NOBLE ENERGY, INC. CHANGE OF CONTROL AGREEMENT
EXHIBIT
10.41
NOBLE
ENERGY, INC.
THIS
CHANGE OF CONTROL AGREEMENT (the “Agreement”), made and entered into by and
between NOBLE ENERGY, INC., a Delaware corporation (“Employer”), and
______________________ (“Executive”),
WITNESSETH
THAT:
WHEREAS,
Employer and Executive entered into a Change of Control Agreement effective as
of ________________ (the “Prior Agreement”); and
WHEREAS,
Employer and Executive now desire to amend the Prior Agreement to make certain
changes designed to comply with the requirements of Internal Revenue Code
section 409A;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, Employer and Executive hereby amend the Prior
Agreement by restatement in its entirety effective as of January 1, 2008, to
read as follows:
RECITALS
The
Board of Directors of Employer (the “Board”) has determined that it is in the
best interests of Employer to assure that Employer will have the continued
dedication of Executive, notwithstanding the possibility, threat or occurrence
of a Change of Control (as defined below). The Board believes it is
imperative to diminish the inevitable distraction of Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control, to encourage Executive’s full attention and dedication to Employer
currently and in the event of any threatened or pending Change of Control, and
to provide Executive with compensation and benefit arrangements upon a
Separation Event (as defined below) that ensure that such compensation and
benefits are competitive with other corporations.
AGREEMENT
In
consideration of Executive’s continued employment by Employer, as well as the
promises, covenants and obligations contained herein, Employer and Executive
agree as follows:
1. Payment
of Severance Amount. Subject to the provisions of paragraph 4,
upon the occurrence of a Separation Event with respect to Executive, Employer
shall:
(a) pay
to Executive when due under Employer’s normal payroll practices all unpaid
salary due to, and unreimbursed expenses incurred by, Executive in the
performance of his duties for Employer through the Separation Date (as defined
below);
(b) pay
Executive an amount equal to Executive’s Annual Cash Compensation (as defined in
paragraph 2) multiplied by a factor of _________________, payable as a lump sum
cash payment within 30 days following the Separation Date;
(c) pay
Executive an amount equal to Executive’s pro-rata (measured as (i) the number of
days expired, as of the Separation Date, in the then-current calendar year,
divided by (ii) 365) target bonus for the then-current year within 30 days
following the Separation Date;
(d) provide
Executive with life, disability, medical and dental insurance at the level
provided at either the date of the occurrence of a Change of Control or the
Separation Date, as Executive shall in his sole discretion elect by providing
written notice to Employer, for _____________________________ months following
the Separation Date or such shorter period until Executive shall obtain
substantially equivalent insurance
coverage from a subsequent employer, if any, in the same manner as if
Executive’s Separation from Service (as defined below) had not occurred until
the end of such period. Executive shall immediately notify Employer
upon obtaining any insurance from a subsequent employer and shall provide all
information required by Employer regarding such insurance to enable Employer to
make a determination of whether such insurance is substantially
equivalent;
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(e) notwithstanding
Executive’s Separation from Service, preserve Executive’s rights to purchase the
shares of Employer’s capital stock that are subject to then-outstanding options
that have been granted to Executive by Employer (or pursuant to a stock option
plan of Employer), so that all such options remain or become exercisable in
accordance with their terms as if Executive’s Separation from Service had not
occurred; and
(f) within
30 days after receiving a detailed invoice for same, reimburse Executive, up to
a maximum cumulative amount of Dollars, for
the reasonable fees of no more than __________ out-placement (or similar)
service provider[(s)]
engaged by Executive to assist in finding employment opportunities for Executive
during the twelve-month period following the Separation Date. All
reimbursements to be made pursuant to this paragraph 1(f) shall be made to
Executive no later than the end of the second calendar year following the
calendar year in which Executive’s Separation Date occurs.
2. Definitions.
(a) A
“Separation
Event” shall be deemed to have occurred if Employer or any successor
thereto causes Executive’s involuntary Separation from Service (within the
meaning of Treas. Reg. 1.409A-1(n)) at any time within 24 months after a Change
of Control for any reason other than (A) Cause (as defined below), or (B)
incapacity due to physical or mental illness. In addition, Employer
shall be deemed to have caused Executive’s involuntary Separation from Service
if Executive’s Separation from Service occurs following a Constructive
Separation Event (as defined below).
(b) A
“Change of
Control” shall be deemed to have occurred if:
(i) individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least fifty-one percent (51%) of the Board,
provided that any person becoming a director subsequent to the date hereof whose
election, or nomination for election by Employer’s stockholders was approved by
a vote of at least a majority of the directors then comprising the Incumbent
Board shall be, for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board;
(ii) the
stockholders of Employer shall approve a reorganization, merger or
consolidation, in each case, with respect to which persons who were the
stockholders of Employer immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own outstanding voting securities
representing at least fifty-one percent (51%) of the combined voting power
entitled to vote generally in the election of directors (“Voting Securities”) of
the reorganized, merged or consolidated company;
(iii) the
stockholders of Employer shall approve a liquidation or dissolution of Employer
or a sale of all or substantially all of the stock or assets of Employer;
or
(iv) any
“person,” as that term is defined in Section 3(a)(9) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) (other than Employer, any of its
subsidiaries, any employee benefit plan of Employer or any of its subsidiaries,
or any entity organized, appointed or established by Employer for or pursuant to
the terms of such a plan), together with all “affiliates” and “associates” (as
such terms are defined in Rule 12b-2 under the Exchange Act) of such person (as
well as any “Person” or “group” as those terms are used in Sections 13(d) and
14(d) of the Exchange Act), shall become the “beneficial owner” or “beneficial
owners” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of securities of Employer representing in the aggregate
twenty-five percent (25%) or more of either (A) the then outstanding shares of
common stock, par value
$3.33 per share, of Employer (“Common Stock”) or (B) the Voting Securities of
Employer, in either such case other than solely as a result of acquisitions of
such securities directly from Employer. Without limiting the
foregoing, a person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares the power to
vote, or to direct the voting of, or to dispose, or to direct the disposition
of, Common Stock or other Voting Securities of Employer shall be deemed the
beneficial owner of such Common Stock or Voting Securities.
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Notwithstanding
the foregoing, a “Change of Control” of Employer shall not be deemed to have
occurred for purposes of subparagraph (iv) of this paragraph 2(b) solely as the
result of an acquisition of securities by Employer which, by reducing the number
of shares of Common Stock or other Voting Securities of Employer outstanding,
increases (i) the proportionate number of shares of Common Stock beneficially
owned by any person to twenty-five percent (25%) or more of the shares of Common
Stock then outstanding or (ii) the proportionate voting power represented by the
Voting Securities of Employer beneficially owned by any person to twenty-five
percent (25%) or more of the combined voting power of all then outstanding
Voting Securities; provided, however, that if any person referred to in clause
(i) or (ii) of this sentence shall thereafter become the beneficial owner of any
additional shares of Common Stock or other Voting Securities of Employer (other
than a result of a stock split, stock dividend or similar transaction), then a
Change of Control of Employer shall be deemed to have occurred for purposes of
subparagraph (iv) of this paragraph 2(b).
(c) “Annual Cash
Compensation” shall, as determined on the Separation Date, be equal to
the sum of (i) plus (ii), where “(i)” equals Executive’s annualized salary in
effect on the date of the earliest Change of Control to occur during the
18-month period prior to the Separation Date, and “(ii)” equals the greater of
(A) Executive’s annual target bonus for the then-current bonus period and (B)
the average annual bonus paid or payable by Employer to Executive for the
three-year period (or for the period of Executive’s employment, if Executive has
not been employed for all of such three-year period) immediately preceding the
date of the Change of Control.
(d) For
purposes of this Agreement, “Cause”
shall mean (i) the willful and continued failure by Executive to perform his
duties as ____________________ of Employer or any of its subsidiaries or his
continued failure to perform duties reasonably requested or reasonably
prescribed by the Board (other than as a result of Executive’s death or
disability), (ii) the engaging by Executive in conduct that is materially
monetarily injurious to Employer or any of its subsidiaries, (iii) gross
negligence or willful misconduct by Executive in the performance of his duties
that results in, or causes, material monetary harm to Employer or any of its
subsidiaries, or (iv) Executive’s commission of a felony or other civil or
criminal offense involving moral turpitude. In the case of (i), (ii)
and (iii) above, a finding of Cause for separation shall be made only after
reasonable notice to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board. A determination of Cause by
the Board shall be effective only if agreed upon by a majority of the
directors.
(e) “Code”
shall mean the Internal Revenue Code of 1986, as amended.
(f) A
“Constructive
Separation Event” shall be deemed to have occurred if
Employer:
(i) demotes
Executive to a lesser position, in title or responsibility, as compared to the
highest position held by him with Employer at the earlier of the occurrence of a
Change of Control or the date on which a tentative agreement is reached by
Employer, or a public announcement is made, regarding a proposed Change of
Control that ultimately occurs;
(ii) decreases
Executive’s total annual compensation (i.e., the sum of his annual
salary, his target bonus under Employer’s annual incentive bonus plan or similar
plan in effect at the applicable time and the value of other employment benefits
provided to Executive by Employer) below the level in effect at the earlier of
the occurrence of a Change of Control or the date on which a tentative agreement
is reached by Employer, or a public announcement is made, regarding a proposed
Change of Control that ultimately occurs; provided, however, that a decrease in
total annual compensation that results solely from an amendment or termination
of any employee or group or other executive
benefit plan, which amendment or termination is applicable to all executives of
Employer, shall not constitute a Constructive Separation Event;
or
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(iii) requires
or requests Executive to relocate to a principal office more than 50 miles from
the principal office at which Executive is employed immediately prior to a
Change of Control; provided, however, that such a requirement or request for a
relocation shall constitute a Constructive Separation Event only if made in
connection with, and within 12 months after consummation of, the event or
transaction that constitutes (or the approval of which constitutes) the Change
of Control, and such 12-month period shall apply, for purposes of determining
whether an event specified in this clause (iii) constitutes a Separation Event,
in lieu of the 24-month period specified in paragraph 2(a). For
purposes of this clause (iii), it shall be presumed (and Employer shall have the
burden of proof to overcome such presumption) that a requirement or request for
a relocation is “in connection with” such an event or transaction if it is made
within the 12-month period specified in this clause (iii).
(g) “Separation from Service”
shall mean, with respect to Executive, Executive’s separation from service
(within the meaning of Section 409A of the Code and the regulations and other
guidance promulgated thereunder) with the group of employers that includes
Employer and each Affiliated Company. An employee’s Separation from
Service shall be deemed to occur on the date as of which the employee and his or
her employer reasonably anticipate that no further services will be performed
after such date or that the level of bona fide services the employee will
perform after such date (whether as an employee or an independent contractor)
will permanently decrease to no more than 20 percent (20%) of the average level
of bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the employer if the employee has been providing services to the
employer less than 36 months).
(h) “Affiliated Company” shall
mean any incorporated or unincorporated trade or business or other entity or
person, other than Employer, that along with Employer is considered a single
employer under Section 414(b) or 414(c) of the Code; provided, however, that (i)
in applying Section 1563(a)(1), (2), and (3) of the Code for the purposes of
determining a controlled group of corporations under Section 414(b) of the Code,
the phrase “at least 50 percent” shall be used instead of the phrase “at least
80 percent” in each place the phrase “at least 80 percent” appears in Section
1563(a)(1), (2), and (3) of the Code, and (ii) in applying Treas. Reg. section
1.414(c)-2 for the purposes of determining trades or businesses (whether or not
incorporated) that are under common control for the purposes of Section 414(c)
of the Code, the phrase “at least 50 percent” shall be used instead of the
phrase “at least 80 percent” in each place the phrase “at least 50 percent”
appears in Treas. Reg. section 1.414(c)-2.
(i) A
“Specified Employee”
shall mean a specified employee within the meaning of Section 409A(a)(2) of the
Code and the regulations and other guidance promulgated
thereunder. Each Specified Employee will be identified by the
Compensation, Benefits and Stock Option Committee of the Board as of each
December 31, using such definition of compensation permissible under Treas. Reg.
section 1.409A-1(i)(2) as said Committee shall determine in its discretion, and
each Specified Employee so identified shall be treated as a Specified Employee
for the purposes of this Agreement for the entire 12-month period beginning on
the April 1 following a December 31 Specified Employee identification
date.
(j) “Separation Date” shall mean
the date of the occurrence of a Separation Event with respect to
Executive.
3. Gross Up
Payment. In the event that (i) Executive becomes entitled to
the payment and benefits provided under paragraph 1 of this Agreement (the
“Change of Control Payment”) and any of the Change of Control Payment will be
subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code, or
any successor provision, or (ii) any payments or benefits received or to be
received by Executive pursuant to the terms of any other plan, arrangement or
agreement (the “Benefit Payments”) will be subject to the Excise Tax, Employer
shall pay to Executive an additional amount (the “Gross-Up Payment”) such that
the net amount retained by Executive, after deduction of any Excise Tax on the
Change of Control Payment and the Benefit Payments, and any federal, state and
local income tax and Excise Tax upon the payment provided for by this paragraph
3, shall be equal to the Change of Control Payment and the Benefit
Payments.
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For
purposes of determining whether any of the Change of Control Payment or the
Benefit Payments will be subject to the Excise Tax and the amount of such Excise
Tax:
(i) any
payments or benefits received or to be received by Executive in connection with
a change in control of Employer or Executive’s Separation from Service (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with Employer, any person whose actions result in change in control or
any person affiliated with Employer or such persons) shall be treated as
“parachute payments” within the meaning of Section 280G(b)(2) of the Code, and
all “excess parachute payments” within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, except to the extent that, in the
opinion of tax counsel selected by the Board, such payments or benefits (in
whole or in part) do not constitute parachute payments, or such excess payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code,
(ii) the
amount of the Change of Control Payment and the Benefit Payments that shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Change of Control Payment and the Benefits Payments or (B)
the amount of excess parachute payments within the meaning of Sections
280G(b)(1) and (4) (after applying clause (i), above), and
(iii) the
value of any non-cash benefits or any deferred payment or benefit shall be
determined by tax counsel, selected by the Board, in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code.
For
purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rates of taxation in
the state and locality of Executive’s residence on the date of separation, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the Excise
Tax is subsequently determined to be less than the amount taken into account
hereunder at the time of Executive’s Separation from Service, Executive shall
repay to Employer at that time that amount of such reduction in Excise Tax as is
finally determined to be the portion of the Gross-Up Payment attributable to
such reduction plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of Executive’s Separation from Service (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), Employer shall make an additional gross-up payment to
Executive in respect of such excess (plus any interest payable with respect to
such excess) at the time that the amount of such excess is finally
determined.
Any
payment to be made to Executive pursuant to this paragraph 3 shall be made
within 30 days after Executive remits the related taxes.
4. Payment
Delay for Specified Employees. Any provision of this Agreement to the
contrary notwithstanding, if Executive is a
Specified Employee on Executive’s Separation Date, then any payment to be made
to Executive pursuant paragraph 1(b) or 1(c) of this Agreement shall be made on
the first business day that is six (6) months after Executive’s Separation Date
(or if earlier, within 30 days after the date of Executive’s
death).
5. Notices. For
purposes of this Agreement, notices and all other communications provided for
herein shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by United States registered or certified
mail, return receipt requested, postage prepaid, (i) if to Employer, then
addressed to its principal business office, to the attention of the corporate
Secretary of Employer, and (ii) if to Executive, to his or her residence address
as reflected in Employer’s records (or to such other address as either party may
furnish to the other in writing in accordance herewith, except that notices of
changes of address shall be effective only upon receipt).
6. Applicable
Law. This contract is entered into under, and shall be
governed for all purposes by, the internal laws of the State of Texas, without
regard to principles of conflicts of law requiring the application of the law of
another State.
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7. Severability. If
a court of competent jurisdiction determines that any provision of this
Agreement is invalid or unenforceable, then the invalidity or unenforceability
of that provision shall not affect the validity or enforceability of any other
provision of this Agreement, and all other provisions shall remain in full force
and effect.
8. Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together will constitute one and the
same Agreement.
9. Withholding
of Taxes. Employer may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as may be required
pursuant to any law or governmental regulation or ruling.
10. No
Employment Agreement. Nothing in this Agreement shall give
Executive any rights (or impose any obligations) to continued employment by
Employer or any subsidiary thereof or successor thereto, nor shall it give
Employer any rights (or impose any obligations) with respect to continued
performance of duties by Executive for Employer or any subsidiary thereof or
successor thereto.
11. Payment
Authority. Any officer of Employer (other than Executive) is
authorized to issue and execute a check, initiate a wire transfer or otherwise
effect payment on behalf of Employer to satisfy Employer’s obligations to pay
all amounts due to Executive under this Agreement.
12. Assignment.
(a) This
Agreement is personal in nature and neither of the parties hereto shall, without
the consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder, except as provided in the remainder of this paragraph
12. Without limiting the foregoing, Executive’s right to receive
payments hereunder shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by his will
or by the laws of descent or distribution, and in the event of any attempted
assignment or transfer contrary to this paragraph 12 Employer shall have no
liability to pay any amount so attempted to be assigned or
transferred. This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
(b) Employer
may: (i) as long as it remains obligated with respect to this
Agreement, cause its obligations hereunder to be performed by a subsidiary or
subsidiaries for which Executive performs services, in whole or in part; (ii)
assign this Agreement and its rights hereunder in whole, but not in part, to any
party with or into which it may hereafter merge or consolidate or to which it
may transfer all or substantially all of its assets, if said party shall by
operation of law or expressly in writing assume to the reasonable satisfaction
of Executive all liabilities of Employer hereunder as fully as if it had been
originally named Employer herein; but may not otherwise assign this Agreement or
its rights hereunder. Subject to the foregoing, this Agreement shall
inure to the benefit of and be enforceable by Employer’s successors and
assigns.
(c) The
provisions of this paragraph 12 shall not prohibit or restrict the assignment or
transfer by Executive of any otherwise assignable or transferable right of
Executive to purchase the shares of Employer’s capital stock that are subject to
any outstanding option that has been granted to Executive by Employer (or
pursuant to a stock option plan of Employer).
13. Release
and Full Settlement. Any provision of this Agreement to the
contrary notwithstanding, as a condition to the receipt of any payment hereunder
upon the occurrence of a Separation Event, Executive shall first execute a
release, in such reasonable form as may be approved by the Board, releasing the
Board, Employer and Employer’s affiliates, stockholders, officers, directors,
employees and agents from any and all claims and from any and all causes of
action of any kind or character, including but not limited to all claims or
causes of action arising out of Executive’s employment with Employer or
Executive’s Separation from Service, and the performance of Employer’s
obligations hereunder and the receipt by Executive of the payments provided
hereunder shall constitute full settlement of all such claims and causes of action.
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14. Modifications. This
Agreement shall not be varied, altered, modified, canceled, changed or in any
way amended except by mutual agreement of the parties in a written instrument
executed by the parties hereto or their legal representatives.
15. Dispute
Procedure and Arbitration. Any dispute
arising in connection with this Agreement shall be resolved as
follows:
(a) If
Executive believes that he has been denied any payment or benefit he is entitled
to receive under this Agreement, within 60 days following such denial Executive
shall file a written claim for such denied payment or benefit with the President
of Employer (the “President”). Such written claim shall detail the
arguments and attach copies of the documents that support Executive’s claim for
the denied payment or benefit. Within 30 days after the receipt of
such written claim, the President shall review such claim and notify Executive
as to whether he is entitled to such payment or benefit. Such a
notification from the President shall be in writing and, if denying Executive’s
claim for such payment or benefit, shall set forth the specific reason or
reasons for the denial and make specific reference to the pertinent provisions
of this Agreement.
(b) Any
dispute arising in connection with this Agreement that is not resolved to the
satisfaction of Executive pursuant to the procedure provided for in paragraph
15(a) above, shall be finally resolved by arbitration in Houston, Texas,
governed by the Federal Arbitration Act and conducted pursuant to and in
accordance with the National Rules for the Resolution of Employment Disputes of
the American Arbitration Association. Either Employer or Executive
may request arbitration by sending written notice to the other
party. In any such arbitration, the only issues to be considered and
determined by the arbitrator(s) shall be issues pertaining to legal and
equitable rights and obligations of the parties under this Agreement and any
applicable law. A decision and award of the arbitrator(s) shall be
final, and may be entered in any court having jurisdiction thereof, and
application may be made to such court for judicial acceptance and/or an order
enforcing such decision and/or award. Judicial review of any decision
or award shall be in accordance with the Federal Arbitration Act, except that
review of any award of punitive or exemplary damages shall be conducted as if
the award of such damages were made by a jury sitting in a federal district
court in Houston, Texas. In the event the arbitrator(s) determine
there is a prevailing party in the arbitration, the prevailing party shall
recover from the losing party all costs of arbitration, including but not
limited to the fees of the arbitrator(s) and reasonable attorneys’ fees incurred
by the prevailing party. The provisions of this paragraph 15(b) shall
not be construed to limit or to preclude either party from bringing an action in
any court of competent jurisdiction for injunctive relief.
16. Interpretation. This
Agreement is intended to provide compensation and benefits that are not subject
to the tax imposed under Section 409A of the Code and shall be interpreted to
the extent possible in accordance with such intent.
IN
WITNESS WHEREOF, the parties have executed this Agreement on this ___ day of
_______________, 200____, to be effective as of January 1, 2008.
| NOBLE ENERGY, INC. | |||
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By:
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| Name: | |||
| Title: | |||
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