Exhibit 10.2
SPECIAL SEPARATION BENEFIT
PLAN
OF UNIT CORPORATION
AND
PARTICIPATING
SUBSIDIARIES
As Amended and
Restated
Effective December 31,
2008
Table of Contents
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Page
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1
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1
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1
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1
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5
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5
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6
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Separation
Benefit Amount
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6
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Separation
Benefit Limitation
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7
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7
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Reemployment of
an Eligible Employee
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7
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Integration
with Disability Benefits
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7
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7
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7
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8
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Article 4.
Method of Payment
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8
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Separation
Benefit Payment
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8
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8
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10
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Payment to
Specified Employees Upon Separation from Service
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10
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Article 5.
Waiver and Release of Claims
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10
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11
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11
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Employing
Company Participation
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11
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Status of
Subsidiaries or Affiliates
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11
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Termination by
an Employing Company
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11
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Article 8.
Administration
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12
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12
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Fiduciary
Responsibilities
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12
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Specific
Fiduciary Responsibilities
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12
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Allocations and
Delegations of Responsibility
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12
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13
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13
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Modification
and Termination
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13
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13
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14
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14
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14
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Repayment of
Advance Payments
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14
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14
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Article 9.
Effective Date
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14
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Article 10.
Miscellaneous
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15
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15
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15
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Employing
Company Records
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15
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Employment
Non-Contractual
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15
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15
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15
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16
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16
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Attachment A -
Separation Agreement
Attachment B -
Separation Agreement
SPECIAL SEPARATION BENEFIT
PLAN
OF UNIT CORPORATION
AND
PARTICIPATING
SUBSIDIARIES
Introduction
The purpose of this Plan is to provide financial
assistance to Eligible Employees whose employment has terminated
under certain conditions, in consideration of the waiver and
release by those employees of any claims arising or alleged to
arise from their employment or the termination of
employment. No employee is entitled to any payment under
this Plan except in exchange for and upon the Employing
Company’s receipt of a written waiver and release given in
accordance with the provisions of this Plan.
ARTICLE 1.
SCOPE
This Plan shall be known as the Special
Separation Benefit Plan of Unit Corporation and Participating
Subsidiaries. The Plan is an “employee benefit
plan” governed by the Employee Retirement Income Security Act
of 1974, as amended.
The Plan Year is the calendar
year. The initial Plan Year is the period January 1,
2004 through December 31, 2004.
ARTICLE 2.
DEFINITIONS
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“Base Salary” means the
regular basic cash remuneration before deductions for taxes and
other items withheld, and without regard to any salary reduction
under any plans maintained by an Employing Company under Section
401(k) or 125 of the Code, payable to an Employee for services
rendered to an Employing Company, but not including pay for
Bonuses, incentive compensation, special pay, awards or
commissions.
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“Beneficiary” means the person
designated by an Eligible Employee in a written instrument filed
with an Employing Company to receive benefits under this
Plan.
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“Board of
Directors” means the board of directors of the
Company.
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“Bonus” means any annual incentive
compensation paid to an Employee over and above Base Salary earned
that is paid in cash or otherwise.
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“Change
in Control” of the Company shall be deemed to have occurred
as of the first day that any one or more of the following
conditions shall have been satisfied:
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(i) on the close
of business on the tenth day following the time the Company learns
of the acquisition by any individual entity or group (a
“Person”), including any “person”
within
the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial
ownership 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 securities of the Company entitled to vote
generally in the election of Directors (the “Outstanding
Company Voting Securities”); excluding, however, the
following: (A) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of an exercise,
conversion or exchange privilege unless the security being so
exercised, converted or exchanged was acquired directly from the
Company); (B) any acquisition by the Company; (C) any acquisition
by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company; and (D) any acquisition by any corporation pursuant to a
transaction with complies with clauses (i), (ii) and (iii) of
subsection (iii) of this definition;
(ii) individuals
who, as of the date hereof, constitute the Board of Directors (the
“Incumbent Board”) cease for any reason to constitute
at least a majority of such Board; provided that any individual who
becomes a Director of the Company subsequent to the date hereof
whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of
the Directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided further, that any
individual who was initially elected as a Director of the Company
as a result of an actual or threatened election contest, as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act, or any other actual or threatened solicitation of
proxies or consents by or on behalf of any Person other than the
Board shall not be deemed a member of the Incumbent
Board;
(iii) approval by
the stockholders of the company of a reorganization, merger or
consolidation or sale or other disposition of all or substantially
all of the assets of the Company (a “Corporate
Transaction”); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals
or entities who are the beneficial owners, respectively, of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 70% of,
respectively, the outstanding shares of common stock, and the
combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of
Directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a
corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either
directly or indirectly) in substantially the same proportions
relative to each other as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities, as the case may be,
(ii) no Person (other than: the Company; the corporation resulting
from such Corporate Transaction; and any Person which beneficially
owned, immediately prior to such Corporate Transaction, directly or
indirectly, 25% or more of the Outstanding Company Common Stock or
the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 25% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of Directors
and (iii) individuals who were members of the Incumbent Board
will
constitute a
majority of the members of the Board of Directors of the
corporation resulting from such Corporate Transaction;
or
(iv) approval by
the stockholders of the Company of a plan of complete liquidation
or dissolution of the Company.
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“Change
of Control Contract” means a Unit Corporation Key Employee
Change of Control Contract entered into between Unit Corporation
and the individual identified in such agreement as
“Executive.”
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“Code” means the Internal Revenue
Code of 1986, as amended from time to time.
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“Company” means Unit Corporation,
the sponsor of this Plan.
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“Comparable Position” means a job
with an Employing Company or successor company at the same or
higher Base Salary as an Employee’s current job and at a work
location within reasonable commuting distance from an
Employee’s home, as determined by the Employee’s
Employing Company.
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“Compensation Committee” means the
Committee established and appointed by the Board of Directors or by
a committee of the Board of Directors.
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“Completed Year of Service”
means the period of time beginning with an Employee’s date of
hire or the anniversary of the date of hire and ending twelve
months thereafter.
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“Discharge for Cause” means
termination of the Employee’s employment by the Employing
Company due to:
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(i) the
consistent failure of the Employee to perform the Employee’s
prescribed duties to the Employing Company (other than any such
failure resulting from the Employee’s incapacity due to
physical or mental illness);
(ii) the
commission by the Employee of a wrongful act that caused or was
reasonably likely to cause damage to the Employing
Company;
(iii) an act of
gross negligence, fraud, unfair competition, dishonesty or
misrepresentation in the performance of the Employee’s duties
on behalf of the Employing Company;
(iv) the
conviction of or the entry of a plea of nolo contendere by the
Employee to any felony or the conviction of or the entry of a plea
of nolo contendere to any offense involving dishonesty, breach of
trust or moral turpitude;
(v) a breach of
an Employee’s fiduciary duty involving personal profit;
or
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“Eligible
Employee” means an Employee who is determined to be eligible
to participate in this Plan and receive benefits under Article
3.
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(a) “Employee” means a
person who is
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(i)
a regular full-time salaried employee of the Employing
Company principally employed in the continental United States,
Alaska or Hawaii;
(ii) employed by
an Employing Company for work on a regular full-time salaried
schedule of at least 40 hours per week for an indefinite period;
or
(iii) a regular
employee who has been demoted or transferred from a full-time
salaried position to an hourly position and who, in the discretion
of Employing Company at the time of such demotion or transfer, is
deemed to retain his or her eligibility to participate in the
Plan.
(b) “Employee” does not,
under any circumstance, mean a person who is
(i) an employee
whose compensation is determined on an hourly basis or who holds a
position with the Employing Company that is generally characterized
as an “hourly” position, except were a specific
employee is, after demotion, deemed to be eligible to participate
in the Plan under paragraph (a)(iii), above;
(ii) an employee
who is classified by the Employing Company as a temporary
employee;
(iii) an employee
who is a member of a bargaining unit unless the employee’s
union has bargained this Plan pursuant to a collective bargaining
agreement between the Employing Company and the union or the
employee’s union bargains this Plan pursuant to bargaining
obligations mandated by the National Labor Relations
Act;
(iv) an employee
retained by the Employing Company under a written contract, other
than a Change of Control Contract;
(v) any worker
who is retained by the Company or Employing Company as a
“independent contractor,” “leased
employee,” or “temporary employee” but who is
reclassified as an “employee” of the Company or
Employing Company by a state or federal agency or court of
competent jurisdiction; or
(vi) an employee
who is a member of the Board of Directors of the Employing
Company.
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“Employing Company” means the
Company or any subsidiary of the Company electing to participate in
this Plan under the provisions of Section 7.1.
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“ERISA” means the Employee
Retirement Income Security Act of 1974, as from time to time
amended, and all regulations and rulings issued thereunder by
governmental administrative bodies.
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“Human
Resources Director” means the Human Resources Director of the
Company.
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“Plan” means the Special Separation
Benefit Plan of Unit Corporation and Participating Subsidiaries
Plan, as set forth in this document and as may be amended from time
to time.
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“Separation Agreement” means the
agreement between an Employee and the Employing Company in which
the Employee waives and releases the Company, Employing Company and
other potentially related parties from certain claims in exchange
for and in consideration of payments of the Separation Benefit, to
which the Employee would not otherwise be entitled.
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“Separation Benefit” means the
benefit provided for under this Plan as determined under Article
3.
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“Separation Period” means the period
of time over which an Eligible Employee receives Separation
Benefits under the Plan .
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“Separation from Service” shall mean
an Employee’s “separation from service” as
determined by the Company in accordance with Section 409A of the
Code. A Separation from Service shall be effective on
the date specified by the Employing Company (the “Termination
Date”).
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“Specified Employee” means those
employees of the Company or a Employing Company who are determined
by the Compensation Committee to be a “specified
employee” in accordance with Section 409A of the Code and the
regulations promulgated thereunder.
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“Years of Service” means the
sum of the number of continuous Completed Years of Service as an
Employee of an Employing Company during the period of employment
beginning with the Employee’s most recent hire date and
ending with the Employee’s most recent termination
date.
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ARTICLE 3.
BENEFITS
Each Employee who (i) is selected by the
Compensation Committee to participate in this Plan, (ii) has at
least one active Year of Service with an Employing Company
immediately before the date of his or her Separation from Service,
(iii) complies with all administrative requirements of this Plan,
including the provisions of Article 5, (iv) has a termination of
employment that is the result of the circumstances described in
Section 3.2, and (v) works through his/her Termination Date and is
not engaged in a strike or lockout as of the Termination Date, is
eligible to participate in this Plan and, subject to all the terms
of the Plan, receive benefits as provided in this Article
3. An Employee is ineligible to participate in this Plan
if that Employee fails to satisfy any of the requirements of this
Plan including, but not limited to, failure to establish that his
or her termination met the requirements for a Separation from
Service. Additionally, an Employee shall be ineligible
to participate in this Plan if that Employee’s termination of
employment results from:
(i) A Discharge for
Cause,
(ii) A court decree or
government action or recommendation having an effect on an
Employing Company’s operations or manpower involving
rationing or price control or any other similar type cause beyond
the control of an Employing Company,
(iii) Before a Change in
Control, an offer to the Employee of a position with an Employing
Company, or affiliate, regardless of whether the position offered
provides comparable wages and benefits to the position formerly
held by the Employee,
(iv) A termination
under which an Employee accepts any benefits under an incentive
retirement plan or other severance or termination benefits program,
contract or plan (other than a Change of Control Contract) offered
by the Company or the Employing Company,
(v) An Employee who
has a written employment contract which contains severance
provisions (other than a Change of Control Contract),
(vi) The failure of an
Employee to report to work as required by his or her Employing
Company,
(vii) A temporary work
cessation due to strikes, lockouts or similar reasons,
(viii) The divestiture of
any business of an Employing Company if the Employee is offered a
Comparable Position by the purchaser or successor of such business,
an affiliate thereof, or an affiliate of an Employing Company,
or
(ix) A termination of
the Employee if the Employee is offered a Comparable Position
arranged for or secured by an Employing Company.
Section 3.2
Separation
Benefit
A Separation Benefit shall be provided for
Eligible Employees under the provisions of this Article 3 if an
Eligible Employee’s Separation from Service is the result of
(i) an Employing Company terminating the employment of the Eligible
Employee, (ii) a voluntary termination of employment by the
Eligible Employee on or after the date the Eligible Employee
attains age 65 or (iii) the death of the Eligible Employee on or
after the date the Eligible Employee attains age 65.
Section 3.3
Separation Benefit
Amount
The Separation Benefit payable to an Eligible
Employee under this Plan shall be based, in part, on his/her Years
of Service with the Company, or Employing Company. The
formula for determining an Employee’s Separation Benefit
payment shall be calculated by dividing the Employee’s
average Base Salary for the one-year period ending immediately
before the date of Separation from Service by 52 to calculate the
weekly separation benefit (the “Weekly Separation
Benefit”). The amount of the Separation Benefit
payable to the Eligible Employee shall then be determined in
accordance with the following applicable provision:
Schedule of Separation
Benefits
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Years of
Service
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Number of Weekly
Separation Benefit
Payments
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Years of
Service
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Number of Weekly
Separation Benefit
Payments
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1
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4
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14
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56
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2
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8
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15
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60
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3
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12
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16
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64
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4
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16
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17
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68
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5
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20
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18
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72
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6
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24
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19
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76
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7
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28
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20
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80
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8
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32
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21
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84
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9
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36
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22
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88
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10
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40
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23
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92
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11
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44
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24
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96
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12
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48
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25
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100
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13
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52
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26 or more
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104
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Section 3.4
Separation Benefit
Limitation
Notwithstanding anything in this Plan to the
contrary, the Separation Benefit payable to any Eligible Employee
under this Plan shall never exceed the lesser of (i) 104 Weekly
Separation Benefit payments; or (ii) the amount permitted under
ERISA to maintain this Plan as a welfare benefit
plan. The benefits payable under this Plan shall be
inclusive of and offset by any amounts paid under the Separation
Benefit Plan of Unit Corporation and Participating Subsidiaries,
federal, state, local or foreign government worker notification
(e.g., Worker Adjustment and Retraining Notification Act) or office
closing requirements.
Section 3.5
Withholding
Tax
The Employing Company shall deduct from the
amount of any Separation Benefits payable under this Plan, any
amount required to be withheld by the Employing Company by reason
of any law or regulation, for the payment of taxes or otherwise to
any federal, state, local or foreign government. In
determining the amount of any applicable tax, the Employing Company
shall be entitled to rely on the number of personal exemptions on
the official form(s) filed by the Employee with the Employing
Company for purposes of income tax withholding on regular
wages.
Section 3.6
Reemployment of an Eligible
Employee
Entitlement to the unpaid balance of any
Separation Benefit due an Eligible Employee under this Plan shall
be revoked immediately on reemployment of the person as an Employee
of an Employing Company. Any unpaid balance shall not be
payable in any future period.
However, if the person’s re-employment is
subsequently terminated and he or she then becomes entitled to a
Separation Benefit under this Plan, Years of Service for the period
of re-employment shall be added to that portion of his or her prior
service represented by the unpaid balance or the revoked
entitlement for the prior Separation Benefit.
Section 3.7
Integration with Disability
Benefits
The Separation Benefit payable to an Eligible
Employee with respect to any Separation Period shall be reduced
(but not below zero) by the amount of any disability benefit
payable from any disability plan or program sponsored or
contributed to by an Employing Company. The amount of
any resulting reduction shall not be paid to the Eligible Employee
in any future period.
Section 3.8
Plan Benefit
Offset
The amount of any severance or separation type
payment that an Employing Company is or was obligated to pay to an
Eligible Employee under any law, decree, or court award because of
the Eligible Employee’s termination of employment from an
Employing Company shall reduce the amount of Separation Benefit
otherwise payable under this Plan. Notwithstanding the
immediately preceding sentence, the terms of this Section 3.8 shall
not be applicable to any benefits paid under a Change of Control
Contract.
An Employing Company may deduct from the
Separation Benefit any amount owing to an Employing Company
from
(a) the
Eligible Employee, or
(b) the
executor or administrator of the Eligible Employee’s
estate.
Section 3.10
Change in
Control
Unless otherwise provided in writing by the
Board of Directors before a Change in Control of the Company, all
Eligible Employees shall be vested in his/her Separation Benefit as
of the date of the Change in Control based on the Eligible
Employee’s then Years of Service as determined by reference
to the schedule set forth in Section 3.3 of this
Plan. Any Separation Benefit deemed to have vested under
this Section shall be payable on the Eligible Employee’s
Separation from Service with the Employing Company and shall be
paid in accordance with the Plan provisions in effect immediately
before the Change in Control.
ARTICLE 4.
METHOD OF PAYMENT
Section 4.1
Separation Benefit
Payment
Separation Benefit payments shall be paid in
equal installments in the same manner as wages were paid to the
Eligible Employee, and, subject to Section 4.4, the installments
shall begin no later than 90 days following the Termination
Date. Notwithstanding anything in the Plan to the
contrary, the Separation Period for an Eligible Employee shall
never exceed the amount of time permitted under ERISA to maintain
this Plan as a welfare benefit plan. If under the
payment schedule set forth in this Plan, the Separation Period will
expire before the full payment of the Separation Benefit owed to an
Eligible Employee under this Plan, then the total amount unpaid as
of the final installment shall be paid to the Eligible Employee in
the final installment.
Section 4.2
Protection of
Business
(i) Any Eligible
Employee who receives Separation Benefits under Section 3.3.2 of
this Plan agrees that, in consideration of the Separation Benefits,
the Employee will not, in any capacity, directly or indirectly, and
on his or her own behalf or on behalf of any other person or
entity, during the period of time he or she is receiving Separation
Benefits, either (a) solicit or attempt to induce any current
customer of the Employing Company to cease doing business with the
Employing Company; (b) solicit or attempt to induce any employee of
the Employing Company to sever the employment relationship; (c)
compete against the Employing Company; (d) injure the Employing
Company and the Company, in their business activities or its
reputation; or (e) act as an employee, independent contractor, or
service provider of a person or entity that is a competitor of the
Employing Company or injures the Employing Company or the Company,
its business activities or its reputation (collectively, the
“Protection of Business Requirements”). The
Compensation Committee in its sole discretion shall decide whether
any Eligible Employee is in violation of this Section.
(ii) Except as provided
in the next paragraph and/or the Separation Agreement, in the event
the Eligible Employee violates the Protection of Business
Requirements of this Section (or the like provisions of his or her
Separation Agreement), the Eligible Employee shall not be entitled
to any further payments of Separation Benefits under this Plan and
shall be obligated to repay the Employing Company all monies
previously received as Separation Benefits from the date of the
violation forward.
(iii) In the event of a
Change in Control, the Eligible Employee’s obligations under
this Section shall expire and be canceled, and the
Eligible Employee shall be entitled to Separation Benefits
under this Plan in accordance with its terms even if he or she
engage
