EXHIBIT 10.1
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FORM OF CHANGE OF CONTROL AGREEMENT
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CHANGE OF CONTROL AGREEMENT
This change of control agreement ("Agreement") is entered into effective
as of January 1, 1998, by and between Xxxxx Xxxxxxx Natural Gas Corp. ("LDNG")
and ("Executive").
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WHEREAS, LDNG desires to retain certain key employee personnel and,
accordingly, the Board of Directors of LDNG has approved LDNG entering into a
change of control agreement with Executive in order to encourage Executive's
continued service to LDNG;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, LDNG and Executive agree as follows:
1. DEFINITIONS.
(a) "Change in Duties" shall mean the occurrence, within two years after
the date upon which a Change of Control occurs, of any one or more
of the following:
(i) a reduction in Executive's annual salary from the level in
effect immediately prior to the Change of Control;
(ii) failure of LDNG or its successor to provide Executive with an
annual bonus, incentive compensation or other employee benefits
(including but not limited to medical, dental, life insurance,
accidental, death and long-term disability plans) that are
materially consistent with such annual bonuses, incentive
compensation or other employee benefits provided by LDNG or its
successor to executives with comparable duties;
(iii) a significant adverse alteration in the nature or status of
Executive's duties, title, responsibilities, or the conditions
of Executive's employment from those in effect immediately
prior to such Change in Control; or
(iv) a change in the location of Executive's principal place of
employment by LDNG or its successor by more than 50 miles from
the location where Executive was principally employed
immediately prior to the date on which a Change of Control
occurs.
(b) "Change of Control" shall mean the occurrence after the effective
date of this Agreement of:
(i) An acquisition (other than directly from LDNG) of any voting
securities of LDNG (the "Voting Securities") by any "Person"
(as the term person is used for purposes of Section 13(d) or
14(d) of the Securities Exchange Act of 1934 (the "Exchange
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Act")) immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of fifty percent (50%) or more of the
combined voting power of LDNG's then outstanding Voting
Securities;
(ii) The individuals who, as of the effective date of this
Agreement, are members of the Board of Directors of LDNG (the
"Incumbent Board"), cease for any reason to constitute at least
two-thirds of the members of the Board of Directors of LDNG
(the "Board"); provided, however, that if the election, or
nomination for election by LDNG's common stockholders, of any
new director was approved by a vote of at least two-thirds of
the Incumbent Board, such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent
Board; provided further, however, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14A-11
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(iii) Approval by stockholders of LDNG of:
(A) A merger, consolidation or reorganization involving LDNG,
unless:
(1) the stockholders of LDNG, immediately before such
merger, consolidation or reorganization, own directly
or indirectly immediately following such merger,
consolidation or reorganization, at least sixty
percent (60%) of the combined voting power of the
outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the Voting Securities immediately before
such merger, consolidation or reorganization,
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation, and
(3) no person other than (a) LDNG, any subsidiary, any
employee benefit plan (or any trust forming a part
thereof) maintained by LDNG, the Surviving
Corporation, or any subsidiary, (b) S.A. Louis
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Dreyfus et Cie ("SALD") or a corporation or other
entity that is directly or indirectly more than 50%
owned by SALD, or (c) any Person who, immediately
prior to such merger, consolidation or reorganization
had Beneficial Ownership of fifty percent (50%) or
more of the then outstanding Voting Securities, has
Beneficial Ownership of fifty percent (50%) or more
of the combined voting power of the Surviving
Corporation's then outstanding voting
securities;
(B) A complete liquidation or dissolution of LDNG; or
(C) An agreement for the sale or other disposition of all or
substantially all of the assets of LDNG to any Person
(other than a transfer to a subsidiary).
Notwithstanding the foregoing, a Change of Control shall not be
deemed to occur:
(i) Solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted percent of
the outstanding Voting Securities as a result of the
acquisition of Voting Securities by LDNG which, by
reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially
Owned by the Subject Person, provided that if a Change of
Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting
Securities by LDNG, and after such share acquisition by
LDNG, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change of
Control shall occur or
(ii) By reason of any acquisition of Voting Securities by a
corporation or entity that is directly or indirectly at
least 50% owned by SALD.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Compensation" shall mean the sum of:
(i) Executive's annual salary immediately prior to the date on
which a Change of Control occurs; and
(ii) an annual average bonus computed by dividing the total
cash bonuses received by Executive during the three years
immediately prior to the date on which a Change of
Control occurs by three or, in the event Executive has
been employed by LDNG for less than three years prior to
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the date on which a Change of Control occurs, the annual
average bonus shall be computed by dividing the total cash
bonuses received by Executive during the period of
employment immediately prior to the date on which a Change
of Control occurs (the "Period") by the number, carried to
two decimal places, determined by dividing the number of
days in the Period by 365.
(e) "Involuntary Termination" shall mean any termination of Executive's
employment with LDNG or its successor other than (i) Termination for
Cause, (ii) termination as a result of death or disability under
circumstances entitling Executive to benefits under LDNG's long-term
disability plan, (iii) Retirement, or (iv) resignation by Executive
except resignation on or before the date which is ninety days after
the date upon which Executive receives notice of a Change in Duties.
(f) "Retirement" shall mean Executive's resignation on or after the date
Executive reaches age sixty-five.
(g) "Severance Amount" shall mean an amount equal to two times
Executive's Compensation.
(h) "Termination for Cause" shall mean an Executive's termination of
employment with LDNG or its successor because of:
(i) the continued failure by the Executive to devote reasonable
time and effort to the performance of Executive's duties after
written demand for improved performance has been delivered to
the Executive by LDNG which specifically identifies how
Executive has not devoted reasonable time and effort to the
performance of Executive's duties; or
(ii) the willful engaging by Executive in misconduct which is
materially injurious to LDNG, monetarily or otherwise.
2. SEVERANCE BENEFITS. If Executive's employment by LDNG or its successor
is subject to an Involuntary Termination which occurs within two years
after the date upon which a Change of Control occurs, then Executive
shall be entitled to receive, as additional compensation for services
rendered to LDNG or its successor, a lump sum cash payment in an amount
equal to Executive's Severance Amount. The severance benefits payable
under this Paragraph shall be paid to Executive on or before the fifth
day after the last day of Executive's employment with LDNG or its
successor. Any severance benefits paid pursuant to this Paragraph will
be deemed to be a severance payment and not compensation for purposes
of determining benefits under LDNG's qualified plans and shall be
subject to any required tax withholding.
3. PARACHUTE PAYMENT PROVISIONS. If the severance benefits provided for
in Paragraph 2, together with any other payments which Executive has
the right to receive from LDNG or its successor, would constitute a
"parachute payment" (as defined in Section 280G(b)(2) of the Code),
Executive may elect to have the severance benefits provided hereunder
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reduced (but not below zero) so that the present value of such total
amounts received by Executive from LDNG or its successor will be one
dollar ($1.00) less than three times Executive's base amount (as
defined in Section 280G of the Code) and so that no portion of such
amounts received by Executive shall be subject to the excise tax
imposed by Section 4999 of the Code.
4. TERM. Within ninety days after January 1, 2000, and within ninety days
after each successive two-year period of time thereafter that this
Agreement is in effect, LDNG 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. LDNG will notify Executive of such action within said ninety
day period. This Agreement shall remain in effect until so terminated
and/or modified by LDNG. Failure of LDNG to take any action within said
ninety day period shall be considered as an extension of this Agreement
for an additional two-year period of time. If a Change of Control
occurs while this Agreement is in effect, then this Agreement shall
not be subject to termination or modification and shall remain in force
for a period of two years after such Change of Control, and if within
said two years 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.
5. GENERAL.
(a) SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of LDNG and any successor of LDNG, by merger or otherwise.
This Agreement shall also be binding upon and inure to the benefit
of the Executive and Executive's 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 Executive's estate.
(b) 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.
(c) CONTROLLING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Oklahoma.
(d) RELEASE. As a condition to the receipt of any benefit under
Paragraph 2 hereof, Executive shall first execute a release, in
the form established by LDNG, releasing LDNG, its 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 LDNG or the termination
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of such employment.
(e) UNFUNDED OBLIGATION. The obligation to pay amounts under this
Agreement is an unfunded obligation of LDNG and no such obligation
shall create a trust or be deemed to be secured by any pledge or
encumbrance on any property of LDNG.
(f) NOT A CONTRACT OF EMPLOYMENT. This Agreement shall not be deemed
to constitute a contract of employment, nor shall any provision
hereof effect (i) the right of LDNG to discharge Executive at will
or (ii) the terms and conditions of any other agreement between
LDNG and Executive except as provided herein. No severance
compensation shall be payable hereunder as a result of any
termination of employment before a Change of Control.
(g) NONALIENATION. No benefit payable hereunder may be assigned,
pledged or mortgaged and shall not be subject to legal process or
attachment for claims of creditors of Executive except to the
extent required by applicable law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day of March, 1998.
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"EXECUTIVE"
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"LDNG"
XXXXX XXXXXXX NATURAL GAS CORP.
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