Assets in the ordinary
course of business.
Unit
means a
unit of interest in the Company acquired or issued pursuant to the Partnership
Agreement.
PART
TWO —
CHANGE IN CONTROL BENEFITS
Upon
the
Involuntary Termination of your employment within eighteen (18) months following
a Change in Control, you will become entitled to receive the special severance
benefits provided in this Part Two.
| 1. |
Severance
Payment.
|
If
your
Involuntary Termination occurs within the first eighteen (18) months after
the
Change in Control, then you will be entitled to a Severance Payment in an
aggregate amount equal to (i) two (2) times your Base Salary plus
(ii) your target bonus for the fiscal year of the Company in which such
Involuntary Termination occurs. The Severance Payment will be made to you
in a
lump sum payment within ninety (90) days after your Involuntary
Termination.
The
Severance Payment will be subject to the Company’s collection of applicable
federal and state income and employment withholding taxes.
In
the
event your employment terminates by reason of your death or disability or
your
Termination for Cause, you will not be entitled to receive any Severance
Payment
or other benefits under this letter agreement.
| 2. |
Option
Acceleration.
|
Your
outstanding Options will (to the extent not then otherwise fully exercisable)
automatically accelerate to the extent so provided in the Plan so that each
such
accelerated Option will become fully vested and immediately exercisable for
the
total number of Units at the time subject to that Option. Each such accelerated
Option, together with all your other vested Options, will remain exercisable
for
fully-vested Units until the earlier of (i) the expiration date of the
original option term for such Option or (ii) the end of the one (1) year
period measured from the date of your Involuntary Termination (notwithstanding
any provisions of the Plan that would provide for only a 90-day
period).
| 3. |
Additional
Benefits.
|
a. Health
Care Coverage.
The
Company will, at its expense, provide you and your eligible dependents with
continued health care coverage under the Company’s medical/dental plan until the
earlier of (i) eighteen (18) months after the date of your Involuntary
Termination or (ii) the first date that the you are covered under another
employer’s health benefit program which provides substantially the same level of
benefits without exclusion for pre-existing medical conditions. The coverage
so
provided you and your eligible dependents will be in full and complete
satisfaction of the continued health care coverage to which you or your eligible
dependents would otherwise, at your own expense, be entitled under Code Section
4980B by reason of your termination of employment, and neither you nor your
eligible dependents will accordingly be entitled to any additional period
of
health care coverage under Code Section 4980B as a result of your termination
of
employment.
b. Unpaid
Benefits
You
will
receive an immediate lump sum payment of all unpaid vacation days which you
have
accrued through the date of your Involuntary Termination.
PART
THREE —
LIMITATION ON BENEFITS
| 1. |
Parachute
Limit.
|
Except
to
the limited extent (if any) provided under Paragraph 4(a) below, the aggregate
Present Value (measured as of the Change in Control) of the benefits to which
you become entitled under Part Two at the time of your Involuntary Termination
(namely the Severance Payment, the Option Parachute Payment attributable
to your
Options and your Health Care Continuation) will in no event exceed in amount
the
difference between (i) 2.99 times your Average Compensation and (ii) the
Present
Value, measured as of the Change in Control, of all Other Parachute Payments
to
which you are entitled.
Accordingly,
except as otherwise provided under Paragraph 4(a) below, your Options will
not
accelerate and no Severance Payment will be made to you pursuant to this
letter
agreement, to the extent the Present Value as of the Change in Control of
(1).the aggregate Option Parachute Payment attributable to your Options plus
(II) your Severance Payment plus (III) your Health Care Continuation would,
when
added to the Present Value of your Other Parachute Payments, exceed 2.99
times
your Average Compensation (the “Parachute Limit”).
| 2. |
Resolution
Procedure.
|
For
purposes of the foregoing Parachute Limit, the following provisions will
be in
effect:
a. In
the
event there is any disagreement between you and the Company as to whether
one or
more payments to which you become entitled in connection with either the
Change
in Control or your subsequent Involuntary Termination constitute Option
Parachute Payments or Other Parachute Payments or as to the determination
of the
Present Value thereof, such dispute will be resolved as follows:
(i) In
the
event temporary, proposed or final Treasury Regulations in effect at the
time
under Code Section 280G (or applicable judicial decisions) specifically address
the status of any such payment or the method of valuation therefore, the
characterization afforded to such payment by the Regulations (or such decisions)
will, together with the applicable valuation methodology, be
controlling.
(ii) In
the
event Treasury Regulations (or applicable judicial decisions) do not address
the
status of any payment in dispute, the matter will be submitted for resolution
to
independent counsel mutually acceptable to you and the Company (“Independent
Counsel”). The resolution reached by Independent Counsel will be final and
controlling; provided, however, that if in the judgment of Independent Counsel
the status of the payment in dispute can be resolved through the obtainment
of a
private letter ruling from the Internal Revenue Service, a formal and proper
request for such ruling will be prepared and submitted by Independent Counsel,
and the determination made by the Internal Revenue Service in the issued
ruling
will be controlling. All expenses incurred in connection with the retention
of
Independent Counsel and (if applicable) the preparation and submission of
the
ruling request shall be shared equally by you and the Company.
(iii) In
the
event Treasury Regulations (or applicable judicial decisions) do not address
the
appropriate valuation methodology for any payment in dispute, the Present
Value
thereof will, at the Independent Counsel’s election, be determined through an
independent third-party appraisal, and the expenses incurred in obtaining
such
appraisal shall be shared equally by you and the Company.
| 3. |
Status
of Benefits.
|
a. No
Severance Payment will be made to you under Part Two of this letter agreement
until the Present Value of the Option Parachute Payment attributable to your
Options has been determined and the status of any payments in dispute under
Paragraph 2 above has been resolved in accordance therewith. However, you
will
be permitted to exercise your Options at any time during the one (1) year
(or
shorter) period immediately following your Involuntary Termination.
b. Once
the
requisite determinations under Paragraph 2 have been made, then to the extent
the aggregate Present Value, measured as of the Change in Control, of (1)
the
Option Parachute Payment attributable to your Options (or installments thereof)
plus (2) your Severance Payment would, when added to the Present Value of
all
your Other Parachute Payments exceed the Parachute Limit, your Severance
Payment
will be accordingly reduced.
| 4. |
Overriding
Limitations.
|
a. Notwithstanding
any provision to the contrary set forth in the preceding provisions of this
Part
Three, the aggregate Present Value of your Severance Payment and the Option
Parachute Payment attributable to your Options will not be reduced below
that
amount (if any) which, when added to the Present Value of all the Other
Parachute Payment to which you are entitled, would nevertheless qualify as
reasonable compensation for past services within the standards established
under
Code Section 280G(b)(4)(B).
b. The
limitations of this Part Three will in all events be interpreted in such
manner
as to avoid the imposition of excise taxes under Code Section 4999, and the
disallowance of deductions under Code Section 280G(a), with respect to any
of
the benefits paid pursuant to Part Two of this letter agreement. This provision
will apply as if Code Section 4999 and Code Section 280G(a) and the related
provisions of the Code and Treasury Regulations are applicable to this Agreement
and to payments to be made to you as a result of your Involuntary Termination
following a Change of Control, notwithstanding the technical inapplicability
of
such law and regulations to the Company as a result of its organization and
structure, and all provisions of this Agreement shall be construed, interpreted,
and applied as if such laws and regulations were applicable.
PART
FOUR —
MISCELLANEOUS PROVISIONS
| 1. |
Termination
for Cause.
|
Should
your termination of employment constitute a Termination for Cause, then the
Company will only be required to pay you (i) any unpaid compensation earned
for
services previously rendered through the date of such termination and (ii)
any
accrued but unpaid vacation benefits or sick days, and no benefits will be
payable to you under Part Two of this letter agreement.
| 2. |
Death.
|
Should
you die before receipt of one or more Severance Payment to which you become
entitled under Part Two of this letter agreement, then those payment or payments
will be made to the executors or administrators of your estate. Should you
die
before you exercise all your outstanding Options, then such Options may be
exercised, within twelve (12) months after your death, by the executors or
administrators of your estate or by persons to whom the Options are transferred
pursuant to your will or in accordance with the laws of inheritance. In no
event, however, may any such Option be exercised after the specified expiration
date of the option term.
| 3. |
General
Creditor Status.
|
The
payments and benefits to which you become entitled hereunder will be paid,
when
due, from the general assets of the Company, and no trust fund, escrow
arrangement or other segregated account will be established as a funding
vehicle
for such payment. Accordingly, your right (or the right of the personal
representatives or beneficiaries of your estate) to receive any payments
or
benefits hereunder will at all times be that of a general creditor of the
Company and will have no priority over the claims of other general
creditors.
| 4. |
Indemnification.
|
The
indemnification provisions for Officers and Directors under the Company Bylaws
will (to the maximum extent permitted by law) be extended to you, during
the
period following your Involuntary Termination, with respect to any and all
matters, events or transactions occurring or effected during your employment
with the Company.
| 5. |
Miscellaneous.
|
This
letter agreement will be binding upon the Company, its successors and assigns
(including, without limitation, the surviving entity in any Change in Control)
and is to be construed and interpreted under the laws of the State of
Washington. This letter may only be amended by written instrument signed
by you
and an authorized officer of the Company. If any provision of this letter
agreement as applied to you or the Company or to any circumstance should
be
adjudged by a court of competent jurisdiction to be void or unenforceable
for
any reason, the invalidity of that provision will in no way affect (to the
maximum extent permissible by law) the application of such provision under
circumstances different from those adjudicated by the court, the application
of
any other provision of this letter agreement, or the enforceability or
invalidity of this letter agreement as a whole. Should any provision of this
letter agreement become or be deemed invalid, illegal or unenforceable in
any
jurisdiction by reason of the scope, extent or duration of its coverage,
then
such provision will be deemed amended to the extent necessary to conform
to
applicable law so as to be valid and enforceable or, if such provision cannot
be
so amended without materially altering the intention of the parties, then
such
provision will be stricken and the remainder of this letter agreement will
continue in full force and effect.
| 6. |
No
Employment or Service Contract.
|
Nothing
in this letter agreement is intended to provide you with any right to continue
in the employ of the Company for any period of specific duration or interfere
with or otherwise restrict in any way your rights or the rights of the Company
(or any subsidiary), which rights are hereby expressly reserved by each,
to
terminate your employment at any time for any reason whatsoever, with or
without
cause.
| 7. |
Attorney
Fees.
|
In
the
event legal proceeding should be initiated by you or by the Company with
respect
to any controversy, claim or dispute relating to the interpretation or
application of the provisions of this letter agreement or any benefits payable
hereunder, the prevailing party in such proceedings will be entitled to recover
from the losing party reasonable attorney fees and costs incurred in connection
with such proceedings or in the enforcement or collection of any judgment
or
award rendered in such proceedings. For purposes of this provision, the
prevailing party means the party determined by the court to have most nearly
prevailed in the proceedings, even if that party does not prevail in all
matters, and does not necessarily mean the party in whose favor the judgment
is
actually rendered.
Please
indicate your acceptance of the foregoing provisions of this employment
agreement by signing the enclosed copy of this agreement and returning it
to the
Company.
▇▇▇▇
RESOURCES, A DELAWARE LIMITED PARTNERSHIP
BY:_____________________________________________
TITLE:
__________________________________________
ACCEPTANCE
I
hereby
agree to all the terms and provisions of the foregoing letter agreement
governing the special benefits to which I may become entitled in connection
with
certain changes in control or ownership of the Company.
Signature:________________________________________
Dated:___________________________________________