NOBLE AFFILIATES, INC.
FORM OF
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") is made and effective
as of the 26th day of November, 2001, by and between Noble Affiliates, Inc.,
a Delaware corporation ("Employer"), and [Name] ("Executive").
RECITALS
The Board of Directors of Employer (the "Board") has determined that
it is in the best interests of Employer to assure that Employer will have the
continued dedication of Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below). The Board believes it
is imperative to diminish the inevitable distraction of Executive by virtue
of the personal uncertainties and risks created by a pending or threatened
Change of Control, to encourage Executive's full attention and dedication to
Employer currently and in the event of any threatened or pending Change of
Control, and to provide Executive with compensation and benefit arrangements
upon a Termination Event (as defined below) that ensure that such
compensation and benefits are competitive with other corporations.
AGREEMENT
Now, therefore, in consideration of Executive's continued employment
by Employer, as well as the promises, covenants and obligations contained
herein, Employer and Executive agree as follows:
1. PAYMENT OF SEVERANCE AMOUNT. Upon the occurrence of a
Termination Event (as defined in paragraph 2), Employer shall:
(a) pay Executive all salary, unreimbursed expenses incurred by
Executive in the performance of his duties for Employer and other compensation
and benefits that are accrued but unpaid through the date of the termination
constituting such Termination Event (the "Termination Date"), payable as a
lump sum cash payment within 30 days following the Termination Date;
(b) pay Executive an amount equal to Executive's Annual Cash
Compensation (as defined in paragraph 2) multiplied by a factor of
[Multiplier], payable as a lump sum cash payment within 30 days following the
Termination Date;
(c) pay Executive an amount equal to Executive's pro-rata
(measured as (i) the number of days expired, as of Termination Date, in the
then-current calendar year, divided by (ii) 365) target bonus for the
then-current year;
(d) provide Executive with life, disability, medical and
dental insurance at the level provided at either the date of the occurrence
of a Change of Control or the Termination Date, as Executive shall in his
sole discretion elect by providing written notice to Employer, for
[12*Multiplier] months following the Termination Date or such shorter period
until Executive shall obtain substantially equivalent insurance coverage from
a subsequent employer, if any, in the same manner as if Executive's
employment had not been terminated until the end of such period. Executive
shall immediately notify Employer upon obtaining any insurance from a
subsequent employer and shall provide all information required by Employer
regarding such insurance to enable Employer to make a determination of
whether such insurance is substantially equivalent;
(e) notwithstanding Executive's termination of employment,
preserve Executive's rights to purchase the shares of Employer's capital
stock that are subject to then-outstanding options that have been granted to
Executive by Employer (or pursuant to a stock option plan of Employer), so
that all
such options remain or become exercisable in accordance with their terms as
if Executive's employment had not terminated; and
(f) upon receiving a detailed invoice for same, reimburse, up
to a maximum cumulative amount of 15,000 Dollars, Executive for the
reasonable fees of no more than one out-placement (or similar) service
provider engaged by Executive to assist in finding employment opportunities
for Executive during the twelve-month period following a Termination Date.
2. DEFINITIONS.
(a) A "TERMINATION EVENT" shall be deemed to have occurred if
at any time within 24 months after a Change of Control, Employer or
any successor thereto shall terminate Executive's employment for any
reason other than for (A) Cause, as defined below, (B) incapacity
due to physical or mental illness or (C) death. For this purpose,
Executive's employment shall be deemed to have been terminated upon
the actual termination of his employment or upon the occurrence of a
Constructive Termination (as defined below).
(b) A "CHANGE OF CONTROL" shall be deemed to have occurred if:
(i) individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute
at least fifty-one percent (51%) of the Board, provided that any
person becoming a director subsequent to the date hereof whose
election, or nomination for election by Employer's stockholders was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board;
(ii) the stockholders of Employer shall approve a
reorganization, merger or consolidation, in each case, with respect
to which persons who were the stockholders of Employer immediately
prior to such reorganization, merger or consolidation do not,
immediately thereafter, own outstanding voting securities representing
at least fifty-one percent (51%) of the combined voting power entitled
to vote generally in the election of directors ("Voting Securities")
of the reorganized, merged or consolidated company;
(iii) the stockholders of Employer shall approve a
liquidation or dissolution of Employer or a sale of all or
substantially all of the stock or assets of Employer; or
(iv) any "person," as that term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (other than Employer, any of its subsidiaries, any
employee benefit plan of Employer or any of its subsidiaries, or any
entity organized, appointed or established by Employer for or
pursuant to the terms of such a plan), together with all "affiliates"
and "associates" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of such person (as well as any "Person" or "group" as
those terms are used in Sections 13(d) and 14(d) of the Exchange
Act), shall become the "beneficial owner" or "beneficial owners" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of securities of Employer representing in the
aggregate twenty-five percent (25%) or more of either (A) the then
outstanding shares of common stock, par value $3.33-1/3 per share,
of Employer ("Common Stock") or (B) the Voting Securities of
Employer, in either such case other than solely as a result of
acquisitions of such securities directly from Employer. Without
limiting the foregoing, a person who, directly or indirectly,
through any contract, arrangement, understanding, relationship or
otherwise has or shares the power to vote, or to direct the voting of,
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or to dispose, or to direct the disposition of, Common Stock or
other Voting Securities of Employer shall be deemed the beneficial
owner of such Common Stock or Voting Securities.
Notwithstanding the foregoing, a "Change of Control" of
Employer shall not be deemed to have occurred for purposes of
subparagraph (iv) of this paragraph 2(b) solely as the result of an
acquisition of securities by Employer which, by reducing the number
of shares of Common Stock or other Voting Securities of Employer
outstanding, increases (i) the proportionate number of shares of
Common Stock beneficially owned by any person to twenty-five percent
(25%) or more of the shares of Common Stock then outstanding or (ii)
the proportionate voting power represented by the Voting Securities
of Employer beneficially owned by any person to twenty-five percent
(25%) or more of the combined voting power of all then outstanding
Voting Securities; provided, however, that if any person referred to
in clause (i) or (ii) of this sentence shall thereafter become the
beneficial owner of any additional shares of Common Stock or other
Voting Securities of Employer (other than a result of a stock split,
stock dividend or similar transaction), then a Change of Control of
Employer shall be deemed to have occurred for purposes of
subparagraph (iv) of this paragraph 2(b).
(c) "ANNUAL CASH COMPENSATION" shall, as determined on the
Termination Date, be equal to the sum of (i) plus (ii), where "(i)" equals
Executive's annualized salary in effect on the date of the earliest Change of
Control to occur during the 18-month period prior to the Termination Date,
and "(ii)" equals the greater of (A) Executive's annual target bonus for the
then-current bonus period and (B) the average annual bonus paid or payable by
Employer to Executive for the three-year period (or for the period of
Executive's employment, if Executive has not been employed for all of such
three-year period) immediately preceding the date of the Change of Control.
(d) For purposes of this Agreement, "CAUSE" shall mean (i) the
willful and continued failure by Executive to perform his duties as [Position]
of Employer or any of its subsidiaries or his continued failure to perform
duties reasonably requested or reasonably prescribed by the Board (other than
as a result of Executive's death or disability), (ii) the engaging by
Executive in conduct that is materially monetarily injurious to Employer or
any of its subsidiaries, (iii) gross negligence or willful misconduct by
Executive in the performance of his duties that results in, or causes,
material monetary harm to Employer or any of its subsidiaries, or (iv)
Executive's commission of a felony or other civil or criminal offense
involving moral turpitude. In the case of (i), (ii) and (iii) above, a
finding of Cause for termination shall be made only after reasonable notice
to Executive and an opportunity for Executive, together with counsel, to be
heard before the Board. A determination of Cause by the Board shall be
effective only if agreed upon by a majority of the directors.
(e) A "CONSTRUCTIVE TERMINATION" of Executive's employment with
Employer shall be deemed to have occurred if Employer:
(i) demotes Executive to a lesser position, in title or
responsibility, as compared to the highest position held by him with Employer
at the earlier of the occurrence of a Change of Control or the date on which
a tentative agreement is reached by Employer, or a public announcement is
made, regarding a proposed Change of Control that ultimately occurs;
(ii) decreases Executive's total annual compensation (i.e.,
the sum of his annual salary, his target bonus under Employer's annual
incentive bonus plan or similar plan in effect at the applicable time and the
value of other employment benefits provided to Executive by Employer) below
the level in effect at the earlier of the occurrence of a Change of Control
or the date on which a tentative agreement is reached by Employer, or a
public announcement is made, regarding a proposed Change of Control that
ultimately occurs; provided, however, that a decrease in total annual
compensation that
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results solely from an amendment or termination of any employee or group or
other executive benefit plan, which amendment or termination is applicable to
all executives of Employer, shall not constitute a Constructive Termination; or
(iii) requires or requests Executive to relocate to a principal
office more than 50 miles from the principal office at which Executive is
employed immediately prior to a Change of Control; provided, however, that
such a requirement or request for a relocation shall constitute a Constructive
Termination only if made in connection with, and within 12 months after
consummation of, the event or transaction that constitutes (or the approval
of which constitutes) the Change of Control, and such 12-month period shall
apply, for purposes of determining whether an event specified in this clause
(iii) constitutes a Termination Event, in lieu of the 24-month period
specified in paragraph 2(a). For purposes of this clause (iii), it shall be
presumed (and Employer shall have the burden of proof to overcome such
presumption) that a requirement or request for a relocation is "in connection
with" such an event or transaction if it is made within the 12-month period
specified in this clause (iii).
3. GROSS UP PAYMENT. In the event that (i) the Executive becomes
entitled to the payment and benefits provided under Section 1 of this
Agreement (the "Change of Control Payment") and any of the Change of Control
Payment will be subject to the tax (the "Excise Tax") imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), or any
successor provision, or (ii) any payments or benefits received or to be
received by the Executive pursuant to the terms of any other plan,
arrangement or agreement (the "Benefit Payments") will be subject to the
Excise Tax, the Employer shall pay to the Executive an additional amount (the
"Gross-Up Payment") such that the net amount retained by the Executive, after
deduction of any Excise Tax on the Change of Control Payment and the Benefit
Payments, and any federal, state and local income tax and Excise Tax upon the
payment provided for by this Section 3, shall be equal to the Change of
Control Payment and the Benefit Payments; provided, however, that in
determining the amount of the Gross-Up Payment, any Excise Tax on the Change
of Control Payment and the Benefit Payments shall be determined using a rate
no higher than twenty percent (20%).
For purposes of determining whether any of the Change of Control
Payment or the Benefit Payments will be subject to the Excise Tax and the
amount of such Excise Tax:
(i) any payments or benefits received or to be received by
the Executive in connection with a change in control of the Employer
or the Executive's termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or
agreement with the Employer, any person whose actions result in
change in control or any person affiliated with the Employer or such
persons) shall be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) shall be treated
as subject to the Excise Tax, except to the extent that, in the
opinion of tax counsel selected by the Board of Directors of the
Employer, such payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess payments (in whole or
in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code;
(ii) the amount of the Change of Control Payment and the
Benefit Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (A) the total amount of the Change
of Control Payment and the Benefits Payments or (B) the amount of
excess parachute payments within the meaning of Sections 280G(b)(1)
and (4) (after applying clause (i), above); and
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(iii) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by tax counsel, selected by
the Board of Directors of the Employer, in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of the Executive's
residence on the date of termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes. In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder at the time of termination
of the Executive's employment, the Executive shall repay to the Employer at
that time that amount of such reduction in Excise Tax as is finally
determined to be the portion of the Gross-Up Payment attributable to such
reduction plus interest on the amount of such repayment at the rate provided
in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder at the time of
the termination of the Executive's employment (including by reason of any
payment the existence or amount of which cannot be determined at the time of
the Gross-Up Payment), the Employer shall make an additional gross-up payment
to the Executive in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such excess is finally
determined.
4. NOTICES. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United
States registered or certified mail, return receipt requested, postage
prepaid, (i) if to Employer, then addressed to its principal business office,
to the attention of the corporate Secretary of Employer, and (ii) if to
Executive, to his or her residence address as reflected in Employer's records
(or to such other address as either party may furnish to the other in writing
in accordance herewith, except that notices of changes of address shall be
effective only upon receipt).
5. APPLICABLE LAW. This contract is entered into under, and shall
be governed for all purposes by, the internal laws of the State of Texas,
without regard to principles of conflicts of law requiring the application of
the law of another State.
6. SEVERABILITY. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the
validity or enforceability of any other provision of this Agreement, and all
other provisions shall remain in full force and effect.
7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together will constitute one and the same Agreement.
8. WITHHOLDING OF TAXES. Employer may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may
be required pursuant to any law or governmental regulation or ruling.
9. NO EMPLOYMENT AGREEMENT. Nothing in this Agreement shall give
Executive any rights (or impose any obligations) to continued employment by
Employer or any subsidiary thereof or successor thereto, nor shall it give
Employer any rights (or impose any obligations) with respect to continued
performance of duties by Executive for Employer or any subsidiary thereof or
successor thereto.
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10. PAYMENT AUTHORITY. Any officer of Employer (other than
Executive) is authorized to issue and execute a check, initiate a wire
transfer or otherwise effect payment on behalf of Employer to satisfy
Employer's obligations to pay all amounts due to Executive under this
Agreement.
11. ASSIGNMENT.
(a) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer
this Agreement or any rights or obligations hereunder, except as provided in
the remainder of this paragraph 11. Without limiting the foregoing,
Executive's right to receive payments hereunder shall not be assignable or
transferable, whether by pledge, creation of a security interest or
otherwise, other than a transfer by his will or by the laws of descent or
distribution, and in the event of any attempted assignment or transfer
contrary to this paragraph 11 Employer shall have no liability to pay any
amount so attempted to be assigned or transferred. This Agreement shall
inure to the benefit of and be enforceable by Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
(b) Employer may: (i) as long as it remains obligated with
respect to this Agreement, cause its obligations hereunder to be performed by
a subsidiary or subsidiaries for which Executive performs services, in whole
or in part; (ii) assign this Agreement and its rights hereunder in whole, but
not in part, to any party with or into which it may hereafter merge or
consolidate or to which it may transfer all or substantially all of its
assets, if said party shall by operation of law or expressly in writing
assume to the reasonable satisfaction of Executive all liabilities of
Employer hereunder as fully as if it had been originally named Employer
herein; but Employer may not otherwise assign this Agreement or its rights
hereunder. Subject to the foregoing, this Agreement shall inure to the
benefit of and be enforceable by Employer's successors and assigns.
(c) The provisions of this paragraph 11 shall not prohibit or
restrict the assignment or transfer by Executive of any otherwise assignable
or transferable right of Executive to purchase the shares of Employer's
capital stock that are subject to any outstanding option that has been
granted to Executive by Employer (or pursuant to a stock option plan of
Employer).
12. RELEASE AND FULL SETTLEMENT. Any provision of this Agreement
to the contrary notwithstanding, as a condition to the receipt of any payment
hereunder upon the occurrence of a Termination Event, Executive shall first
execute a release, in such reasonable form as may be approved by the Board,
releasing the Board, Employer and Employer's affiliates, shareholders,
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 Employer or the termination of such employment, and the
performance of Employer's obligations hereunder and the receipt by Executive
of the payments provided hereunder shall constitute full settlement of all
such claims and causes of action.
13. MODIFICATIONS. This Agreement shall not be varied, altered,
modified, canceled, changed or in any way amended except by mutual agreement
of the parties in a written instrument executed by the parties hereto or
their legal representatives.
14. DISPUTE PROCEDURE AND ARBITRATION. Any dispute arising in
connection with this Agreement shall be resolved as follows:
(a) If Executive believes that he has been denied any payment or
benefit he is entitled to receive under this Agreement, within 60 days
following such denial Executive shall file a written claim for such denied
payment or benefit with the President of Employer (the "President"). Such
written claim
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shall detail the arguments and attach copies of the documents that support
Executive's claim for the denied payment or benefit. Within 30 days after
the receipt of such written claim, the President shall review such claim and
notify Executive as to whether he is entitled to such payment or benefit.
Such a notification from the President shall be in writing and, if denying
Executive's claim for such payment or benefit, shall set forth the specific
reason or reasons for the denial and make specific reference to the pertinent
provisions of this Agreement.
(b) Any dispute arising in connection with this Agreement that is
not resolved to the satisfaction of Executive pursuant to the procedure
provided for in paragraph 14(a) above, shall be finally resolved by
arbitration in Houston, Texas, governed by the Federal Arbitration Act and
conducted pursuant to and in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association.
Either the Employer or the Executive may request arbitration by sending
written notice to the other party. In any such arbitration, the only issues
to be considered and determined by the arbitrator(s) shall be issues
pertaining to legal and equitable rights and obligations of the parties under
this Agreement and any applicable law. A decision and award of the
arbitrator(s) shall be final, and may be entered in any court having
jurisdiction thereof, and application may be made to such court for judicial
acceptance and/or an order enforcing such decision and/or award. Judicial
review of any decision or award shall be in accordance with the Federal
Arbitration Act, except that review of any award of punitive or exemplary
damages shall be conducted as if the award of such damages were made by a
jury sitting in a federal district court in Houston, Texas. In the event the
arbitrator(s) determine there is a prevailing party in the arbitration, the
prevailing party shall recover from the losing party all costs of
arbitration, including but not limited to the fees of the arbitrator(s) and
reasonable attorneys' fees incurred by the prevailing party. The provisions
of this paragraph 14(b) shall not be construed to limit or to preclude either
party from bringing an action in any court of competent jurisdiction for
injunctive relief.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
NOBLE AFFILIATES, INC.
By:
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Name: Xxxxxxx X. Xxxxxxxx
Title: Chairman, President & Chief
Executive Officer
EXECUTIVE
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[Name]
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SCHEDULE TO EXHIBIT 10.18
FORM OF CHANGE OF CONTROL AGREEMENT
The Change of Control Agreements between Noble Affiliates, Inc. and
the officers named below, dated November 26, 2001, are identical in all
material respects (except as noted below) other than with respect to (1)
their employment position and (2) the multiplier, which is used to calculate
the lump sum payment that will be made upon termination and the provision of
insurance benefits. These differences are as follows for each officer:
Name Position Multiplier
---- -------- ----------
X.X. Xxxxxxxxxx Xx. VP - Exploration 2.50
A.D. Xxxxx Sr. VP - General Counsel and Secretary 2.50
X.X. XxXxxxxx VP - CFO, Treasurer and Assistant Secretary 2.50
W.A. Poillion, Jr. Sr. VP - Production & Drilling 2.50
A.R. Xxxxxxxxxx XX - International Division 2.00
X.Xxxxxxxx VP - Business Administration and President -
Noble Gas Marketing, Inc. 2.00
X.X. Xxxxxxx VP - Offshore Division 2.00
T.A. Price VP - Onshore Division 1.50*
X.X. Xxxxx VP - Information Systems 2.00
* Mr. Price's multiplier is based on his November 26, 2001
Change of Control
Agreement which was executed when he was Onshore Division Exploration Manager.
