Document:

Exhibit 10.1

 

LONE PINE RESOURCES INC. 2011 STOCK INCENTIVE PLAN

 

FORM OF

PHANTOM STOCK UNIT (RSU AWARD) AGREEMENT FOR

CANADIAN EMPLOYEE GRANTEES
 (CASH ONLY)

 

This Phantom Stock Unit Agreement (“Agreement”) is made as of the        day of             , 20    , between Lone Pine Resources Inc., a Delaware corporation (“Lone Pine”), and                                       (the “Employee”). For purposes of this Agreement, the term “the Company” shall include Lone Pine and its Affiliates, as defined in the Lone Pine Resources Inc. 2011 Stock Incentive Plan (the “Plan”).

 

1.             Award.  Pursuant to the Plan, as  a contingent unvested bonus for the services that the Employee has provided to the Company in Canada in [year] (the “Service Year”), Lone Pine hereby makes a grant of Phantom Stock Units (as defined below) subject to the terms and conditions contained herein and in the Plan, which is available on Lone Pine’s intranet at the following site: [                ].  The Phantom Stock Units so awarded are not in substitution for or in lieu of ordinary salary or wages of the Employee.  For paper copies of the Plan and prospectus please contact [                          ], Suite 2500, 645-7 Avenue SW, Calgary, Alberta, Canada, T2P 4G8, or call 403.        .        .

 

(a)           Units.  Pursuant to the Plan,          units (the “Phantom Stock Units”) shall be granted to the Employee as hereinafter provided and credited to a notional account maintained by Lone Pine in the Employee’s name, subject to certain restrictions thereon.  On the terms and conditions set out herein and in the Plan, the Phantom Stock Units shall be settled only in cash.  For greater certainty, no Phantom Stock Units shall have any value (monetary or otherwise) prior to the Vesting Date (as defined below).  The Phantom Stock Units constitute a “Phantom Stock Award” under the Plan.

 

(b)           Grant of Phantom Stock Units.  The Phantom Stock Units shall be granted upon acceptance hereof by the Employee.  The Employee acknowledges and agrees that this award of Phantom Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof.  In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control.

 

2.             Definitions.           For purposes of this Agreement, the following capitalized words and terms shall have the meanings indicated below:

 

(a)           “Board” shall have the meaning set forth in the Plan.

 

(b)           “Committee” shall have the meaning set forth in the Plan.

 

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

 

 

(i)            Lone Pine shall not be a surviving or continuing entity in any merger, amalgamation, consolidation or other reorganization or business combination (or survives or continues only as a subsidiary of an entity other than a previously wholly-owned subsidiary of Lone Pine);

 

(ii)           Lone Pine sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of Lone Pine);

 

(iii)          Lone Pine is to be dissolved and liquidated;

 

(iv)          any person or entity, including a “group” as contemplated by Section 13(d)(3) of the United States Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of Lone Pine’s voting stock (based upon voting power); or

 

(v)           as a result of or in connection with a contested election of directors, the persons who were directors of Lone Pine before such election shall cease to constitute a majority of the Board.

 

Notwithstanding the foregoing, the term “Corporate Change” shall not include (1) any amalgamation, merger, consolidation or other reorganization or business combination involving solely Lone Pine and one or more previously wholly-owned subsidiaries of Lone Pine or (2) a distribution, or spin-off, of some or all of the shares of Lone Pine’s common stock beneficially owned by Forest Oil Corporation to the shareholders of Forest Oil Corporation.

 

(d)           “Disability” shall mean that, as a result of the Employee’s incapacity due to physical or mental illness, the Employee 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 30 days after written notice of termination is given to the Employee by the Company (provided, however, that such notice may not be given prior to 30 days before the expiration of such six-month period).

 

(e)           “Forfeiture Restrictions” shall have the meaning specified in Section 3(a) hereof.

 

(f)            “Involuntary Termination” shall mean any termination of the Employee’s employment with the Company which does not result from (i) a resignation by the Employee, (ii) a termination as a result of death or Disability, or (iii) a termination of the Employee’s employment by the Company by reason of the Employee’s unsatisfactory performance of his duties, to be determined by the Company in its sole discretion, or final conviction of a misdemeanor involving moral turpitude or a felony.

 

(g)           “Vesting Date” shall mean the date, if any, upon which the Forfeiture Restrictions Lapse pursuant to Section 3(b) below.

 

3.             Phantom Stock Units.  The Employee hereby accepts the Phantom Stock Units when granted and agrees with respect thereto as follows:

 

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(a)           Forfeiture Restrictions.  The Phantom Stock Units granted hereunder may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of, and in the event of termination of the Employee’s employment with the Company for any reason other than death, Disability, or Involuntary Termination, the Employee shall, for no consideration, forfeit to Lone Pine all Phantom Stock Units to the extent then subject to the Forfeiture Restrictions.  The prohibition against transfer and the obligation to forfeit and surrender Phantom Stock Units to Lone Pine upon termination of employment are herein referred to as the “Forfeiture Restrictions.”

 

(b)           Lapse of Forfeiture Restrictions.  The Forfeiture Restrictions shall lapse and cease to apply to Phantom Stock Units according to the following schedule provided that the Employee has been continuously employed by the Company from the date of this Agreement through the lapse date:

 

	
Percentage of Units Vesting
    	
 
    	
Vesting Date
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

Notwithstanding the foregoing or any other provisions of this Agreement, the Forfeiture Restrictions shall lapse and cease to apply to all Phantom Stock Units not previously forfeited pursuant to Section 3(a) (and for which a Vesting Date has not previously occurred pursuant to the schedule above) on December 15th of the third calendar year following the Service Year, and such date shall be the Vesting Date of all such Phantom Stock Units.

 

Further, the Forfeiture Restrictions shall lapse and cease to apply as to all of the Phantom Stock Units then subject to the Forfeiture Restrictions, and the Vesting Date for such Phantom Stock Units shall be: (i) the date of a Corporate Change provided that the Employee has been continuously employed by the Company from the date of this Agreement to the date of such Corporate Change or (ii) the date the Employee’s employment with the Company is terminated by reason of death, Disability, or Involuntary Termination.

 

As soon as reasonably practicable after the Vesting Date, but in no event later than December 31st of the third calendar year following the Service Year (the “Expiry Date”), the Company will make payment in cash to the Employee of the value of the Phantom Stock Units with respect to which the Forfeiture Restrictions lapse and cease to apply as of such Vesting Date (determined in accordance with Section 3(c) below), subject to the Employee’s satisfaction of applicable taxes and other required source deductions (as described in Section 3(d) below).

 

If the employment of the Employee with the Company terminates prior to the lapse of the Forfeiture Restrictions, and there exists a dispute between the Employee and the Company or the Committee as to the satisfaction of the conditions to the lapse of the Forfeiture Restrictions or the terms and conditions of the grant, the Phantom Stock Units and all rights, property and interests associated therewith shall remain subject to the Forfeiture Restrictions until the resolution of such dispute, provided that, in all events, all payments made in respect of the Phantom Stock Units granted hereunder shall be made no later than the Expiry Date.

 

(c)           Settlement.  Settlement of vested Phantom Stock Units shall be made by payment from the Company of an aggregate amount equal to:

 

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The product of:

 

*                                         the Fair Market Value (as defined in the Plan) of a share of Lone Pine’s common stock on the applicable settlement date specified by the Committee,

 

multiplied by:

 

*                                         the number of Phantom Stock Units (including fractional units) then being settled in cash.

 

Any cash payment in settlement of Phantom Stock Units shall be payable in Canadian dollars, determined based on the Bank of Canada noon spot rate on the Vesting Date.

 

Notwithstanding anything to the contrary in this Agreement, all payments made in respect of any Phantom Stock Units shall be made no later than the Expiry Date.  No amounts shall be paid on or in respect of any Phantom Stock Units granted hereunder after the Expiry Date.

 

(d)           Withholding of Taxes and Other Required Source Deductions.  To the extent that the receipt of the Phantom Stock Units or the settlement of Phantom Stock Units results in employment income, compensation income, wages or other taxable income to the Employee for federal, state, provincial or local tax purposes, the Employee shall deliver to the Company at the time of such receipt or settlement, as the case may be, such amount of money (in Canadian dollars) as the Company may require to ensure that it can comply with its withholding obligations under applicable tax laws or regulations.  The Company is authorized to deduct and withhold from the amount of any cash payment to the Employee hereunder the amount of any tax or other source deductions required to be withheld by reason of employment income, compensation income, wages or other taxable income resulting under this Agreement.

 

(e)           Corporate Acts.  The existence of the Phantom Stock Units shall not affect in any way the right or power of the Board or the stockholders of Lone Pine  to make or authorize any adjustment, recapitalization, reorganization or other change in Lone Pine’s capital structure or its business, any merger, amalgamation, consolidation or other reorganization or business combination of Lone Pine, any issue of debt or equity securities, the dissolution or liquidation of Lone Pine or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding.  Prior to the settlement date, the Committee shall have the right, in its sole discretion, to determine to make or determine not to make adjustments to any Phantom Stock Units in the event of a recapitalization, reorganization or other change in Lone Pine’s capital structure or business, or any merger, amalgamation, consolidation or other reorganization or business combination as described in the Plan.

 

4.             No Rights as Stockholder.  The Phantom Stock Units represent an unsecured and unfunded right to receive a payment in cash, which right is subject to the terms, conditions and restrictions set forth in this Agreement and the Plan.  Accordingly, the Employee will have no rights as a stockholder with respect to any Phantom Stock Units covered by this Agreement.

 

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5.             Employment Relationship.  A period of notice, if any, or payment in lieu thereof, upon termination of employment, wrongful or otherwise, shall not be considered as extending the period of employment for the purposes of this Agreement. Without limiting the scope of the preceding sentence, it is expressly provided that the Employee shall be considered to have terminated employment with the Company at the time of the termination of the “Affiliate” status under the Plan of the entity or other organization that employs the Employee.  Nothing in the adoption of the Plan, nor the award of Phantom Stock Units thereunder pursuant to this Agreement, shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final.  The Employee waives any and all right to compensation or damages in consequence of termination of employment (whether lawfully or unlawfully) or otherwise whatsoever insofar as those rights arise or may arise from the Employee’s ceasing to have rights under or be entitled to receive any cash payment under the Plan as a result of such termination of employment or pursuant to Section 3(a) of this Agreement.

 

6.             Committee’s Powers.  No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering, any of the powers, rights or authority vested in the Committee pursuant to the terms of the Plan, including, without limitation, the Committee’s rights to make certain determinations and elections with respect to the Phantom Stock Units.

 

7.             Resolution of Disputes.  As a condition of the granting of the Phantom Stock Units hereby, the Employee and the Employee’s heirs, personal representatives and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Committee in its sole discretion and judgment, and that any such determination and any interpretation by the Committee of this Agreement shall be final and shall be binding and conclusive, for all purposes, upon the Company, the Employee, the Employee’s heirs, personal representatives and successors or any person or entity claiming through any of them.

 

8.             Binding Effect.  This Agreement shall be binding upon and inure to the benefit of any successor to the Company and all persons lawfully claiming under the Employee.

 

9.             Entire Agreement; Amendment. This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and Lone Pine with respect to the subject matter of this Agreement.  This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of Lone Pine who is expressly authorized by Lone Pine to execute such document.  Any modification of this Agreement shall be effective only if it is in writing and signed by both the Employee and an authorized officer of Lone Pine.

 

10.           Notices.  Any notices or other communications provided for in this Agreement shall be sufficient if in writing.  In the case of the Employee, such notices or communications shall be effectively delivered if hand delivered to the Employee or if sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In

 

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the case of Lone Pine, such notices or communications shall be effectively delivered if sent by registered or certified mail to Lone Pine at its principal executive offices.

 

11.           Clawback.  Notwithstanding any provisions in this Agreement to the contrary, any portion of the payments and benefits provided under this Agreement shall be subject to a clawback to the extent necessary to comply with applicable law including, without limitation, the requirements of the United States Dodd-Frank Wall Street Reform and Consumer Protection Act or any United States Securities and Exchange Commission rule.

 

12.          Controlling Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

IN WITNESS WHEREOF, Lone Pine has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date first above written.

 

	
 
    	
LONE   PINE RESOURCES INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
[name]
    
	
 
    	
[title]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Employee Name]
    

 

6Exhibit 10.2

 

FORM OF

SEVERANCE AGREEMENT

 

SEVERANCE AGREEMENT (this “Agreement”) dated as of                 , 20     between LONE PINE RESOURCES INC., a Delaware corporation (the “Company”), with its principal offices located at Suite 2500, 645-7 Avenue SW, Calgary, Alberta, and David M. Anderson (“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 its subsidiaries; 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.

 

(b)   “Change in Duties” shall mean the occurrence of any one or more of the following:

 

(i)    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;

 

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

 

(iii)  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 employees 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;

 

Confidential

 

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(iv)  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 employees with comparable duties or (B) the employee benefits and perquisites to which he was entitled immediately prior to the date on which a Change of Control occurs; or

 

(v)   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)    The acquisition by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act) (an “Acquiring Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subparagraph (i) any acquisition by any Acquiring Person pursuant to a transaction which complies with clause (iii)(1) of this definition shall not constitute a Change of Control; or

 

(ii)   Individuals, who, on the date immediately following the Effective Date, are members of the Board (the “Incumbent Directors”), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the then Incumbent Directors shall be deemed for purposes of this definition to thereafter be an Incumbent Director, but excluding, for these purposes, any such individual whose initial assumption of office as a director occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of an Acquiring Person other than the Board; or

 

(iii)  The consummation of a reorganization, merger, consolidation amalgamation or other business combination of the Company or any of its subsidiaries, or the sale, lease or other disposition of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole (other than to an entity wholly owned, directly or indirectly, by the Company), or the liquidation or dissolution of the Company (any of the foregoing being a “Corporate Transaction”), unless, following such Corporate Transaction, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Company (if it be the ultimate parent entity following such Corporate Transaction) or the corporation resulting from such Corporate Transaction (or the ultimate parent entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), and (2) at least a majority of the members of the board of directors of the ultimate parent entity resulting from such Corporate Transaction were members of the Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such 

 

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Corporate Transaction. For purposes of the foregoing sentence, only (A) shares of common stock and voting securities of the Company, assuming the Company is the ultimate parent entity following such Corporate Transaction, held by a beneficial owner immediately prior to such Corporate Transaction and any additional shares of common stock and voting securities of the Company issuable to such beneficial owner in connection with such Corporate Transaction in respect of the shares of common stock and voting securities of the Company held by such beneficial owner immediately prior to such Corporate Transaction, or (B) shares of common stock and voting securities of the ultimate parent entity following such Corporate Transaction, assuming the Company is not the ultimate parent entity following such Corporate Transaction, issuable to a beneficial owner in respect of the shares of common stock and voting securities of the Company held by such beneficial owner immediately prior to such Corporate Transaction, in either case shall be included in determining whether or not the fifty percent (50%) ownership test in this subparagraph (iii) has been satisfied.

 

Notwithstanding the preceding provisions of this Paragraph 1(c), in no event shall any of the following constitute a Change of Control: (x) an initial public offering of the Company’s common stock; or (y) a distribution, or spin-off, of some or all of the remaining shares of the Company’s common stock beneficially owned by Forest to the shareholders of Forest.

 

(d)   “Compensation Committee” shall mean the Compensation Committee of the Board; provided, however, that if at any time the Board does not have a standing Compensation Committee, then the term “Compensation Committee” shall mean 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)    “Effective Date” shall mean the first date on which the proceeds of any sale of the Company’s common stock to the underwriters of the initial public offering of the Company’s common stock are received.

 

(g)   “Exchange Act” shall mean the United States Securities Exchange Act of 1934, as amended.

 

(h)   “Forest” shall mean Forest Oil Corporation, a New York corporation.

 

(i)    “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 (i)); 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 or otherwise becomes subject to 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.

 

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

 

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

 

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(l)    “Severance Period” shall mean a period commencing on the date Executive’s employment by the Company or any subsidiary thereof or successor thereto is subject to an Involuntary Termination and continuing for twenty-four months.

 

(m)  “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 misdemeanor involving moral turpitude or a felony.

 

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 Within Two Years After a Change of Control.  Subject to the provisions of Paragraph 5(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 the date that is 60 days after the date of Executive’s Involuntary Termination.

 

(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 (or to receive equivalent benefits) throughout the Severance Period, without any cost to Executive; provided, however, that (i) such coverage shall terminate if and to the extent Executive and such dependents become 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.

 

(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 non-qualified deferred compensation plan, then the preceding provisions of this paragraph shall govern and control.

 

4.  Interest on Late Payments.  If any payment provided for in Paragraph 3(a) hereof is not made when due, 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 rate of interest for Canadian dollar loans announced by JPMorgan Chase Bank, N.A., Toronto Branch (or any successor thereto), on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.

 

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5.  General.

 

(a)  Term.  This Agreement shall be effective as of the Effective Date; provided, however, that if the Effective Date has not occurred on or before                 , 2011, then this Agreement shall be void ab initio. Within thirty (30) days after the date that is thirty months after the Effective Date and within thirty (30) days after each successive thirty-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, 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 rate of interest for Canadian dollar loans announced by JPMorgan Chase Bank, N.A., Toronto Branch (or any successor thereto), on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.

 

(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 Paragraph 3(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.

 

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(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 Province of Alberta, Canada.

 

(i)  Release.  As a condition to the receipt of any benefit under Paragraph 3 hereof, Executive shall first execute a release, in the form established by the Company, releasing the Company, its subsidiaries and their respective stockholders, 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 any subsidiary or the termination of such employment. The release described in the preceding sentence must be effective and irrevocable within 55 days after the date of the termination of Executive’s employment with the Company.

 

(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 or any of its subsidiaries on account of the termination of Executive’s employment, whether under contract, common law, statute or otherwise, and Executive shall not have and, subject to receiving the benefits provided hereunder, does hereby waive any entitlement to further or additional severance benefits.

 

(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)  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.

 

(m)  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. In addition, as of the Effective Date, that certain Severance Agreement dated as of August 11, 2008, as amended, by and between Executive and Forest shall be terminated. The provisions of the preceding sentence shall be for the benefit of, and enforceable by, Forest. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

 

[Signatures begin on the following page.]

 

6

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written, effective as of the Effective Date.

 

	
 
    	
“EXECUTIVE”
    
	
 
    	
 
    
	
 
    	
 David M.   Anderson
    
	
 
    	
 
    
	
 
    	
“COMPANY”
    
	
 
    	
 
    
	
 
    	
LONE PINE RESOURCES INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

7

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