Exhibit
10.1
UNIT
CORPORATION AMENDED AND RESTATED
KEY
EMPLOYEE CHANGE OF CONTROL CONTRACT
This
Agreement is entered into effective as of the 19th day of August, 2008 by and
between Unit Corporation, a Delaware corporation (the “
Company
”)
and [●] (the “
Executive
”).
WHEREAS,
the Board of Directors of the Company (the “
Board
”)
has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Section
2) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive’s full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which provide the Executive with
compensation and benefits arrangements that are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Agreement. [The
Company previously entered into a Key Employee Change of Control Contract with
the Executive dated as of [●] (the “Prior Agreement”). Due to the
adoption of Section 409A of the Internal Revenue Code of 1986, as amended, the
Prior Agreement must be amended, and in connection with such review process,
additional revisions to the Prior Agreement have been made. In order
to accomplish these objectives, the Board has caused the Company to enter into
this Agreement, which upon execution will supersede and replace the Prior
Agreement.]
NOW,
THEREFORE, it is hereby agreed as follows:
(a) The
“
Effective Date
”
shall mean the first
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control (as defined in Section 2) occurs. Anything in
this Agreement to the contrary notwithstanding, if the Executive’s employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii) otherwise
arose in connection with or anticipation of a Change of Control (such a
termination of employment, an “Anticipatory Termination”), then for all purposes
of this Agreement the “Effective Date” shall mean the date immediately prior to
the date of such termination of employment.
(b) The
“
Change of Control
Period
”
shall mean the period
commencing on the date hereof and ending on the third anniversary of the date
hereof; provided, however, that commencing on the date one year after the date
hereof, and on each annual anniversary of such
date
(such date and each annual anniversary thereof shall be hereinafter referred to
as the “
Renewal
Date
”),
unless previously
terminated, the Change of Control Period shall be automatically extended so as
to terminate three years from such Renewal Date, unless at least 90 days prior
to the Renewal Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
For the
purpose of this Agreement, a “
Change of Control
”
shall mean:
(a) Any
individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”))
(a “
Person
”)
becomes the beneficial
owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
15% or more of either (i) the then outstanding shares of common stock of the
Company (the “
Outstanding
Company Common Stock
”)
or (ii) 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 subsection (a), the following shall not constitute a Change
of Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any company controlled by,
controlling or under common control with the Company (each, an “
Affiliated
Company
”), (iv) any acquisition pursuant to a transaction
which complies with Sections 2(c)(i), 2(c)(ii) and 2(c)(iii) or (v) if the Board
determines in good faith that a Person became the beneficial owner of 15% or
more of the Outstanding Company Common Stock inadvertently and without any
intention of changing or influencing control of the Company, unless and until
such Person shall have failed to divest itself, as soon as practicable (as
determined, in good faith, by the Board of Directors of the Company), of
beneficial ownership of a sufficient number of Outstanding Company Common Stock
so that such Person's beneficial ownership of Outstanding Company Common Stock
would no longer otherwise qualify as a Change of Control; or
(b) Individuals
who, as of the date hereof, constitute the Board (the “
Incumbent Board
”)
cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual was a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office 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 a Person other than the
Board; or
(c) Consummation
by the Company of a reorganization, merger, statutory share exchange or
consolidation or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company or the acquisition of assets or stock of another entity by
the Company or any of its subsidiaries (each, a “
Business Combination
”),
in each case, unless,
following such Business Combination, (i) 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 Business Combination beneficially own, directly or
indirectly, more than 60% of the then outstanding shares of common
stock (or, for a non-corporate entity, equivalent securities) and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity resulting from
such Business Combination (including, without limitation, an 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) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 15% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) Approval
by the shareholders of the Company of a complete liquidation or dissolution of
the Company.
The
Company hereby agrees to continue the Executive in its employ, and the Executive
hereby agrees to remain in the employ of the Company subject to the terms and
conditions of this Agreement, for the period commencing on the Effective Date
and ending on the third anniversary of the Effective Date (the “
Employment
Period
”). The Employment Period shall terminate upon the
Executive’s termination of employment for any reason.
(a) Position
and Duties.
(i) During
the Employment Period, (A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities
shall be
at least commensurate in all material respects with the most significant of
those held, exercised and assigned to the Executive at any time during the
120-day period immediately preceding the Effective Date, (B) the Executive’s
services shall be performed at the office where the Executive was employed
immediately preceding the Effective Date or any other location less than 35
miles from such location, and (C) the Executive shall not be required to travel
on Company business to a substantially greater extent than required during the
120-day period immediately prior to the Effective Date.
(ii) During
the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) serve on corporate, civic
or charitable boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage personal
investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the Executive
prior to the Effective Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the performance
of the Executive’s responsibilities to the Company.
(b) Compensation.
(i)
Base
Salary.
During the Employment Period, the Executive shall
receive an annual base salary (the “
Annual Base Salary
”),
at an annual rate, at
least equal to twelve times the highest monthly base salary paid or payable,
including any base salary which has been earned but deferred, to the Executive
by the Company and its Affiliated Companies in respect of the twelve-month
period immediately preceding the month in which the Effective Date
occurs. The Annual Base Salary shall be paid at such intervals as the
Company pays executive salaries generally. During the Employment
Period, the Annual Base Salary shall be reviewed at least annually, beginning no
more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date. Any increase in the Annual Base Salary
shall not serve to limit or reduce any other obligation to the Executive under
this Agreement. The Annual Base Salary shall not be reduced after any
such increase and the term “Annual Base Salary” shall refer to the Annual Base
Salary as so increased.
(ii)
Annual Bonus.
In
addition to the Annual Base Salary, the Executive shall be awarded, for each
fiscal year ending during the Employment Period, an annual bonus (the “
Annual Bonus
”)
in cash at least equal
to the Executive’s highest annual bonus earned by the Executive under the
Company’s annual incentive plans, or any comparable bonus under any predecessor
or successor plan, for the three full fiscal years prior to the
Effective
Date(or for such lesser number of full fiscal years prior to the Effective Date
for which the Executive was eligible to earn such a bonus, and annualized in the
case of any pro rata bonus earned for a partial fiscal year) (the “Recent Annual
Bonus”). (If the Executive has not been eligible to earn such a bonus
for any period prior to the Effective Date, the “Recent Annual Bonus” shall mean
the Executive’s bonus for the year in which the Effective Date
occurs.) Each such Annual Bonus shall be paid no later than two and a
half months following the fiscal year for which the Annual Bonus is
awarded, unless the Executive shall elect to defer the receipt of such Annual
Bonus pursuant to an arrangement that meets the requirements of Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”).
(iii)
Long-Term Cash and Equity
Incentives, Savings and Retirement Plans.
During the
Employment Period, the Executive shall be entitled to participate in all
long-term cash incentive, equity incentive, savings and retirement plans,
practices, policies and programs applicable generally to other peer executives
of the Company and its Affiliated Companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its Affiliated Companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its Affiliated Companies.
(iv)
Welfare Benefit
Plans.
During the Employment Period, the Executive and/or the
Executive’s family, as the case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit plans, practices, policies
and programs provided by the Company and its Affiliated Companies (including,
without limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and programs)
to the extent applicable generally to other peer executives of the Company and
its Affiliated Companies, but in no event shall such plans, practices, policies
and programs provide the Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
those provided generally at any time after the Effective Date to other peer
executives of the Company and its Affiliated Companies.
(v)
Expenses.
During
the Employment Period, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive in
accordance with the most favorable policies, practices and procedures of the
Company and its Affiliated Companies in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive,
as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its Affiliated Companies.
(vi)
Fringe
Benefits.
During the Employment Period, the Executive shall be
entitled to fringe benefits, including, without limitation, tax and financial
planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
Affiliated Companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its Affiliated Companies.
(vii)
Office and Support
Staff.
During the Employment Period, the Executive shall be
entitled to an office or offices of a size and with furnishings and other
appointments, and to exclusive personal secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive by
the Company and its Affiliated Companies at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer
executives of the Company and its Affiliated Companies.
(viii)
Vacation.
During
the Employment Period, the Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies, programs and practices of
the Company and its Affiliated Companies as in effect for the Executive at any
time during the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its Affiliated
Companies.
|
5.
|
TERMINATION
OF EMPLOYMENT.
|
(a)
Death or
Disability.
The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment
Period. If the Company determines in good faith that the Disability
(as defined herein) of the Executive has occurred during the Employment Period
(pursuant to the definition of “Disability”), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement of its
intention to terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the “
Disability Effective
Date
”),
provided that, within
the 30 days after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes of this
Agreement, “
Disability
”
shall mean the absence
of the Executive from the Executive’s duties with the Company on a full-time
basis for 180 consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a physician
selected by the Company or its
insurers and acceptable
to the Executive or the Executive’s legal representative (such agreement as to
acceptability not to be unreasonably withheld).
(b)
Cause.
The Company
may terminate the Executive’s employment during the Employment Period with or
without Cause. For purposes of this Agreement, “
Cause
”
shall mean:
(i) the
willful and continued failure of the Executive to perform substantially the
Executive’s duties (as contemplated by Section 4(a)(i)) with the Company or any
Affiliated Company (other than any such failure resulting from incapacity due to
physical or mental illness or following the Executive’s delivery of a Notice of
Termination for Good Reason), after a written demand for substantial performance
is delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or the Chief
Executive Officer of the Company believes that the Executive has not
substantially performed the Executive’s duties, or
(ii) the
willful engaging by the Executive in illegal conduct or gross misconduct that is
materially and demonstrably injurious to the Company.
For
purposes of this 5(b), no act or failure to act, on the part of the Executive,
shall be considered “
willful
”
unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon (A) authority given
pursuant to a resolution duly adopted by the Board, or if the Company is not the
ultimate parent corporation of the Affiliated Companies and is not
publicly-traded, the board of directors of the ultimate parent of the Company
(the “
Applicable Board
”)
or (B) the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Applicable Board (excluding the Executive, if the Executive is a member of the
Applicable Board) at a meeting of the Board called and held for such purpose
(after reasonable notice is provided to the Executive and the Executive is given
an opportunity, together with counsel for the Executive, to be heard before the
Applicable Board), finding that, in the good faith opinion of the Applicable
Board, the Executive is guilty of the conduct described in Sections 5(b)(i) or
5(b)(ii), and specifying the particulars thereof in detail.
(c)
Good Reason.
The
Executive may voluntarily terminate the Executive’s employment during the
Employment Period for Good Reason or without Good Reason. For
purposes of this Agreement, “
Good Reason
”
shall mean:
(i) the
assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any action by the Company which results in a
diminution in such position, authority, duties or responsibilities (whether or
not occurring solely as a result of the Company’s ceasing to be a publicly
traded entity), excluding for this purpose an isolated,
insubstantial
and inadvertent action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
(ii) any
failure by the Company to comply with any of the provisions of Section 4(b) of
this Agreement, other than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the
Company’s requiring the Executive to be based at any office or location other
than as provided in Section 4(a)(i)(B) of this Agreement or to be based at a
location other than the principal executive offices of the Company if the
Executive was employed at such location immediately prior to the Effective
Date;
(iv) any
purported termination by the Company of the Executive’s employment otherwise
than as expressly permitted by this Agreement; or
(v) any
other action or inaction that constitutes a material breach by the Company of
this Agreement, including any failure by the Company to comply with and satisfy
Section 11(c) of this Agreement.
For
purposes of this Section 5(c), any good faith determination of “Good Reason”
made by the Executive shall be conclusive. Anything in this Agreement
to the contrary notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first anniversary of the
Effective Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement. The Executive’s mental or physical
incapacity following the occurrence of an event described above in clauses (i)
through (v) shall not affect the Executive’s ability to terminate employment for
Good Reason and the Executive’s death following delivery of a Notice of
Termination for Good Reason shall not affect estate’s entitlement to severance
payments benefits provided hereunder upon a termination of employment for Good
Reason.
(d)
Notice of
Termination.
Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Section 12(b) of this
Agreement. For purposes of this Agreement, a “
Notice of Termination
”
means a written notice
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the Date of Termination (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s respective rights
hereunder.
(e)
Date of
Termination.
“
Date of Termination
”
means (i) if the
Executive’s employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination, (iii) if
the Executive resigns without Good Reason, the date on which the Executive
notifies the Company of such termination and (iv) if the Executive’s employment
is terminated by reason of death or Disability, the date of death of the
Executive or the Disability Effective Date, as the case may be. The
Company and the Executive shall take all steps necessary (including with regard
to any post-termination services by the Executive) to ensure that any
termination described in this Section 5 constitutes a “separation from service”
within the meaning of Section 409A of the Code, and notwithstanding anything
contained herein to the contrary, the date on which such separation from service
takes place shall be the “Date of Termination.”
|
6.
|
OBLIGATIONS
OF THE COMPANY UPON TERMINATION.
|
(a)
By the Executive for Good Reason; By
the Company Other Than for Cause, Death or Disability.
If,
during the Employment Period, the Company terminates the Executive’s employment
other than for Cause, death or Disability or the Executive shall terminate
employment for Good Reason:
(i) The
Company shall pay to the Executive in a lump sum in cash within 20 days after
the Date of Termination the aggregate of the following amounts:
A. the
sum of (1) the Executive’s Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (2) the Executive’s business expenses that are
reimbursable pursuant to Section 4(b)(v) but have not been reimbursed by the
Company as of the Date of Termination; (3) the Executive’s Annual Bonus for the
fiscal year immediately preceding the fiscal year in which the Date of
Termination occurs, if such bonus has been determined but not paid as of the
Date of Termination; (4) any accrued vacation pay, to the extent not theretofore
paid (the sum of the amounts described in clauses (1), (2), (3) and (4), the
“
Accrued Obligations
”)
and (5) an amount equal to the product of (x) the higher of (I) the Recent
Annual Bonus and (II) the Annual Bonus paid or payable for the most recently
completed fiscal year during the Employment Period (including any bonus or
portion thereof which has been earned but deferred and annualized for any fiscal
year consisting of less than twelve full months or during which the Executive
was employed for less than twelve full months) (such higher amount being
referred to as the “
Highest
Annual Bonus
”)
and (y) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365;
provided, that
notwithstanding the foregoing, if the Executive has made an irrevocable election
under any deferred compensation arrangement subject to Section 409A of the Code
to defer any portion of the Annual Bonus described in clause (3) above, then for
all purposes of this Section 6 (including, without
limitation,
Sections 6(b) through 6(d)), such deferral election, and the terms of the
applicable arrangement shall apply to the same portion of the amount described
in such clause (iii), and such portion shall not be considered as part of the
“Accrued Obligations” but shall instead be an “Other Benefit” (as defined
below); and
B. an
amount equal to the product of (1) three
and (2) the sum of (x)
the Executive’s Annual Base Salary and (y) the Highest Annual Bonus;
and
C. an
amount equal to the sum of the Company’s or an Affiliated Company’s (as
applicable) matching contributions under the Company’s qualified
defined contribution plans in which the Executive participates at of the Date of
Termination (or, if more favorable to the Executive, the plans as in effect
immediately prior to the Effective Date) which would have been made on the
Executive’s behalf if the Executive’s employment continued for three
years after the Date of
Termination, assuming for this purpose that (1) the Executive’s benefits under
such plans are fully vested, (2) the Executive’s compensation in each of the
three
years is that
required by Sections 4(b)(i) and 4(b)(ii), (3) the rate of any such employer
contribution is equal to the maximum rate provided under the terms of the
applicable plans for the year in which the Date of Termination occurs (or, if
more favorable to the Executive, or in the event that as of the Date of
Termination the rate of any such contribution for such year is not determinable,
the rate of contribution under the plans for the plan year ending immediately
prior to the Effective Date) and (4) to the extent that the Company’s
contributions are determined based on the contributions or deferrals of the
Executive, that the Executive’s contribution or deferral elections, as
appropriate, are those in effect immediately prior the Date of Termination;
and
(ii) The
Company shall, at its sole expense as incurred, provide the Executive with
outplacement services at a cost to the Company not to exceed $30,000, the scope
and provider of which shall be selected by the Executive in the Executive’s sole
discretion; and provided, however, that such outplacement benefits shall end not
later than the last day of the second calendar year that begins after the Date
of Termination; and
(iii) For
three years after the Executive’s Date of Termination, or such longer period as
may be provided by the terms of the appropriate plan, program, practice or
policy (the “
Benefit
Continuation Period
”), the Company shall provide health care and life
insurance benefits to the Executive and/or the Executive’s family at least equal
to, and at the same after-tax cost to the Executive and/or the Executive’s
family, as those that would have been provided to them in accordance with the
plans, programs, practices and policies providing health care and life insurance
benefits and at the benefit level described in Section 4(b)(iv) if the
Executive’s employment had not been terminated or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and the Affiliated Companies and their families;
provided, however, that the health care benefits provided during the Benefit
Continuation Period shall be provided in such a manner that such benefits (and
the costs
and
premiums thereof) are excluded from the Executive’s income for federal income
tax purposes and if the Company reasonably determines that providing continued
coverage under one or more of its health care benefit plans contemplated herein
could be taxable to the Executive, the Company shall provide such benefits at
the level required hereby and at the same after-tax cost to the Executive and/or
the Executive’s family through the purchase of individual insurance coverage;
provided, however, that, if the Executive becomes re-employed with another
employer and is eligible to receive health care and life insurance benefits
under another employer-provided plan, the health care and life insurance
benefits provided hereunder shall be secondary to those provided under such
other plan during such applicable period of eligibility. Benefits
provided pursuant to this paragraph are contractual only and are not to be
considered a continuation of coverage as provided under Section 601 et seq. of
ERISA and Section 4980B of the Code. Following the end of the Benefit
Continuation Period, the Executive shall be eligible for continued health
coverage as required by Section 4980B of the Code or other applicable law
(“COBRA Coverage”), as if the Executive’s employment with the Company had
terminated as of the end of such period, and the Company shall take such actions
as are necessary to cause such COBRA Coverage not to be offset by the provision
of benefits under this Section 6(a)(iii) and to cause the period of COBRA
Coverage to commence at the end of the Benefit Continuation
Period. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree welfare benefits pursuant
to the retiree welfare benefit plans, the Executive shall be considered to have
remained employed until the end of the Benefit Continuation Period and to have
retired on the last day of such period, and if the Executive satisfies the
eligibility requirements, such benefits shall commence no later than the
expiration of the three year continuation period provided in clause (A) of this
Section 6(a)(iii). In order to comply with Section 409A of the Code,
(1) the amount of life insurance benefits that the Company is obligated to
provide under this Section 6(a)(iii) in any given calendar year shall not affect
the amount of such benefits that the Company is obligated to pay in any other
calendar year, and (2) the Executive’s right to have the Company provide such
benefits may not be liquidated or exchanged for any other benefit;
and
(iv) To
the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any Other Benefits (as defined in Section 7) in
accordance with the terms of the underlying plans or agreements.
Notwithstanding
the foregoing provisions of this Section 6(a)(i), except as otherwise provided
in Section 12(g) with respect to an Anticipatory Termination, in the event that
the Executive is a “specified employee” within the meaning of Section 409A of
the Code (as determined in accordance with the methodology established by the
Company as in effect on the Date of Termination) (a “
Specified Employee
”), amounts
that would otherwise be payable under Section 6(a)(i) during the six-month
period immediately following the Date of Termination (other than the Accrued
Obligations) shall instead be paid, with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code
(“
Interest
”), or
provided on the first business day after the date that is six months following
the Executive’s “separation from service” within the meaning of Section 409A of
the Code (the “
Delayed Payment
Date
”).
(b)
Death.
If the
Executive’s employment is terminated by reason of the Executive’s death during
the Employment Period, the Company shall provide the Executive’s estate or
beneficiaries with the Accrued Obligations (subject to the proviso set forth in
Section 6(a)(i)(A) to the extent applicable) and the timely payment or provision
of the Other Benefits (subject to the proviso set forth in Section 6(a)(i)(A) to
the extent applicable) and shall have no other severance obligations under this
Agreement. The Accrued Obligations shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within 20 days of
the Date of Termination. With respect to the provision of the Other
Benefits, the term “Other Benefits” as utilized in this Section 6(b) shall
include, without limitation, and the Executive’s estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and Affiliated Companies to the estates and
beneficiaries of peer executives of the Company and such Affiliated Companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other peer executives and their
beneficiaries at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death
with respect to other peer executives of the Company and its Affiliated
Companies and their beneficiaries.
(c)
Disability.
If the
Executive’s employment is terminated by reason of the Executive’s Disability
during the Employment Period, the Company shall provide the Executive with the
Accrued Obligations and the timely payment or provision of the Other Benefits
(subject to the proviso set forth in Section 6(a)(i)(A) to the extent
applicable) in accordance with the terms of the underlying plans or agreements,
and shall have no other severance obligations under this
Agreement. The Accrued Obligations (subject to the proviso set forth
in Section 6(a)(i)(A) to the extent applicable) shall be paid to the Executive
in a lump sum in cash within 20 days of the Date of Termination. With
respect to the provision of the Other Benefits, the term “Other Benefits” as
utilized in this Section 6(c) shall include, and the Executive shall be entitled
after the Disability Effective Date to receive, disability and other benefits at
least equal to the most favorable of those generally provided by the Company and
its Affiliated Companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer executives
and their families at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive and/or the Executive’s
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its Affiliated Companies and their
families.
(d)
Cause; Other than for Good
Reason.
If the Executive’s employment shall be terminated for
Cause during the Employment Period, to the Company shall provide the Executive
(i) the Annual Base Salary through the Date of Termination to the extent
theretofore unpaid and (ii) the Other Benefits (disregarding the proviso set
forth in Section 6(a)(i)(A) to the extent applicable) in accordance with the
terms of the underlying plans or agreements, and shall have no other severance
obligations under this Agreement. If the Executive voluntarily
terminates employment during the Employment Period, excluding a termination for
Good Reason, the Company shall provide to the Executive, subject to the proviso
set forth in Section 6(a)(i)(A) to the extent applicable, the Accrued
Obligations and the timely payment or provision
of the
Other Benefits, and shall have no other severance obligations under this
Agreement. In such case, all Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 20 days of the Date of
Termination.
|
7.
|
NON-EXCLUSIVITY
OF RIGHTS.
|
Nothing
in this Agreement shall prevent or limit the Executive’s continuing or future
participation in any plan, program, policy or practice provided by the Company
or any of its Affiliated Companies and for which the Executive may qualify, nor,
subject to Section 12(f), shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its Affiliated Companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its Affiliated Companies, at or subsequent to the Date of Termination
(such amounts and benefits, the “
Other Benefits
”) shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement. Without
limiting the generality of the foregoing, the Executive’s resignation under this
Agreement with or without Good Reason, shall in no way affect the Executive’s
ability to terminate employment by reason of the Executive’s “retirement” under
any compensation and benefits plans, programs or arrangements of the Affiliated
Companies, including without limitation any retirement or pension plans or
arrangements or to be eligible to receive benefits under any compensation or
benefit plans, programs or arrangements of the Affiliated Companies, including
without limitation any retirement or pension plan or arrangement of the
Affiliated Companies or substitute plans adopted by the Company or its
successors, and any termination which otherwise qualifies as Good Reason shall
be treated as such even if it is also a “retirement” for purposes of any such
plan. Notwithstanding the foregoing, if the Executive receives
payments and benefits pursuant to Section 6(a) of this Agreement, the Executive
shall not be entitled to any severance pay or benefits under any severance plan,
program or policy of the Company and the Affiliated Companies, unless otherwise
specifically provided therein in a specific reference to this
Agreement. For the avoidance of doubt, this Agreement shall not
effect the Executive’s eligibility to participate in, or entitlement to any
payments or benefits under, the Separation Benefit Plan of Unit Corporation and
Participating Subsidiaries or the Special Separation Benefit Plan of Unit
Corporation and Participating Subsidiaries in accordance with the terms of such
plans as in effect from time to time and to the extent the Executive is eligible
to therein as of immediately prior to the Effective Date, as
applicable.
|
8.
|
FULL
SETTLEMENT; LEGAL FEES.
|
The
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of
the provisions of this Agreement and except as specifically provided in Section
6(a)(iii), such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay as incurred
(within 10 days following the Company’s receipt of an
invoice
from the Executive), at any time from the Effective Date of this Agreement
through the Executive’s remaining lifetime (or, if longer, through the 20
th
anniversary of the Effective Date) to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability or entitlement under,
any provision of this Agreement or any guarantee of performance thereof (and
including as a result of any contest by the Executive about the amount of any
payment pursuant to this Agreement), plus in each case Interest. In
order to comply with Section 409A of the Code, in no event shall the payments by
the Company under this Section 8 be made later than the end of the calendar year
next following the calendar year in which such fees and expenses were incurred,
provided, that the Executive shall have submitted an invoice for such fees and
expenses at least 10 days before the end of the calendar year next following the
calendar year in which such fees and expenses were incurred. The
amount of such legal fees and expenses that the Company is obligated to pay in
any given calendar year shall not affect the legal fees and expenses that the
Company is obligated to pay in any other calendar year, and the Executive’s
right to have the Company pay such legal fees and expenses may not be liquidated
or exchanged for any other benefit.
|
9.
|
CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY.
|
(a) Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution in the nature of compensation
(within the meaning of Section 280G(b)(3) to or for the benefit of the 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 Code, together with any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “
Excise Tax
”)
,
then the Executive shall be
entitled to receive an additional payment (the “
Gross-Up Payment
”)
in an amount such that
after payment by the Executive of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, but excluding any income taxes and
penalties imposed pursuant to Section 409A of the Code, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. The Company’s obligation to make Gross-Up Payments under
this Section 9 shall not be conditioned upon the Executive’s termination of
employment.
(b) Subject
to the provisions of Section 9(c), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by PricewaterhouseCoopers LLP or
such other nationally recognized certified public accounting firm as may be
designated by the Executive (the “
Accounting
Firm
”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or
group
effecting the Change of Control, the Executive may appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be
borne solely by the Company. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“
Underpayment
”),
consistent with the
calculations required to be made hereunder. In the event that the
Company exhausts its remedies pursuant to Section 9(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The
Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing
prior to the expiration of such period that the Company desires to contest such
claim, the Executive shall:
(i) give
the Company any information reasonably requested by the Company relating to such
claim,
(ii) take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate
with the Company in good faith in order effectively to contest such claim,
and
(iv) permit
the Company to participate in any proceedings relating to such
claim;
provided,
however, that the Company shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and penalties)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in connection with
such contest and, at its sole discretion, may pursue or forgo any and all
administrative appeals, proceedings, hearings and
conferences
with the applicable taxing authority in respect of such claim and may, at its
sole option, either pay the tax claimed to the appropriate taxing authority on
behalf of the Executive and direct the Executive to sue for a refund or contest
the claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company pays such claim and directs
the Executive to sue for a refund, the Company shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income with respect to such payment; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.
(d) If,
after the receipt by the Executive of a Gross-Up Payment or payment by the
Company of an amount on the Executive’s behalf pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of
Section 9(c), if applicable) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after payment by the Company of an amount on
the Executive’s behalf pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then the amount of such payment shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.
(e) Any
Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the
Company to the Executive within five days of the receipt of the Accounting
Firm’s determination;
provided
that, the Gross-Up
Payment shall in all events be paid no later than the end of the Executive’s
taxable year next following the Executive’s taxable year in which the Excise Tax
(and any income or other related taxes or interest or penalties thereon) on a
Payment are remitted to the Internal Revenue Service or any other applicable
taxing authority or, in the case of amounts relating to a claim described in
Section 9(c) that does not result in the remittance of any federal, state, local
and foreign income, excise, social security and other taxes, the calendar year
in which the claim is finally settled or otherwise
resolved. Notwithstanding any other provision of this Section 9, the
Company may, in its sole discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the Executive hereby
consents to such withholding.
|
10.
|
CONFIDENTIAL
INFORMATION.
|
The
Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to the Company or
any of its Affiliated Companies, and their respective businesses, which
information, knowledge or data shall have been obtained by the Executive during
the Executive’s employment by the Company or any of its Affiliated Companies and
which information, knowledge or data shall not be or become public knowledge
(other than by acts by the Executive or representatives of the Executive in
violation of this Agreement). After termination of the Executive’s
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those persons designated by it. In no event
shall an asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
(a) This
Agreement is personal to the Executive and without the prior written consent of
the Company shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure to
the benefit of and be enforceable by the Executive’s legal
representatives.
(b) This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. Except as provided in Section 11(c), without
the prior written consent of the Executive this Agreement shall not be
assignable by the Company.
(c) The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. As used
in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of Oklahoma, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought only in
any federal or state court located in Tulsa County, Oklahoma, and each of the
parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law,
any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum.
(b) All
notices and other communications hereunder shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:
If
to the Executive:
At the
most recent address on file at the Company.
If
to the Company:
7130
South Lewis
Suite
1000
Tulsa,
Oklahoma 74136
Attention: General
Counsel
or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(c) The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this
Agreement.
(d) The
Company may withhold from any amounts payable under this Agreement such United
States federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The
Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or
the Company
may have
hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
(f) The
Executive and the Company acknowledge that, except as may otherwise be provided
under any other written agreement between the Executive and the Company, the
employment of the Executive by the Company is “at will” and, subject to Section
1(a), prior to the Effective Date, the Executive’s employment may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this
Agreement. From and after the Effective Date, except as specifically
provided in this Agreement, this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof in effect
immediately prior to the execution of this Agreement.
(g) In
the event payments are made and benefits provided under Section 5(a) in
connection with an Anticipatory Termination, notwithstanding anything contained
herein to the contrary, if a Change of Control does not occur within twelve
months following the date of such Anticipatory Termination, (x) the Executive
shall forfeit the right to retain, and shall return to the Company, any cash
amounts received by the Executive from the Company, on an after-tax basis after
taking into account any deductions available to the Executive by virtue of such
return, pursuant to Section 5(a)(1)(A)(v), Section 5(a)(1)(B), Section
5(a)(1)(C), and Section 5(a)(3); and (y) the Company’s obligations under this
Agreement, including but not limited to the provision of health care and life
insurance benefits pursuant to Section 5(a)(2), shall cease as of the date that
is twelve months following the date of such Anticipatory Termination (or, if
earlier, the date on which the proposed Change of Control to which the
Anticipatory Termination was alleged to have related is finally and formally
abandoned or terminated).
(h) Within
the time period permitted by the applicable Treasury Regulations, the Company
may, in consultation with the Executive, modify the Agreement, in the least
restrictive manner necessary and without any diminution in the value of the
payments to the Executive, in order to cause the provisions of the Agreement to
comply with the requirements of Section 409A of the Code, so as to avoid the
imposition of taxes and penalties on the Executive pursuant to
Section 409A of the Code.
Upon the
expiration or other termination of this Agreement or the Executive’s employment,
the respective rights and obligations of the parties hereto shall survive to the
extent necessary to carry out the intentions of the parties under this
Agreement.
In Witness Whereof
,
the Executive has
hereunto set the Executive’s hand and, pursuant to the authorization from its
Board of Directors, the Company has caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written.
EXECUTIVE
[Executive]
UNIT
CORPORATION
By:
[Executive Officer or Chairman]
20