EXHIBIT 10
CHANGE-IN-CONTROL EXECUTIVE SEVERANCE AGREEMENT
This Change-in-Control Severance
Agreement (this (“Agreement”), dated and effective
September 4, 2007, is between Panhandle Oil and Gas Inc., an
Oklahoma corporation (the “Company”), and
(the “Executive”).
Statement of Purpose
The Company desires, for its
continued success, to have the benefit of services of experienced
management personnel like the Executive. The Board of Directors of
the Company therefore believes that it is in the best interest of
the Company that, in the event of any prospective change in control
of the Company, the Executive be reasonably secure in his
employment and position with the Company, so that the Executive can
exercise independent judgment as to the best interest of the
Company and its shareholders, without distraction by any personal
uncertainties or risks regarding the executive’s continued
employment with the Company created by the possibility of a
change-in-control of the Company. The Board believes that this
Agreement will create an environment that is best suited to
maximizing shareholder value and retaining executive loyalty and
focus when they are needed most and will further align the
interests of Executive with the interests of the Company’s
shareholders.
Agreement
In consideration of the statements
made in the Statement of Purpose and the mutual agreements set
forth below, the Company and the Executive agree as follows:
1. Protection . In order
to protect Executive against the possible consequences of a
“Change-in-Control” of the Company (as defined in
Section 2) and to induce Executive to remain in the employ of
the Company and in consideration of Executive agreeing to remain in
the employ of the Company subject to the terms and conditions set
forth below, this Agreement sets forth the severance benefits which
the Company agrees will be provided to Executive in the event his
employment with the Company is terminated on or subsequent to a
Change-in-Control of the Company under the circumstances described
below.
2. Definitions . For
purposes of this Agreement, the following capitalized terms shall
have the following meanings:
(a)
“Board” means the Board of Directors of the
Company.
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(b)
“Cause” means:
(i) the
willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company (other
than a failure resulting from incapacity due to physical or mental
illness), within a reasonable period of time after a written demand
for substantial performance is delivered to the Executive by the
Board which demand specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
the Executive’s duties; or
(ii) the
willful engaging by the Executive in illegal conduct, gross
misconduct or a clearly established violation of the
Company’s written policies and procedures, in each case,
which is materially and demonstrably injurious to the Company,
monetarily or otherwise.
For
purposes of this paragraph (b), no act or failure to act, on the
part of the Executive, will be considered “willful”
unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive’s
action or omission was in the best interests of the Company. Any
act, or failure to act, based on authority given pursuant to a
resolution duly adopted by the Board or based on the advice of
counsel for the Company will be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the
best interests of the Company.
(c)
“Change-in-Control” means the occurrence of any one or
more of the following:
(i) any
“person” (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) (other than a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company) is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more
of the total voting power represented by the Company’s then
outstanding Voting Securities; or
(ii) during
any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new
director, whose election by the Board or nomination for election by
the Company’s shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board, or
(iii) the
shareholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or
consolidation that would result in the Voting Securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or
(iv) the
shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the
Company (in one transaction or a series of transactions) of all or
substantially all of the Company’s assets.
(d)
“Code” means the Internal Revenue Code of 1986, as
amended from time to time.
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(e)
“Date of Termination” means (i) if
Executive’s employment is terminated by the Company for
“Cause,” the date specified in the Notice of
Termination, and (ii) if Executive’s employment is
terminated for any other reason, the date on which a Notice of
Termination is given.
(f)
“Effective Date” means September 4, 2007.
(g)
“Good Reason” shall include:
(i) the
assignment to Executive of any position which results, in the
aggregate, in a material reduction in Executive’s rank,
authority, duties, status, or responsibilities as an officer of the
Company or Executive is assigned duties and obligations
inconsistent with his position with the Company;
(ii) Executive’s
annual base salary is reduced below the higher of Executive’s
base salary in effect immediately before the Change-in-Control or
Executive’s base salary in effect at any time after the
Change-in-Control;
(iii) Executive
is removed from or denied participation in incentive plans, benefit
plans, or perquisites generally provided by the Company to other
executives with a comparable level of responsibility, title or
stature;
(iv) a
failure to provide (or a reduction in, if previously provided)
incentive compensation opportunities, benefits or perquisites that
are provided other executives with comparable responsibility, title
or stature;
(v) the
failure by the Company to continue to provide the Executive with
benefits similar in all material respects to those enjoyed by the
Executive under any Plan in which the Executive was participating
at any time within three months before the Change-in-Control, the
taking of action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at any time
three months before the Change-in-Control, or the failure by the
Company to provide the Executive with the number of paid vacation
days to which the Executive is entitled on the basis of years of
service with the Company in accordance with the Company’s
normal vacation policy in effect at any time within three months
before the Change-in-Control.
(vi) the
Company’s principal officers are moved to a location more
than 25 highway miles from its current location or Executive is
required to be based anywhere other than the Company’s
principal executive offices;
(vii) the
failure of the Company to obtain a satisfactory agreement from any
successor to assume and agree to perform this Agreement
satisfactory in form and substance to Executive;
(viii) any
purported termination of the Executive’s employment which is
not effected pursuant to a Notice of Termination satisfying its
requirements, and for purposes of this Agreement, no such purported
termination shall be effective; or
(ix) any
material breach of this Agreement by the Company not described in
paragraphs (i) through (viii) above.
(h)
“Notice of Termination” means a written and dated
notice which indicates the Date of Termination (not earlier than
the date on which the notice is provided), and which indicates the
specific termination provision in this Agreement relied on and
which sets forth in reasonable
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detail
the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so
indicated.
(i)
“Plan” means any bonus, incentive compensation,
retirement, stock ownership or purchase, pension, deferred
compensation, or welfare benefits plan, policy, practice, program
or arrangement of (including any separate contract or agreement
with) the Company for its employees.
(j)
“Voting Securities” means the Company’s
Class A Common Stock, par value $0.01666 per share, and any
other securities of the Company that vote generally in the election
of directors.
3. Change-in-Control .
No benefits shall be payable hereunder unless there shall have been
a Change-in-Control of the Company, and Executive’s
employment by the Company shall have been terminated in accordance
with Section 5 below.
4. Rights Provided By
Agreement . This Agreement does not constitute a guarantee of
continued employment but instead provides for certain rights and
benefits in the event Executive’s employment with the Company
terminates under the circumstances provided herein.
5. Termination Following
Change-in-Contro l.
(a)
Severance Payment . If, on the occurrence of a
Change-in-Control or, within two (2) years following the
occurrence of a Change-in-Control, (i) Executive’s
employment with the Company is terminated by the Company other than
for Cause or Executive’s death, or (ii) Executive
resigns for Good Reason, then the Company shall pay to Executive as
severance pay in a lump sum, in cash, on or before the fifth day
following the Date of Termination, an amount equal to two (2) times
the average of the compensation paid to Executive during the two
(2) calendar years preceding the Change-in-Control (or the
annual average for any shorter period, if applicable). For this
purpose, compensation shall include the sum of Executive’s
base salary, bonuses and contributions made by the Company to its
ESOP Plan on Executive’s behalf. The bonus used in
determining Executive’s compensation shall not in any event
be less than Executive’s targeted bonus for the calendar year
in which the Change-in-Control occurs (or if not yet determined for
that calendar year in which the Change-in-Control occurs, the
Executives’ targeted bonus for the preceding calendar year.
In addition, the Company shall promptly reimburse Executive each
month for all costs incurred by Executive of purchasing COBRA
continuing coverage (as described in Section 4980B of the
Code) for Executive and all of Executive’s dependents
following Executive’s Date of Termination for so long as
Executive qualifies for such continuing coverage.
(b)
Notice of Termination . Any termination of Executive’s
employment by Executive for Good Reason shall be communicated by
Notice of Termination to the Company. Executive shall not be deemed
to have been terminated for Cause unless and until there shall have
been delivered to him a copy of a Notice of Termination from the
Board, after reasonable notice to Executive and an opportunity for
Executive, together with his counsel, to be heard before the Board,
finding that, in the good faith opinion of the Board, Executive was
guilty of conduct set forth above in clauses (i) or
(ii) in Section 5(a) and specifying the particulars thereof in
detail.
6. Term of Agreement .
This Agreement will continue in effect until the earlier of:
(a) The
termination or cessation of the Executive’s employment with
the Company before a Change-in-Control; or
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