**Exhibit10.1**

 

**FIRSTAMENDMENT TO**

**FOREST OILCORPORATION PENSION TRUST AGREEMENT**

**AS AMENDEDAND RESTATED JANUARY 1, 2002**

 

**WHEREAS**,Forest Oil Corporation (the “Company”) has heretofore entered into an agreementwith David H. Keyte, Cyrus D. Marter IV, Timothy F. Savoy, and Michael N.Kennedy (or the individuals who preceded them as trustees or Committee members)denominated the Forest Oil Corporation Pension Trust Agreement, as amended andrestated as of January 1, 2002 (the “Trust Agreement”); and

 

**WHEREAS**,the Company desires to amend the Trust Agreement to incorporate certainrevisions required by recent legislative developments and to clarify operationof the Trust in certain respects.

 

**NOW, THEREFORE**,the parties hereto hereby mutually agree that the Trust Agreement shall beamended as follows:

 

I.                                           Effectiveas of January 1, 2002 (and, with respect to earlier versions of the Plan,effective as of the date the affected provisions (or provisions similarthereto) were incorporated into the Plan):

 

1.                                       Thefirst paragraph of Section 1.23 of the Trust Agreement shall be deletedand the following shall be substituted therefor:

 

“‘Qualified Joint andSurvivor Annuity’” shall mean a monthly annuity payable during the joint livesof a married Participant and such Participant’s spouse, continuing for the lifeof the spouse if the spouse survives the Participant, in an amount equal toone-half (1/2) the amount payable during the joint lives of the Participant andspouse; provided that for purposes of this form of annuity, the Participant’sspouse may only receive benefits following the death of the Participant if heor she was married to the Participant when payments under such annuitycommenced.  A Qualified Joint andSurvivor Annuity shall be payable in amounts such that the Qualified Joint andSurvivor Annuity is the actuarial equivalent of the amount of pension payablefor 10 years certain and continuously for the life of the Participantdetermined under Section 3.01.  AParticipant shall be entitled to elect not to take a Qualified Joint andSurvivor Annuity as herein provided. If a Participant elects not to take aQualified Joint and Survivor Annuity, once payments commence under the optionalform of benefit chosen by the Participant, the Participant may not change hiselection (either as to form of benefit or designated Beneficiary), except tothe extent specifically provided in Section 3.10.”

 

2.                                       Thefollowing provision shall be added at the end of the second paragraph of Section 1.24of the Trust Agreement:

 

“If a Participant electsnot to take a Qualified Survivor Annuity, once payments commence under theoptional form of benefit chosen by the Participant, the

 

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Participant may notchange his election (either as to form of benefit or designated Beneficiary).”

 

3.                                       Thefollowing new Section 3.10 shall be added to the Trust Agreement:

 

“3.10                     Notwithstandingthe foregoing provisions of this Article III, once payments commence underthe Qualified Joint and Survivor Annuity or optional form of benefit chosen bythe Participant, the Participant may not change his election (either as to formof benefit or designated Beneficiary); provided, however, that if a Participantelects a life annuity with a term certain, he may change his designatedBeneficiary after payments commence.”

 

4.                                       Thefollowing new Section 4.06 shall be added to the Trust Agreement:

 

“4.06                     Notwithstandingthe foregoing provisions of this Article IV, once payments commence underthe Qualified Survivor Annuity or optional form of benefit chosen by the designatedBeneficiary of the Participant), the Participant or the designated Beneficiary,as applicable, may not change his election (either as to form of benefit ordesignated Beneficiary); provided, however, that the designated Beneficiary maybe changed if the Qualified Survivor Annuity has been waived and either a termcertain annuity or installment benefit has been elected.”

 

5.                                       Thefollowing new Section 5.05 shall be added to the Trust Agreement:

 

“5.05                     Notwithstandingthe foregoing provisions of this Article V, once payments commence underthe Qualified Joint and Survivor Annuity, the Participant may not change hiselection (either as to form of benefit or designated Beneficiary).”

 

II.                                     Effectiveas of March 28, 2005:

 

1.                                       Section 3.07of the Trust Agreement shall be deleted and the following shall be substitutedtherefor:

 

“3.07                     Notwithstanding the foregoingprovisions of this Article III, if at a Participant’s termination ofemployment with all Employers, the present value (determined using theactuarial assumptions specified in Schedule A) of the Participant’spension is $1,000 or less, then a lump-sum payment equal to such present valueshall be paid to the Participant, in lieu of any other benefit under the Plan,as soon as practicable following his termination of employment with allEmployers.  Further, notwithstanding theforegoing provisions of this Article III, if at a Participant’stermination of employment with all Employers, the present value (determinedusing the actuarial assumptions specified in Schedule A) of theParticipant’s pension exceeds $1,000 but does not exceed $5,000, then theParticipant may elect to receive a lump-sum payment equal to such presentvalue, in lieu of any other benefit under the Plan, which shall be payable assoon as administratively feasible following his election.  Payment of benefits pursuant to

 

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this Section shallnot require spousal consent or waiver of the Qualified Joint and SurvivorAnnuity.”

 

2.                                       Thelast paragraph of Section 5.02 of the Trust Agreement shall be deleted andthe following shall be substituted therefor:

 

“Notwithstanding theforegoing provisions of this Section 5.02, if at a Participant’stermination of employment with all Employers, the present value (determinedusing the actuarial assumptions specified in Schedule A) of theParticipant’s accrued benefit is $1,000 or less, then a lump-sum payment equalto such present value shall be paid to the Participant, in lieu of any otherbenefit under the Plan, as soon as practicable following his termination ofemployment with all Employers.  Further,notwithstanding the foregoing provisions of this Section 5.02, if at aParticipant’s termination of employment with all Employers, the present value(determined using the actuarial assumptions specified in Schedule A) ofthe Participant’s accrued benefit exceeds $1,000 but does not exceed $5,000,then the Participant may elect to receive a lump-sum payment equal to suchpresent value, in lieu of any other benefit under the Plan, which shall bepayable as soon as administratively feasible following his election.  Payment of benefits pursuant to thisparagraph shall not require spousal consent or waiver of the Qualified Jointand Survivor Annuity.”

 

3.                                       Thefollowing provision shall be added at the end of Section 10.10 of theTrust Agreement:

 

“In the event that thetotal value of an amount directed to be paid pursuant to a ‘qualified domesticrelations order’ is not in excess of $5,000, such amount shall be paid to therecipient or recipients identified in such order in one lump sum payment assoon as practicable after such order has been determined to be a ‘qualifieddomestic relations order.’”

 

III.                                   Effectivefor determining required minimum distributions for calendar years beginning onor after January 1, 2003, the following new Section 3.11 shall beadded to Article III of the Trust Agreement:

 

“3.11                     (a)                                  Theprovisions of this Section 3.11 will apply for purposes of determiningrequired minimum distributions for calendar years beginning with the 2003Distribution Calendar Year.  Theforegoing notwithstanding, distributions made from the Plan for DistributionCalendar Years 2003, 2004 and 2005 will not fail to satisfy the requirementsand rules of this Section 3.11 if they were based upon a reasonable andgood faith interpretation of Section 401(a)(9) of the Code.

 

(b)                                 Therequirements of this Section 3.11 will take precedence over anyinconsistent provisions of the Plan.

 

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(c)                                  Alldistributions required under this Section 3.11 will be determined and madein accordance with the Treasury regulations under section 401(a)(9) of theCode.

 

(d)                                 Notwithstandingthe other provisions of this Section 3.11, other than Paragraph (c) above,distributions may be made under a designation made before January 1, 1984,in accordance with section 242(b)(2) of the Tax Equity and FiscalResponsibility Act (TEFRA) and the provisions of the Plan that relate to section 242(b)(2)of TEFRA.

 

(e)                                  TheParticipant’s entire interest will be distributed, or begin to be distributed,to the Participant no later than the Participant’s Required BeginningDate.  If the Participant dies beforedistributions begin, the Participant’s entire interest will be distributed, orbegin to be distributed, no later than as follows:

 

(1)                                         Ifthe Participant’s surviving spouse is the Participant’s sole DesignatedBeneficiary, distributions to the surviving spouse will begin by December 31of the calendar year immediately following the calendar year in which theParticipant died, or by December 31 of the calendar year in which theParticipant would have attained age 701⁄2, if later.

 

(2)                                         Ifthe Participant’s surviving spouse is not the Participant’s sole DesignatedBeneficiary, distributions to the designated beneficiary will begin by December 31of the calendar year immediately following the calendar year in which theParticipant died.

 

(3)                                         Ifthere is no Designated Beneficiary as of September 30 of the yearfollowing the year of the Participant’s death, the Participant’s entireinterest will be distributed by December 31 of the calendar yearcontaining the fifth anniversary of the Participant’s death.

 

(4)                                         Ifthe Participant’s surviving spouse is the Participant’s sole DesignatedBeneficiary and the surviving spouse dies after the Participant but beforedistributions to the surviving spouse begin, this Paragraph (disregarding item(1) above), will apply as if the surviving spouse were the Participant.

 

For purposesof this Paragraph (e) and Paragraph (h) below, distributions are considered tobegin on the Participant’s Required Beginning Date (or, if item (4) applies,the date distributions are required to begin to the surviving spouse under item(1) above).  If annuity paymentsirrevocably commence to the Participant before the Participant’s RequiredBeginning Date (or to the Participant’s surviving spouse before the datedistributions are required to begin to the surviving spouse under item (1)above), the date distributions are considered to begin is the datedistributions actually commence.  Unlessthe Participant’s interest is distributed in the form of an annuity purchasedfrom an insurance company or in a single sum on or before the RequiredBeginning Date, as of the first Distribution Calendar Year distributions willbe made in accordance with

 

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Paragraphs(f), (g) and (h) of this Section 3.11, whichever is applicable. If theParticipant’s interest is distributed in the form of an annuity purchased froman insurance company, distributions thereunder will be made in accordance withthe requirements of Section 401(a)(9) of the Code and the Treasuryregulations promulgated thereunder and, if the annuity contract is purchasedafter the Required Beginning Date, the first payment interval must begin on orbefore the annuity contract purchase date and the payment required for onepayment interval must be made no later than the end of such payment interval.  Any part of the Participant’s interest whichis in the form of an individual account described in section 414(k) of theCode will be distributed in a manner satisfying the requirements of section 401(a)(9) of the Code and the Treasuryregulations promulgated thereunder that apply to individual accounts.

 

(f)                                    Ifthe Participant’s interest is paid in the form of annuity distributions underthe Plan, payments under the annuity must satisfy the following requirements:

 

(1)                            Theannuity distributions will be paid in periodic payments made at uniformintervals not longer than one year.

 

(2)                            Thedistribution period will be over a life (or lives) or over a period certain notlonger than the period described in Paragraph (g) or (h).

 

(3)                            Oncepayments have begun over a period certain, the period certain will not bechanged even if the period certain is shorter than the maximum permitted unlesssuch change is permitted under and complies with A-13 of Treasury regulation section 1.401(a)(9)-6.

 

(4)                            Paymentswill either be nonincreasing (disregarding ancillary death benefits in the caseof payments made upon the death of the Participant) or increase only asfollows:

 

(i)                                     byan annual percentage increase that does not exceed the annual percentageincrease in an Eligible Cost-of-Living Index for a twelve-month period endingin the year in which the increase occurs or the prior year;

 

(ii)                                  bya percentage increase that occurs at specified times and does not exceed thecumulative total of annual percentage increases in an Eligible Cost-of-Living Indexsince the Annuity Starting Date or, if later, the date of the most recentpercentage increase;

 

(iii)                               tothe extent of the reduction in the amount of the Participant’s payments toprovide for a survivor benefit upon death, but only if the beneficiary whoselife was being used to determine the distribution period described in Paragraph(g) dies

 

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or is no longer the Participant’s beneficiary pursuant to a qualifieddomestic relations order within the meaning of section 414(p);

 

(iv)                              toprovide cash refunds of employee contributions upon the Participant’s death;

 

(v)                                 topay increased benefits that result from a Plan amendment;

 

(vi)                              toallow a beneficiary to convert the survivor portion of a joint and survivorannuity into a single sum distribution upon the Participant’s death; or

 

(vii)                           tothe extent permitted under items (c) and (d) of A-14 of Treasury regulation section 1.401(a)(9)-6(regarding permitted increases under certain annuity contracts purchased froman insurance company and additional permitted increases for annuities payablefrom a trust for certain *de minimis*increases, payments upon death or as a result of certain dividend payments).

 

The amountthat must be distributed on or before the Participant’s Required Beginning Date(or, if the Participant dies before distributions begin, the date distributionsare required to begin under item (1) or (2) of Paragraph (e)) is the paymentthat is required for one payment interval. The second payment need not be madeuntil the end of the next payment interval even if that payment interval endsin the next calendar year. Payment intervals are the bi-monthly, monthly,semi-annually, annually or other, as applicable, periods for which payments arereceived.  All of the Participant’sbenefit accruals as of the last day of the first Distribution Calendar Yearmust be included in the calculation of the amount of the annuity payments forpayment intervals ending on or after the Participant’s Required Beginning Date.  Any additional benefits accruing to theParticipant in a calendar year after the first Distribution Calendar Year mustcommence to be distributed in accordance with the provisions of this Section 3.11beginning with the first payment interval ending in the calendar yearimmediately following the calendar  yearin which such additional benefit amount accrues.

 

(g)                                 Ifthe Participant’s interest is being distributed in the form of a joint andsurvivor annuity for the joint lives of the Participant and a nonspousebeneficiary, the periodic annuity payment payable to the Designated Beneficiaryafter the Participant’s death must not at any time after the Participant’sRequired Beginning Date exceed the applicable percentage of the annuity paymentpayable to the Participant using the table set forth in A-2 of Treasuryregulation section 1.401(a)(9)-6. If the form of distribution combines a joint and survivor annuity forthe joint lives of the Participant and a nonspouse beneficiary and a periodcertain annuity, the requirement in the preceding sentence will apply toannuity payments to be made to the Designated Beneficiary after the expirationof the period certain. Unless the Participant’s spouse is the sole DesignatedBeneficiary and the form of distribution is a period certain and no lifeannuity, the

 

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period certainfor an annuity distribution commencing during the Participant’s lifetime maynot exceed the applicable distribution period for the Participant under theUniform Lifetime Table set forth in A-2 of Treasury regulation section 1.401(a)(9)-9for the calendar year that contains the Participant’s Annuity Starting Date. Ifthe Annuity Starting Date precedes the year in which the Participant reachesage 70, the applicable distribution period for the Participant is thedistribution period for age 70 under the Uniform Lifetime Table set forth inA-2 of Treasury regulation section 1.401(a)(9)-9 plus the excess of 70over the age of the Participant as of the Participant’s birthday in the yearthat contains the Annuity Starting Date. If the Participant’s spouse is theparticipant’s sole Designated Beneficiary, the period certain may not exceedthe joint and last survivor expectancy of the Participant and the Participant’sspouse, if longer than the applicable distribution period for the Participantas determined under this Paragraph (g), provided the period certain is notprovided in conjunction with a life annuity.

 

(h)                                 Ifthe Participant dies before the date distribution of his or her interest beginsand there is a Designated Beneficiary, the Participant’s entire interest willbe distributed, beginning no later than the time described in item (1) or (2)of Paragraph (e), whichever is applicable, over the life of the DesignatedBeneficiary or over a period certain not exceeding:

 

(1)                                         Unlessthe Pension Starting Date is before the first Distribution Calendar Year, theLife Expectancy of the Designated Beneficiary determined using the beneficiary’sage as of the beneficiary’s birthday in the calendar year immediately followingthe calendar year of the Participant’s death determined for the DistributionCalendar Year that contains the Pension Starting Date; or

 

(2)                                         Ifthe Pension Starting Date is before the first Distribution Calendar Year, theLife Expectancy of the Designated Beneficiary determined using the beneficiary’sage as of the beneficiary’s birthday in the calendar year that contains thePension Starting Date. If the Participant dies before the date distributionsbegin and there is no Designated Beneficiary as of September 30 of theyear following the year of the Participant’s death, distribution of theParticipant’s entire interest will be completed by December 31 of thecalendar year containing the fifth anniversary of the Participant’s death. Ifthe Participant dies before the date distribution of his or her interestbegins, the Participant’s surviving spouse is the participant’s sole DesignatedBeneficiary, and the surviving spouse dies before distributions to thesurviving spouse begin, this Paragraph (h) will apply as if the survivingspouse were the Participant, except that the time by which distributions mustbegin will be determined without regard to item (1) of Paragraph (e).

 

(i)                                     Forpurposes of this Section 3.11, payments made by the Plan to a Participant’schild following the death of the Participant are treated as if made to asurviving spouse of the Participant until the child reaches the age of majority

 

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underapplicable state law (or dies, if earlier) provided that such payments becomepayable to the Participant’s surviving spouse upon cessation of such paymentsto the child if such surviving spouse is then living.  A child who has not completed a specifiedcourse of education and is under the age of 26 or who is disabled within themeaning of Section 72(m)(7) of the Code is not deemed to have reached theage of majority for purposes of the preceding sentence.

 

(j)                                     Forpurposes of this Section 3.11, the following terms shall be defined asfollows:

 

(1)                                         DesignatedBeneficiary.  The individual who isdesignated as the Beneficiary under the Plan and is a Designated Beneficiaryunder Section 401(a)(9) of the Code and section 1.401(a)(9)-1,Q&A-4, of the Treasury regulations.

 

(2)                                         DistributionCalendar Year.  A calendar year forwhich a minimum distribution is required. For distributions beginning beforethe Participant’s death, the first Distribution Calendar Year is the calendaryear immediately preceding the calendar year which contains the Participant’sRequired Beginning Date. For distributions beginning after the Participant’sdeath, the first Distribution Calendar Year is the calendar year in whichdistributions are required to begin pursuant to Paragraph (e) above.

 

(3)                                         EligibleCost-in-Living Index.  Any indexdescribed in items (b)(2), (b)(3) or (b)(4) of A-14 of Treasury regulation section 1.401(a)(9)-6.

 

(4)                                         LifeExpectancy.  Life expectancy ascomputed by use of the Single Life Table in Treasury Regulation section 1.401(a)(9)-9.

 

(5)                                         RequiredBeginning Date.  With respect to aParticipant or beneficiary, the date specified in the second paragraph of Section 3.08of the Plan.”

 

IV.                                   Effectiveas of February 1, 2006, the third paragraph of Section 1.23 of theTrust Agreement shall be deleted and the following shall be substitutedtherefor:

 

“The Committee shall furnish an explanation regarding the standard formof benefit and the Sections 3.02, 3.03 and 5.02 election to each Participant noless than thirty days before the end of the election period described below(unless such thirty-day period is waived by an affirmative election inaccordance with the Code and applicable Treasury regulations) and no more thanninety days before his Annuity Starting Date. The furnished explanation shall be written in nontechnical language in amanner calculated to be understood by the average Plan Participant and shallinclude the following specific information relating to the standard form ofbenefit and each other optional form of benefit generally available under thePlan:  (1) a description of the form ofbenefit, (2) a description of the eligibility

 

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conditions forthe form of benefit, (3) a description of the financial effect of election theform of benefit (i.e., the amount payable under the form of benefit to theParticipant during the Participant’s lifetime and the amount payable after thedeath of the Participant), (4) a chart or other comparable device showing thefinancial effect and relative value of the optional forms of benefit inaccordance with Treasury regulation section 1.417(a)(3)-1(d)(2)(i) andwhich is accompanied with explanations and statements required under suchregulation, (5) the amount payable to the Participant expressed in the form ofa pension commencing at his Normal Retirement Date or commencing immediately,(6) a statement that offers to provide the Participant upon his request to theCommittee a statement of financial effect and a comparison of relative valuesthat is specific to the Participant for any presently available option form ofbenefit and how he may request such information, and (7) a statement that, uponthe Participant’s request to the Committee, he may obtain the specific items ofParticipant-specific information described in Treasury regulation section 1.417(a)(3)-1(c)with respect to any or all of the optional forms of benefits available underthe Plan to the Participant with a Pension Starting Date for which the explanationapplies and how he may request such information.  The period of time during which a Participantmay make or revoke the election described in this Section shall be theninety-day period ending on the later of the date such Participant’s pensionpayments commence or the thirtieth day after the information required by thisParagraph has been furnished to the Participant; provided, however, that aParticipant may affirmatively elect (with spousal consent if required) to waivethe requirement that such information be provided at least thirty days beforethe end of the election period so long as the election period does not end, andthe Participant’s benefit hereunder does not commence, until at least eightdays after the information required by this Paragraph has been furnished to theParticipant.  In the event of suchwaiver, the election period shall end on the later of the date of the waiver orthe eighth day after the information required by this Paragraph has beenfurnished to the Participant, and payment of the Participant’s benefit shallcommence as soon as administratively feasible thereafter.”

 

V.                                     Asamended hereby, the Trust Agreement is specifically ratified and reaffirmed.

 

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**EXECUTED**this 10th day of May, 2005.

 
| **FOREST OIL CORPORATION** | **EMPLOYEE BENEFITS COMMITTEE**     |
|----------------------------|-------------------------------------|
|                       |                                |
|                       |                                |
| **By:**               | /s/ CYRUS D.  MARTER IV             |   |   /s/  DAVID H. KEYTE |   |
|                       | **Cyrus D.  Marter IV**             | **David H. Keyte** |
| ** **                 | **Vice President, General Counsel** |   |   |   |
| ** **                 | **and Secretary**                   |   |   |   |
|                       |   /s/  CYRUS D. MARTER IV |   |
|                       | **Cyrus D. Marter IV**              |
|                       | ** **                          |
|                       |                                |
|                       |   /s/  TIMOTHY F. SAVOY   |   |
| ** **                 | **Timothy F. Savoy**                |
| ** **                 | ** **                          |
| ** **                 | ** **                          |
|                       |   /s/  MICHAEL N. KENNEDY |   |
|                       | **Michael N. Kennedy**              |

 

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