EXHIBIT 10.1


 


[Severance
Agreement — Grandfathered Senior VP Form — Dec. 2007]


 


SEVERANCE
AGREEMENT


 


SEVERANCE
AGREEMENT (the “Agreement”)
dated as of December 17, 2007 between FOREST OIL CORPORATION, a New
York corporation (the “Company”), with its offices located at 707 Seventeenth
Street, Suite 3600, Denver, Colorado 80202 and
                                  
(“Executive”),


 


W I T N E S S E T H


 


WHEREAS, the Company desires to attract and retain certain key
employee personnel and, accordingly, the Board of Directors of the Company (the
“Board”) has approved the Company entering into a severance agreement with
Executive in order to encourage his continued service to the Company;


 


WHEREAS, Executive is prepared to commit such services in return
for specific arrangements with respect to severance compensation and other
benefits;


 


WHEREAS,
Executive will receive and/or has received proprietary and confidential trade
secret information of the Company; and


 


WHEREAS,
Executive will serve and/or has served as an executive, management personnel,
or officer of the Company;


 


NOW,
THEREFORE, in
consideration of the foregoing and for other good and valuable consideration,
the Company and Executive agree as follows:


 


1.             Definitions.


 


                (a)           “Annual Compensation” shall mean an
amount equal to the greater of:


 


(i)            Executive’s annual base salary at the annual rate in
effect at the date of his Involuntary Termination;


 


(ii)           Executive’s annual base salary at the annual rate in
effect sixty days prior to the date of his Involuntary Termination; or


 


(iii)          Executive’s annual base salary at the annual rate in effect
immediately prior to a Change of Control if Executive’s employment shall be
subject to an Involuntary Termination within two years after such Change of
Control.


 


Notwithstanding the foregoing, if
Executive’s employment shall be subject to an Involuntary Termination within
two years after such Change of Control, then the amount determined pursuant to
the preceding sentence shall be increased by the amount of the Annual Bonus.  For purposes of the preceding sentence, the
term ‘Annual Bonus’ shall mean the annual bonus most recently paid by the
Company to Executive prior to the date of his Involuntary Termination;
provided, however, that if Executive was employed by the Company for only a
portion of the 


 


1

















 


year with respect to which such bonus
was paid, then the ‘Annual Bonus’ shall equal an amount determined by
annualizing the bonus received by Executive based on the ratio of the number of
days Executive was employed by the Company during such year to 365 days;
provided, further, that if Executive has not received an annual bonus from the
Company at any time prior to the date of his Involuntary Termination, then the ‘Annual
Bonus’ shall equal the amount of Executive’s target annual bonus for the year
in which such termination occurs.


 


(b)                                 “Change in Duties” shall mean:


 


(i)            The occurrence, prior to a Change of
Control or after the date which is two years after a Change of Control occurs,
of any one or more of the following:


 


                (1)           A significant change in the nature or
scope of Executive’s authorities or duties from those previously applicable to
him;


 


(2)           A
reduction in Executive’s base salary from that provided to him immediately
prior to the effective date of this Agreement (or the effective date of any
extension of this Agreement pursuant to Paragraph 7(a)); or


 


(3)           A
diminution in employee benefits (including but not limited to medical, dental,
life insurance and long-term disability plans) and perquisites applicable to
Executive from those substantially similar to the employee benefits and
perquisites provided by the Company (including its subsidiaries) to executives
with comparable duties; or


 


(ii)           The
occurrence, within two years after the date upon which a Change of Control
occurs, of any one or more of the following:


 


(1)           A
significant change in the nature or scope of Executive’s authorities or duties
from those applicable to him immediately prior to the date on which a Change of
Control occurs;


 


(2)           A
reduction in Executive’s base salary from that provided to him immediately
prior to the date on which a Change of Control occurs;


 


(3)           A
diminution in Executive’s eligibility to participate in bonus, stock option,
incentive award and other compensation plans which provide opportunities to
receive compensation which are the greater of (A) the opportunities
provided by the Company (including its subsidiaries) for executives with
comparable duties or (B) the opportunities under any such plans under
which he was participating immediately prior to the date on which a Change of
Control occurs;


 


(4)           A
diminution in employee benefits (including but not limited to medical, dental,
life insurance and long-term disability plans) and perquisites applicable to
Executive from the greater of (A) the employee benefits and perquisites
provided by the Company (including its subsidiaries) to executives with
comparable duties or (B) the employee 


 


2

















 


benefits
and perquisites to which he was entitled immediately prior to the date on which
a Change of Control occurs; or


 


                                (5)           A change in the location of Executive’s
principal place of employment by the Company (including its subsidiaries) by
more than 50 miles from the location where he was principally employed
immediately prior to the date on which a Change of Control occurs.


 


                (c)           “Change of Control” shall mean the
occurrence of any one of the following events:


 


(i)            Any one person, or more than one
person Acting as a Group (as hereinafter defined), acquires ownership of stock
of the Company that, together with stock held by such person or group,
constitutes more than 50% of the total fair market value or total voting power
of the stock of the Company; provided, however, that if any one person, or more
than one person Acting as a Group, is considered to own more than 50% of the
total fair market value or total voting power of the stock of the Company, the
acquisition of additional stock by the same person or group does not cause a
Change of Control within the meaning of this Paragraph 1(c)(i); and provided,
further, that an increase in the percentage of stock owned by any one person,
or persons Acting as a Group, as a result of a transaction in which the Company
acquires its stock in exchange for property will be treated as an acquisition
of stock for purposes of this Paragraph 1(c)(i); and provided, further, that
this Paragraph 1(c)(i) applies to cause a Change of Control only when
there is a transfer of stock of the Company (or issuance of stock of the
Company) and stock in the Company remains outstanding after the transaction;
and provided, further, that, if any person, or more than one person Acting as a
Group, is considered to have met the control requirements of Paragraph 1(c)(ii) below,
the acquisition of additional control by the same person or group will not
cause a Change of Control within the meaning of this Paragraph 1(c)(i); or


 


(ii)           A majority of the members of the
Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board before the
date of such appointment or election; provided, however, that, if any person,
or more than one person Acting as a Group, is considered to have met the
control requirements of this Paragraph 1(c)(ii), the acquisition of additional
control by the same person or group will not cause a Change of Control within
the meaning of this Paragraph 1(c)(ii); or


 


(iii)          Any one person, or more than one
person Acting as a Group, acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or group)
assets from the Company that have a total “gross fair market value” equal to or
more than 60% of the total “gross fair market value” of all the assets of the
Company immediately before such acquisition or acquisitions; provided, however,
that there is no Change of Control under this Paragraph 1(c)(iii) where
there is a transfer to an entity  that is
controlled by the shareholders of the Company immediately after the transfer,
as provided in the following proviso; and, provided, further, that a transfer
of assets by the Company shall not be treated as change in the ownership of
such assets if the assets are transferred to (1) a shareholder of the
Company (immediately before the asset transfer) in exchange for or with respect
to its stock, (2) an entity, 50% or more of the total value or voting
power of which is owned, directly or 


 


3

















 


indirectly,
by the Company, (3) a person, or more than one person Acting as a Group,
that owns, directly or indirectly, 50% or more of the total value or voting
power of all the outstanding stock of the Company, or (4) an entity, at
least 50% of the total value or voting power of which is owned, directly or
indirectly, by a person described in clause (3) of this proviso.  For purposes of this Paragraph 1(c)(iii), “gross
fair market value” means the value of the assets of the Company, or the value
of the assets being disposed of, determined without regard to any liabilities
associated with such assets.


 


For
purposes of this Paragraph 1(c), (x) Section 318(a) of the Code
applies to determine stock ownership, and (y) the term “Acting as a Group”
means “acting as a group” within the meaning of Treasury Regulation section
1.409A-3(i)(5)(v)(B), (vi)(D), or (vii)(C), as applicable.  The definition of Change of Control under
this Paragraph 1(c) is intended to comply with applicable definitions and
requirements of Section 409A(a)(2)(A)(v) of the Code and Treasury
Regulation section 1.409A-3(i)(5) that correspond to the change of control
events described above, and shall be interpreted consistently therewith.


 


(1)           “Code” shall mean the Internal
Revenue Code of 1986, as amended.”


 


(d)           “Compensation
Committee” shall mean the Compensation Committee of the Board.


 


(e)           “Disability”
shall mean that, as a result of Executive’s incapacity due to physical or
mental illness, he shall have been absent from the full-time performance of his
duties for six-consecutive months and he shall not have returned to full-time
performance of his duties within thirty days after written notice of
termination is given to Executive by the Company (provided, however, that such
notice may not be given prior to thirty days before the expiration of such
six-month period).


 


(f)            “Involuntary
Termination” shall mean any termination of Executive’s employment with the
Company which:


 


(i)            does
not result from a resignation by Executive (other than a resignation pursuant
to clause (ii) of this subparagraph (f)); or


 


(ii)           results
from a resignation by Executive on or before the date which is sixty days after
the date upon which Executive receives notice of a Change in Duties;


 


provided,
however, the term “Involuntary Termination” shall not include a Termination for
Cause or any termination as a result of death, Disability, or Retirement.  For all purposes of this Agreement, Executive
shall be considered to have terminated employment with the Company when
Executive incurs a “separation from service” with the Company within the
meaning of Section 409A(a)(2)(A)(i) of the Code and applicable
administrative guidance issued thereunder.


 


                (g)           “Monthly Severance Amount” shall mean an amount equal to
one-twelfth of Executive’s Annual Compensation.


 


4

















 


(h)           “Retirement”
shall mean Executive’s resignation on or after the date he reaches age
sixty-five.


 


(i)            “Severance
Amount” shall mean an amount equal to 2.5 times Executive’s Annual
Compensation.


 


(j)            “Severance Period” shall mean:


 


(i)            in the case of an Involuntary Termination which occurs
prior to a Change of Control or after the date which is two years after a
Change of Control occurs, a period commencing on the date of such Involuntary
Termination and continuing for a number of months (not in excess of thirty
months) equal to the whole number of times that Executive’s Annual Compensation
can be divided by $10,000; or


 


(ii)           in
the case of an Involuntary Termination which occurs within two years after the
date upon which a Change of Control occurs, a period commencing on the date of
such Involuntary Termination and continuing for thirty months.


 


(k)           “Termination
for Cause” shall mean termination of Executive’s employment by the Company (or
its subsidiaries) by reason of Executive’s (i) gross negligence in the
performance of his duties, (ii) willful and continued failure to perform
his duties, (iii) willful engagement in conduct which is materially injurious
to the Company or its subsidiaries (monetarily or otherwise) or (iv) conviction
of a felony or a misdemeanor involving moral turpitude.


 


2.             Services.  Executive agrees that he will render services
to the Company (as well as any subsidiary thereof or successor thereto) during
the period of his employment to the best of his ability and in a prudent and
businesslike manner and that he will devote substantially the same time,
efforts and dedication to his duties as heretofore devoted.


 


3.             Termination Other Than Within Two Years
After a Change of Control. 
Subject to the provisions of Paragraph 7(i) hereof, if Executive’s
employment by the Company or any subsidiary thereof or successor thereto shall
be subject to an Involuntary Termination which occurs prior to a Change of
Control or after the date which is two years after a Change of Control occurs,
then the Company will, as additional compensation for services rendered to the
Company (including its subsidiaries), pay to Executive the following amounts
(subject to any applicable payroll or other taxes required to be withheld and
any employee benefit premiums) and take the following actions after the last
day of Executive’s employment with the Company:


 


                (a)           Pay Executive the Monthly Severance
Amount on the first day of each month throughout the Severance Period;
provided, however, that in the event Executive obtains new employment during
the Severance Period, each such monthly payment shall be reduced by 50%
beginning with the payment next due after the date Executive obtains such new
employment.  Executive shall promptly
report any such new employment to the Company. 
For purposes of this Paragraph 3(a), the term “employment” shall include
(i) any employment as an employee or (ii) the conduct of any trade or
business (whether as a sole proprietor, independent contractor or 


 


5

















 


otherwise) by Executive in which he is
expected to render personal services for more than 40 hours in any given month
during the Severance Period.


 


(b)           Cause Executive and those of his
dependents (including his spouse) who were covered under the Company’s medical
and dental benefit plans on the day prior to Executive’s Involuntary
Termination to continue to be covered under such plans throughout the Severance
Period, without any cost to Executive; provided, however, that (i) such
coverage shall terminate if and to the extent Executive becomes eligible to
receive medical and dental coverage from a subsequent employer (and any such
eligibility shall be promptly reported to the Company by Executive) and (ii) if
Executive (and/or his spouse) would have been entitled to retiree medical
and/or dental coverage under the Company’s plans had he voluntarily retired on
the date of such Involuntary Termination, then such coverages shall be
continued as provided under such plans. 
The coverage described in the preceding sentence shall be provided
through an arrangement that satisfies the requirements of Sections 105 and 106
of the Code such that the benefits or reimbursements under such arrangement are
not includible in Executive’s income (and, if continued coverage under the
Company’s plans does not satisfy this requirement, then the Company shall
arrange for substantially comparable coverage to be provided under one or more
insurance policies that will satisfy this requirement).


 


4.             Termination Within Two Years After a
Change of Control. 
Subject to the provisions of Paragraph 7(i) hereof, if Executive’s
employment by the Company or any subsidiary thereof or successor thereto shall
be subject to an Involuntary Termination which occurs within two years after
the date upon which a Change of Control occurs, then the Company will, as
additional compensation for services rendered to the Company (including its subsidiaries),
pay to Executive the following amounts (subject to any applicable payroll or
other taxes required to be withheld and any employee benefit premiums) and take
the following actions after the last day of Executive’s employment with the
Company:


 


(a)           Pay
Executive a lump sum cash payment in an amount equal to the Severance Amount on
or before the fifth day after the effective date of the release described in
Paragraph 7(i) hereof.


 


(b)           Cause
Executive and those of his dependents (including his spouse) who were covered
under the Company’s medical and dental benefit plans on the day prior to
Executive’s Involuntary Termination to continue to be covered under such plans
throughout the Severance Period, without any cost to Executive; provided,
however, that (i) such coverage shall terminate if and to the extent
Executive becomes eligible to receive medical and dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to the
Company by Executive) and (ii) if Executive (and/or his spouse) would have
been entitled to retiree medical and/or dental coverage under the Company’s
plans had he voluntarily retired on the date of such Involuntary Termination,
then such coverages shall be continued as provided under such plans.  The coverage described in the preceding
sentence shall be provided through an arrangement that satisfies the
requirements of Sections 105 and 106 of the Code such that the benefits or 


 


6

















 


reimbursements
under such arrangement are not includible in Executive’s income (and, if
continued coverage under the Company’s plans does not satisfy this requirement,
then the Company shall arrange for substantially comparable coverage to be
provided under one or more insurance policies that will satisfy this
requirement).


 


(c)           Cause
any and all outstanding options to purchase common stock of the Company held by
Executive to become immediately exercisable in full and cause Executive’s
accrued benefits under any and all nonqualified deferred compensation plans
sponsored by the Company to become immediately nonforfeitable. If and to the
extent that the preceding provisions of this paragraph are inconsistent or
conflict with the terms of any stock option agreement or nonqualified deferred
compensation plan, then the preceding provisions of this paragraph shall govern
and control.


 


(d)           Cause
any and all outstanding options to purchase common stock of the Company held by
Executive to remain exercisable for twelve months after the last day of
Executive’s employment with the Company (but in no event shall any such option
be exercisable for (i) a longer period than the original term of such
option (but in no event after the 10th anniversary of the original
date of grant of such option) or (ii) a shorter period than that already
provided for under the terms of such option). 
If and to the extent that the preceding provisions of this paragraph are
inconsistent or conflict with the terms of any stock option agreement, then the
preceding provisions of this paragraph shall govern and control.


 


5.             Interest on Late Payments.  If any payment
provided for in Paragraph 3(a) or Paragraph 4(a) hereof is not made
when due (determined after giving effect to any delay in such payment required
pursuant to Paragraph 7(i)(2) hereof), the Company shall pay to Executive
interest on the amount payable from the date that such payment should have been
made under such paragraph until such payment is made, which interest shall be
calculated at 10% plus the prime or base rate of interest announced by JPMorgan
Chase Bank (or any successor thereto) at its principal office in New York on a
non-compounded basis, and shall change when and as any such change in such
prime or base rate shall be announced by such bank.


 


6.             Certain
Additional Payments by the Company.


 


(a)           Notwithstanding
anything to the contrary in this Agreement, in the event that any payment or
distribution by the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended, or any interest or penalties
with respect to such excise tax (such excise tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise
Tax”), the Company shall pay to Executive an additional payment (a “Gross-up
Payment”) in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments.  The Gross-up Payment
attributable to a particular Payment shall be made at the time such Payment is
made; provided, however, that in no event shall the Gross-up Payment be made
later than the end of Executive’s taxable year next following Executive’s
taxable year in which Executive remits the related taxes. The Company and 


 


7

















 


Executive
shall make an initial determination as to whether a Gross-up Payment is
required and the amount of any such Gross-up Payment.  Executive shall notify the Company
immediately in writing of any claim by the Internal Revenue Service which, if
successful, would require the Company to make a Gross-up Payment (or a Gross-up
Payment in excess of that, if any, initially determined by the Company and Executive)
within five days of the receipt of such claim. 
The Company shall notify Executive in writing at least five days prior
to the due date of any response required with respect to such claim if it plans
to contest the claim.  If the Company
decides to contest such claim, Executive shall cooperate fully with the Company
in such action; provided, however, the Company shall bear and pay directly or
indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold 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 the Company’s
action.  If, as a result of the Company’s
action with respect to a claim, Executive receives a refund of any amount paid
by the Company with respect to such claim, Executive shall promptly pay such
refund to the Company.  If the Company
fails to timely notify Executive whether it will contest such claim or the
Company determines not to contest such claim, then the Company shall
immediately pay to Executive the portion of such claim, if any, which it has
not previously paid to Executive.


 


(b)           On
or before the date upon which a Change of Control occurs (the “Change of
Control Date”), the Compensation Committee shall make a determination under the
Company’s annual incentive plan as to whether bonuses under such plan for the
year during which the Change of Control Date occurs are due based on partial
year results through the Change of Control Date, and, if the Compensation
Committee determines that such bonuses are due, then the Compensation Committee
shall also determine the amount of such bonus that shall be paid to Executive.  On or before the Change of Control Date, the
Company shall pay to Executive the amount of Executive’s bonus that has been
determined by the Compensation Committee in accordance with the preceding
sentence.


 


7.             General.


 


(a)           Term. 
The effective date of this Agreement is December 17, 2007.  Within thirty (30) days after June 17,
2010 and within thirty (30) days after each successive thirty (30)-month period
of time thereafter that this Agreement is in effect, the Company shall have the
right to review this Agreement, and in its sole discretion either continue and
extend this Agreement, terminate this Agreement, and/or offer Executive a
different agreement.   The Compensation
Committee (excluding any member of the Compensation Committee who is covered by
this Agreement or by a similar agreement with the Company) will vote on whether
to so extend, terminate, and/or offer Executive a different agreement and will
notify Executive of such action within said thirty-day time period mentioned
above.  This Agreement shall remain in
effect until so terminated and/or modified by the Company.  Failure of the Compensation Committee to take
any action within said thirty days shall be considered as an extension of this
Agreement for an additional thirty-month period of time.  Notwithstanding anything to the contrary
contained in this “sunset provision”, it is agreed that if a Change of Control
occurs while this Agreement is in effect, then this Agreement shall not be
subject to termination or modification under this “sunset provision”, and shall
remain in force for a period of thirty months after such Change of Control, 


 


8

















 


and
if within said thirty months the contingency factors occur which would entitle
Executive to the benefits as provided herein, this Agreement shall remain in
effect in accordance with its terms.  If,
within such thirty months after a Change of Control, the contingency factors
that would entitle Executive to said benefits do not occur, thereupon this
thirty-month “sunset provision” shall again be applicable with the thirty-day
time period for Compensation Committee action to thereafter commence at the
expiration of said thirty months after such Change of Control and on each
thirty-month anniversary date thereafter.


 


(b)           Indemnification.  If Executive shall obtain any money judgment
or otherwise prevail with respect to any litigation brought by Executive or the
Company to enforce or interpret any provision contained herein, the Company, to
the fullest extent permitted by applicable law, hereby indemnifies Executive
for his reasonable attorneys’ fees and disbursements incurred in such
litigation and hereby agrees (i) to pay in full all such fees and
disbursements and (ii) to pay prejudgment interest on any money judgment
obtained by Executive from the earliest date that payment to him should have
been made under this Agreement until such judgment shall have been paid in
full, which interest shall be calculated at 10% plus the prime or base rate of
interest announced by JP Morgan Chase Bank (or any successor thereto) at its
principal office in New York on a non-compounded basis, and shall change when
and as any such change in such prime or base rate shall be announced by such
bank. Any reimbursement of reasonable attorneys’ fees and disbursements
required under this Paragraph 7(b) shall be made not later than the close
of Executive’s taxable year following the taxable year in which Executive
incurs the expense; provided, however, that, upon Executive’s termination of
employment with the Company, in no event shall any additional reimbursement be
made prior to the date that is six months after the date of Executive’s
termination of employment to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of
the Code.  In no event shall any
reimbursement be made to Executive for such fees and disbursements incurred
after the later of (A) Executive’s death or (B) the date that is 10
years after the date of Executive’s termination of employment with the Company.


 


(c)           Payment
Obligations Absolute.  The Company’s obligation to pay (or cause one
of its subsidiaries to pay) Executive the amounts and to make the arrangements
provided herein shall be absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Company (including its
subsidiaries) may have against him or anyone else.  All amounts payable by the Company (including
its subsidiaries hereunder) shall be paid without notice or demand.  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, except as provided in Paragraphs
3(a), 3(b) and 4(b) hereof, the obtaining of any such other
employment shall in no event effect any reduction of the Company’s obligations
to make (or cause to be made) the payments and arrangements required to be made
under this Agreement.


 


(d)           Successors.  This Agreement
shall be binding upon and inure to the benefit of the Company and any successor
of the Company, by merger or otherwise. 
This Agreement shall also be binding upon and inure to the benefit of
Executive and his estate.  If Executive
shall die prior to full payment of amounts due pursuant to this Agreement, such
amounts shall be payable pursuant to the terms of this Agreement to his estate.


 


9

















 


(e)           Severability.  Any provision in
this Agreement which is prohibited or unenforceable in any jurisdiction by
reason of applicable law shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without invalidating or
affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


(f)            Non-Alienation.  Executive shall not
have any right to pledge, hypothecate, anticipate or assign this Agreement or
the rights hereunder, except by will or the laws of descent and distribution.


 


(g)           Notices.  Any notices or
other communications provided for in this Agreement shall be sufficient if in
writing.  In the case of Executive, such
notices or communications shall be effectively delivered if hand delivered to
Executive at his principal place of employment or if sent by registered or
certified mail to Executive at the last address he has filed with the
Company.  In the case of the Company,
such notices or communications shall be effectively delivered if sent by
registered or certified mail to the Company at its principal executive offices.


 


(h)           Controlling
Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado.


 


(i)            Release, Covenant Not to Compete or
Solicit, and Delayed Payment Restriction.


 


(1)           As a condition to the receipt of any
benefit under Paragraph 3 or 4 hereof, Executive shall first execute a release,
in the form established by the Company, releasing the Company, its
shareholders, partners, officers, directors, employees and agents from any and
all claims and from any and all causes of action of any kind or character,
including but not limited to all claims or causes of action arising out of
Executive’s employment with the Company or the termination of such
employment.  In the event that Executive
is to receive benefits under Paragraph 3, the release shall also contain a
covenant obligating Executive, for a period lasting 2 years from the effective
date of the release, (i) not to compete with the Company in or reasonably
near all geographic areas in which Executive devoted efforts during the 2-year
period immediately preceding his termination from the Company, as determined by
the Company in its sole discretion, and (ii) not to solicit the employment
of any employees of the Company without advance written consent of the Company,
which consent may be withheld for any reason.


 


(2)           The release described in Paragraph
7(i)(1) hereof must be effective and irrevocable within 55 days after the
date of the termination of Executive’s employment with the Company.  Notwithstanding any provision in this
Agreement to the contrary, if the payment of any amount or benefit under this
Agreement would be subject to additional taxes and interest under Section 409A
of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of
the Code and the regulations thereunder, then any such payment or benefit that
Executive would otherwise be entitled to during the first six months following
the date of Executive’s termination of employment shall be accumulated and paid
or provided, as applicable, on the date that is six months after the date of
Executive’s termination of employment (or if such date does not fall on a
business day of the Company, the next following business day of the Company),
or such earlier date upon which such amount can be paid or provided under 


 


10

















 


Section 409A of the
Code without being subject to such additional taxes and interest.  If this Paragraph 7(i)(2) becomes
applicable such that the payment of any amount is delayed, any payments that
are so delayed shall accrue interest on a non-compounded basis, from the date
such payment would have been made had this Paragraph 7(i)(2) not applied
to the actual date of payment, at the prime or base rate of interest announced
by JPMorgan Chase Bank (or any successor thereto) at its principal office in
New York on the date of Executive’s termination of employment (or the first
business day following such date if such termination does not occur on a
business day) and shall be paid in a lump sum on the actual date of payment of
the delayed payment amount.  Executive
hereby agrees to be bound by the Company’s determination of its “specified
employees” (as such term is defined in Section 409A of the Code) in
accordance with any of the methods permitted under the regulations issued under
Section 409A of the Code.


 


(j)            Full Settlement.  If Executive is entitled to and receives the
benefits provided hereunder, performance of the obligations of the Company
hereunder will constitute full settlement of all claims that Executive might
otherwise assert against the Company on account of his termination of
employment.


 


(k)           Unfunded Obligation.  The obligation to pay amounts under this
Agreement is an unfunded obligation of the Company (including its
subsidiaries), and no such obligation shall create a trust or be deemed to be
secured by any pledge or encumbrance on any property of the Company (including
its subsidiaries).


 


(l)            Not a Contract of Employment.  This Agreement shall not be deemed to
constitute a contract of employment, nor shall any provision hereof affect (a) the
right of the Company (or its subsidiaries) to discharge Executive at will or (b) the
terms and conditions of any other agreement between the Company and Executive
except as provided herein.


 


(m)          Number and Gender.  Wherever appropriate herein, words used in
the singular shall include the plural and the plural shall include the
singular.  The masculine gender where
appearing herein shall be deemed to include the feminine gender.


 


(n)           Entire Agreement.  This Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all the covenants, promises, representations, warranties and agreements between
the parties with respect to such subject matter. Without limiting the scope of
the preceding sentence, all understandings and agreements preceding the date of
execution of this Agreement and relating to the subject matter hereof are
hereby null and void and of no further force and effect, including, without
limitation, all prior Severance Agreements, if any, by and between the Company
and Executive. Any modification of this Agreement will be effective only if it
is in writing and signed by the party to be charged.


 


11

















 


IN WITNESS WHEREOF,
the parties hereto have executed this Agreement effective as


 


	
  “EXECUTIVE”

  
	
   

  
	
   

  
	
  [Name]

  
	
   

  	
   

  
	
  “COMPANY”

  
	
   

  	
   

  
	
  FOREST
  OIL CORPORATION

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  H.
  Craig Clark

  
	
   

  	
  President &
  Chief Executive Officer

  
			



 


12