Exhibit 10.3
UNIT CORPORATION
SEPARATION BENEFIT
PLAN
FOR SENIOR
MANAGEMENT
As Amended and
Restated
Effective December 31,
2008
UNIT CORPORATION
SEPARATION BENEFIT
PLAN
FOR SENIOR
MANAGEMENT
INDEX
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Page
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Introduction
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1
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ARTICLE 1.
Definitions
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1
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1.1
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“Base
Salary”
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1
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1.2
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“Beneficiary”
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1
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1.3
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“Board of
Directors”
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1
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1.4
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“Bonus”
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1
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1.5
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“Change
in Control”
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1
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1.6
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“Code”
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3
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1.7
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“Company”
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3
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1.8
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“Comparable Position”
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3
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1.9
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“Compensation Committee”
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3
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1.10
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“Completed Year of
Service”
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3
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1.11
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“Discharge for Cause”
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3
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1.12
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“Employing Company”
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3
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1.13
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“Erisa”
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4
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1.14
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“Human
Resources Director”
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4
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1.15
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“Participant”
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4
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1.16
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“Plan”
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4
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1.17
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“Separation Agreement”
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4
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1.18
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“Separation Benefit”
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4
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1.19
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“Separation Period”
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4
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1.20
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“Separation from Service”
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4
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1.21
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“Specified Employee”
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4
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1.22
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“Years of
Service”
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4
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ARTICLE 2.
Benefits
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4
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2.1
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Participants
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4
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2.2
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Separation
Benefit
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4
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2.3
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Eligibility
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5
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2.4
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Separation
Benefit Amount
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5
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2.5
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Separation
Benefit Limitation
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7
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2.6
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Withholding
Tax
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7
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2.7
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Reemployment of
a Participant
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7
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2.8
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Integration
with Disability Benefits
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7
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2.9
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Plan Benefit
Offset
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7
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2.10
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Recoupment
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8
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2.11
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Completion of
Twenty Years of Service
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8
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2.12
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Change in
Control
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8
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ARTICLE 3.
Method of Payment
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8
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3.1
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Separation
Benefit Payment
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8
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3.2
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Protection of
Business
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9
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3.3
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Death
Subsequent to Separation from Service
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10
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3.4
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Payment to
Specified Employees Upon Separation from Service
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11
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ARTICLE 4.
Waiver and Release of Claims
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11
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ARTICLE 5.
Funding
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11
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ARTICLE 6.
Administration
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11
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6.1
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Named
Fiduciary
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11
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6.2
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Fiduciary
Responsibilities
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12
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6.3
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Specific
Fiduciary Responsibilities
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12
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6.4
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Allocations and
Delegations of Responsibility
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12
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6.5
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Advisors
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13
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6.6
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Plan
Determination
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13
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6.7
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Modification
and Termination
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13
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6.8
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Indemnification
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13
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6.9
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Successful
Defense
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14
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6.10
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Unsuccessful
Defense
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14
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6.11
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Advance
Payments
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14
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6.12
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Repayment of
Advance Payments
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14
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6.13
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Right of Indemnification
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14
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ARTICLE 7.
Effective Date and Plan Year
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15
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ARTICLE 8.
Miscellaneous
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15
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8.1
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Assignment
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15
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8.2
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Governing
Law
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15
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8.3
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Employing
Company Records
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15
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8.4
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Employment
Non-Contractual
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15
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8.5
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Taxes
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16
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8.6
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Binding
Effect
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16
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8.7
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Entire
Agreement
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16
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8.8
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Decisions and
Appeals
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16
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UNIT CORPORATION
SEPARATION BENEFIT
PLAN
FOR SENIOR
MANAGEMENT
Introduction
The purpose of the Unit Corporation
Separation Benefit Plan for Senior Management is to provide certain
officers and key executives of Unit Corporation or its subsidiaries
with appropriate assurances of continued income and other benefits
for a reasonable period of time in the event that the
individual’s employment ceases under the circumstances
described herein.
The Compensation Committee shall,
in its absolute discretion select the individuals to be covered by
this Plan from time to time. The Compensation Committee
may notify each selected individual of his or her selection and
provide him or her with a copy of this Plan.
Participation in the Plan shall not
in any respect be deemed to grant Participant either a right to
continued participation in the Plan or a right to continued
employment and employment and participation remains terminable at
will by either the Employing Company or Participant at any time for
any reason or for no reason.
ARTICLE 1.
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 a Participant 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 a
Participant in a written instrument filed with the Compensation
Committee 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
a Participant over and above Base Salary earned and 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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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
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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 which complies with clauses (i), (ii) and (iii) of
subsection (iii) of this definition;
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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;
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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
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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
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approval by the
stockholders of the Company of a plan of complete liquidation or
dissolution of the Company.
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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 a
Participant’s current job and at a work location within
reasonable commuting distance from a Participant’s home, as
determined by the Participant’s Employing Company.
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“Compensation Committee”
means the Compensation Committee
established and appointed by the Board of Directors.
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“Completed Year of
Service” means the
period of time beginning with a Participant’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 a
Participant’s employment by the Employing Company due
to:
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the consistent
failure of Participant to perform Participant’s prescribed
duties to the Employing Company (other than any such failure
resulting from Participant’s incapacity due to physical or
mental illness);
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the commission
by Participant of a wrongful act that caused or was reasonably
likely to cause damage to the Employing Company;
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an act of gross
negligence, fraud, unfair competition, dishonesty or
misrepresentation in the performance of Participant duties on
behalf of the Employing Company;
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the conviction
of or the entry of a plea of nolo contendere by Participant 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;
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a breach of
Participant’s fiduciary duty involving personal profit;
or
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“Employing Company”
with respect to a Participant shall
mean either the Company or, if applicable, the subsidiary of the
Company which employs Participant.
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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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“Participant”
means an individual who is
designated as such pursuant to Section 2.1.
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“Plan” means the Unit Corporation Separation Benefit
Plan for Senior Management, 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 Participant 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
Participant would not otherwise be entitled.
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“Separation Benefit”
means the benefit provided for under
this Plan as determined under Article 2.
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“Separation Period”
means the period of time over which
a Participant receives Separation Benefits under the
Plan.
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“Separation from Service”
shall mean an Participant’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 Participant’s
period of employment beginning with Participant’s most recent
hire date and ending with Participant’s most recent
termination date.
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ARTICLE 2.
Benefits
Each individual named on Schedule I
hereto shall be a Participant in the Plan. Schedule I
may be amended by the Compensation Committee from
time to time to add individuals as a Participant.
A Separation Benefit shall be
provided under the provisions of this Article 2 to a Participant
who is eligible to receive a Separation Benefit under Section 2.3
at the time of their Separation from Service.
Each Participant who complies with
all administrative requirements of this Plan, including the
provisions of Article 4, is eligible to receive a Separation
Benefit following their Separation from
Service. However, a Participant is ineligible to receive
a Separation Benefit if he or she 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, a Participant
shall be ineligible to participate in this Plan if that
Participant’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)
An offer to Participant of a
position with an Employing Company, or affiliate,
(iv)
A termination under which a
Participant accepts any benefits under an incentive retirement plan
or other severance or termination benefits program, contract or
plan offered by the Company or the Employing Company,
(v)
A Participant who has a written
employment contract which contains severance provisions,
(vi)
A temporary work cessation due to
strikes, lockouts or similar reasons,
(vii)
The divestiture of any business of
an Employing Company if the Participant is offered a Comparable
Position by the purchaser or successor of such business, an
affiliate thereof, or an affiliate of an Employing Company,
or
(viii)
A termination of the Participant if
the Participant is offered a Comparable Position arranged for or
secured by an Employing Company.
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Separation
Benefit Amount
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The Separation Benefit payable to a
Participant under this Plan shall be based, in part, on his/her
Years of Service with the Company, or Employing
Company. The formula for determining a
Participant’s Separation Benefit payment shall be calculated
by dividing Participant’s annual Base Salary in effect
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 Participant shall then be determined in
accordance with the following applicable provision:
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Involuntary
separation - In the event
the Separation from Service is the result of an Employing Company
terminating the employment of Participant, the Separation Benefit
shall be determined according to the following schedule:
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Involuntary
Separation
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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4
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56
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8
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60
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12
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64
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16
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68
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20
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72
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24
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76
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28
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80
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32
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84
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36
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88
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40
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92
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44
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96
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48
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100
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52
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104
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Voluntary
separation - In the event
the Separation from Service is the result of Participant’s
own action (such as by way of example and not limitation, quitting,
resignation or retirement) the Separation Benefit shall be
determined according to the following Schedule:
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Voluntary
Separation
Schedule of Separation
Benefits
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Number of Weekly
Separation Benefit
Payments
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0
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80
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84
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88
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92
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96
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100
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104
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Under certain exceptional
circumstances the Compensation Committee may, in its sole and
absolute discretion, choose to treat a voluntary separation as an
involuntary separation and allow
a Participant to receive Separation
Benefits in accordance with the schedule set forth in Section
2.4.1.
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Separation
Benefit Limitation
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Notwithstanding anything in the
Plan to the contrary, the Separation Benefit payable to any
Participant 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 federal, state,
local or foreign government worker notification (e.g., Worker
Adjustment and Retraining Notification Act) or office closing
requirements.
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 Participant
with the Employing Company for purposes of income tax withholding
on regular wages.
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Reemployment
of a Participant
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Entitlement to the unpaid balance
of any Separation Benefit due a Participant 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.
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Integration
with Disability Benefits
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The Separation Benefit payable to a
Participant 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 Participant in any
future period.
The amount of any severance or
separation type payment that an Employing Company is or was
obligated to pay to a Participant under any law, decree, or court
award, because of Participant’s termination of employment
from an Employing Company shall reduce the amount of Separation
Benefit otherwise payable under this Plan.
The Company may deduct from the
Separation Benefit any amount owing to an Employing Company
from
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the executor or
administrator of Participant’s estate.
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Completion
of Twenty Years of Service
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Any Participant who completes 20
Years of Service before the termination of this Plan shall be
vested in his/her Separation Benefit, notwithstanding the
subsequent termination of this Plan before that Participant’s
Separation from Service. Any Separation Benefit deemed
to have vested under this Section shall be payable on such
Participant’s Separation from Service with the Employing
Company and shall be paid in accordance with the greater of (1) the
Plan provisions in effect immediately before the termination of
this Plan, and (2) the Plan provisions in effect on the date
Participant completed 20 Years of Service.
Unless otherwise provided in
writing by the Board of Directors before a Change in Control of the
Company, all Participant shall be vested in his/her Separation
Benefit as of the date of the Change in Control based on the
Participant’s then Years of Service as determined by
reference to the schedule set forth in Section 2.3.1
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