UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 24, 2018
Whiting Petroleum Corporation
(Exact name of registrant as specified in its charter)
| Delaware | 1-31899 | 20-0098515 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1700 Broadway, Suite 2300, Denver, Colorado 80290-2300
(Address of principal executive offices, including ZIP code)
(303) 837-1661
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 C.F.R. §230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 C.F.R. §240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act(17 C.F.R. §240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act(17 C.F.R. §240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On August 24, 2018, the Compensation Committee (the “Committee”) of the Board of Directors of Whiting Petroleum Corporation (the “Company”) approved, and the executive officers of the Company, including the Company’s named executive officers, executed, a letter agreement (the “Letter Agreement”) amending outstanding equity awards that had been granted under the Company’s 2013 Equity Incentive Plan (the “Plan”) to such officers and the Executive Employment and Severance Agreement (the “Employment Agreement”) between the Company and each of such officers. The amendments to the outstanding equity awards apply to all of the outstanding restricted stock and performance share awards granted to the officers of the Company, including the Company’s named executive officers, in 2016, 2017 and 2018.
The amendments to the outstanding restricted stock awards provide that if the award holder’s employment terminates as a result of the award holder’s retirement after age 60 with at least 10 years of service (a “Qualifying Retirement”) or death while eligible for a Qualifying Retirement, then all of the unvested restricted stock subject to the award will vest and be released. The amendments to the outstanding performance share awards provide that, if the award holder’s employment is terminated as a result of the award holder’s Qualifying Retirement or death while eligible for a Qualifying Retirement, then a pro rata portion of the performance shares will vest and be released, subject to the Committee’s determination of the number of shares earned based on performance through the end of the relevant performance period. The amendment to the Employment Agreement removes an exception to the non-competition obligations for service as a director of certain entities. A copy of the Letter Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference.
A new form of Restricted Stock Unit Award Agreement (Stock-Settled) (the “RSU Award Agreement”) and a new form of Performance Share Unit Award Agreement (together with the RSU Award Agreement, the “New Award Agreements”) that include vesting terms similar to the amendments to outstanding awards described above and approved by the Committee for use in granting future awards under the Plan are attached hereto as Exhibits 10.2 and 10.3, respectively, and incorporated herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
(a) Financial Statements of Businesses Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Shell Company Transactions. Not applicable.
(d) Exhibits: The exhibits listed in the Exhibit Index below are filed as part of this report.
EXHIBIT INDEX
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WHITING PETROLEUM CORPORATION | ||||||
| Date: August 30, 2018 | By: | /s/ Bruce R. DeBoer | ||||
| Bruce R. DeBoer Senior Vice President, General Counsel and Corporate Secretary | ||||||
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Exhibit 10.1
WHITING PETROLEUM CORPORATION
AMENDMENTS TO AWARDS UNDER
THE 2013 EQUITY INCENTIVE PLAN AND
THE EXECUTIVE EMPLOYMENT AND SEVERANCE AGREEMENT
August 24, 2018
Dear Award Holder:
The Compensation Committee recently approved enhanced vesting features for our long-term incentive compensation program for our officers. We intend to include these enhanced vesting features in future long-term incentive compensation awards granted to our officers and the vesting features will also apply to your outstanding restricted stock and performance share awards granted in 2016, 2017 and 2018 under the Whiting Petroleum Corporation 2013 Equity Incentive Plan. However, these enhanced vesting features will apply only if you also agree to an amendment to your Executive Employment and Severance Agreement. The enhanced vesting features and the amendment to your Executive Employment and Severance Agreement are described below.
Enhanced Vesting Features
| • | Restricted Stock—Retirement or Death While Retirement Eligible. If you retire after age 60 with at least 10 years of service (a “qualifying retirement”) or if you die while eligible for a qualifying retirement, then all of your unvested restricted stock will vest and be released. |
| • | Performance Shares—Retirement or Death While Retirement Eligible. If you have a qualifying retirement or die while eligible for a qualifying retirement, then a pro rata portion of your performance shares (based on time served as an employee during the relevant performance period) will vest and be released, subject to determination of the number of shares earned based on performance through the end of the relevant performance period. |
Amendment to Employment and Severance Agreement
In exchange for the enhanced vesting features described above, you are being asked to agree to an amendment to your Executive Employment and Severance Agreement. The amendment would remove the exception to your non-competition obligations for your service as a director of an entity that has less than 10% of its assets located in the Whiting Fields and Plays.
The descriptions above are only a summary of the proposed amendments to your equity awards and your Executive Employment and Severance Agreement and are qualified in their entirety by the full text of the amendments as set forth in Exhibit A to this letter. In the event of any difference between the descriptions above and the text in Exhibit A, the text in Exhibit A will govern. If you agree to the amendments, please sign and date this letter below where indicated and return the signed original to Bruce R. DeBoer.
Please be aware that, if you agree to these amendments and you either (1) are currently eligible for a qualifying retirement, or (2) become eligible for a qualifying retirement during the vesting or performance period that applies to your awards, then you may have a taxable event with respect to your awards before the shares are released to you. If that happens, Whiting will withhold shares from your award to cover the related tax withholding obligation so that you will not need to pay for the full amount of such taxes before receiving the shares.
Except for the changes described in these amendments, the terms and conditions of your awards, including, without limitation, the number of shares subject to your awards, the performance goals and the vesting schedules, as well as the terms and conditions of your Executive Employment and Severance Agreement, remain in full force and effect and are not changed.
If you have any questions, please contact Bruce R. DeBoer.
Sincerely,
Bradley J. Holly
Chairman, President and Chief Executive Officer
Whiting Petroleum Corporation
ACCEPTED AND AGREED:
| Signature: | Date: August 24, 2018 | |
| Print Name: | ||
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Exhibit A
Amendment to Restricted Stock Agreements
| 1. | Paragraph 2 of the Restricted Stock Agreements relating to awards granted in 2016, 2017 and 2018 (the “Restricted Stock Agreements”) is amended by adding the following to the end thereof: |
If the Participant’s employment is terminated by Retirement (as defined below) or as a result of the Participant’s death when the Participant is Retirement eligible, then the restrictions imposed upon the Restricted Stock (except for any such shares which were previously forfeited to the Company) by the first sentence of this Paragraph 2 shall immediately be deemed to have lapsed and the Release Date shall be deemed to have occurred with respect to the Restricted Stock as of the date of such termination. “Retirement” shall mean the termination of the Participant’s employment (x) following the Participant’s having reached the age of sixty (60) with at least ten (10) years of service as an employee of the Company or one of its affiliates and (y) at a time when Participant’s employment could not have been terminated for Cause (as defined in the Executive Employment and Severance Agreement between the Participant and the Company).
| 2. | Paragraph 5 of the Restricted Stock Agreements is amended and restated in its entirety to read as follows: |
Other Termination of Employment or Death Prior to Retirement Eligibility. If the Participant’s employment with, or service on the board of directors of, the Company and its affiliates (as applicable) is terminated prior to the Release Date for any reason other than the Participant’s Retirement or the Participant’s death following Retirement eligibility (including death prior to Retirement eligibility), then all Restricted Stock that has not been released shall be forfeited to the Company on the date on which such termination of status occurs.
| 3. | Paragraph 8 of the Restricted Stock Agreements is amended and restated in its entirety to read as follows: |
Tax Withholding.
| (a) | It shall be a condition of the obligation of the Company to issue or release from the segregated account Restricted Stock to the Participant, and the Participant agrees, that the Participant shall pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes incurred by reason of the award of the Restricted Stock, as a result of the termination of the restrictions on such Stock hereunder or in connection with any other event relating to the Restricted Stock. |
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| (b) | If the Participant does not make an election under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the Restricted Stock awarded hereunder, the Participant may satisfy the Company’s withholding tax requirements by electing to have the Company withhold that number of shares of Restricted Stock otherwise deliverable to the Participant from escrow hereunder or to deliver to the Company a number of shares of Stock, in each case, having a Fair Market Value (as defined in the Plan) on the Tax Date (as defined below) equal to the amount required to be withheld as a result of the termination of the restrictions on such Restricted Stock or other event relating to such Restricted Stock; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. The election must be made in writing and delivered to the Company prior to the Tax Date. If the number of shares of Stock so determined shall include a fractional share, the Participant shall deliver cash in lieu of such fractional share. All elections shall be made in a form approved by the Compensation Committee of the Board of Directors of the Company (the “Committee”) and shall be subject to disapproval, in whole or in part, by the Committee. As used herein, “Tax Date” means the date on which the Participant must include in his or her gross income for federal income tax purposes the fair market value of the Restricted Stock over the purchase price therefor, if any. |
| (c) | To the extent the Participant has not made a payment or election contemplated by subparagraph (a) or (b), the Company or an affiliate may withhold such taxes from other amounts owed to the Participant or may choose to satisfy withholding obligations relating to the Restricted Stock by withholding that number of shares of Restricted Stock otherwise held in escrow for the Participant hereunder having a Fair Market Value on the Tax Date equal to the amount required to be withheld; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. |
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Amendment to 2016 and 2017 Performance Share Agreements
| 1. | Paragraph 6 of the Performance Share Agreements relating to awards granted in 2016 and 2017 is amended and restated in its entirety to read as follows: |
Termination of Employment or Death.
| (a) | If the Participant’s employment with the Company and its affiliates terminates prior to the Release Date as a result of (i) the Participant’s Retirement (as defined below) or (ii) the Participant’s death when the Participant is Retirement-eligible (either of (i) or (ii), a “Qualifying Termination”), then the Participant shall be eligible to earn a pro rata portion of the shares subject to this Agreement. Such pro rata portion shall be equal to the product of (A) the Target Shares multiplied by (B) the quotient of (x) the number of days during the Performance Period on which the Participant was employed by the Company divided by (y) the total number of days in the Performance Period, and the number of Earned Shares shall be determined as provided in Paragraphs 2 and 3 by using such pro rata portion as the Target Shares. Any shares of Stock that are not part of such pro rata portion that the Participant remains eligible to earn shall be forfeited to the Company as of the date on which the Qualifying Termination occurs. |
| (b) | “Retirement” shall mean the termination of the Participant’s employment (i) following the Participant’s having reached the age of sixty (60) with at least ten (10) years of service as an employee of the Company or one of its affiliates and (ii) at a time when the Participant’s employment could not have been terminated for Cause (as defined in the Executive Employment and Severance Agreement between the Participant and the Company). |
| (d) | If the Participant’s employment with the Company and its affiliates is terminated prior to the Release Date for any reason other than the Participant’s Retirement or the Participant’s death following Retirement eligibility (including death prior to Retirement eligibility), then all Stock that has not been earned and released shall be forfeited to the Company on the date on which such termination occurs. |
| 2. | Paragraph 9 of the Performance Share Agreements relating to awards granted in 2016 and 2017 is amended and restated in its entirety to read as follows: |
Tax Withholding.
| (a) | It shall be a condition of the obligation of the Company to issue or release from the segregated account shares of Stock and Dividends to the Participant, and the Participant agrees, that the Participant shall pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes incurred by reason of the award of the Stock or Dividends, as a result of the termination of the restrictions on such Stock or Dividends hereunder or in connection with any other event relating to the Stock or Dividends. |
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| (b) | The Participant may satisfy withholding tax requirements with respect to shares of Stock by electing to have the Company withhold that number of shares of Stock otherwise deliverable to the Participant from the segregated account hereunder or otherwise issuable to the Participant to deliver to the Company a number of shares of Stock, in each case, having a Fair Market Value (as defined in the Plan) on the Tax Date (as defined below) equal to the amount required to be withheld as a result of the termination of the restrictions on or issuance of such shares of Stock; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. The election must be made in writing and must be delivered to the Company prior to the Tax Date. If the number of shares of Stock so determined shall include a fractional share, the Participant shall deliver cash in lieu of such fractional share. All elections shall be made in a form approved by the Compensation Committee of the Board of Directors of the Company (the “Committee”) and shall be subject to disapproval, in whole or in part, by the Committee. As used herein, “Tax Date” means the date on which the Participant must include in his or her gross income for federal income tax purposes the fair market value of shares of Stock over the purchase price therefor, if any. |
| (c) | To the extent the Participant has not made a payment or election contemplated by subparagraph (a) or (b), the Company or an affiliate may withhold such taxes from other amounts owed to the Participant or may choose to satisfy withholding obligations relating to the Stock by withholding that number of shares of Stock otherwise held in escrow for the Participant hereunder having a Fair Market Value on the Tax Date equal to the amount required to be withheld; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. |
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Amendment to 2018 Performance Share Agreement
| 1. | Paragraph 2 of the Performance Share Agreement relating to awards granted in 2018 is amended and restated in its entirety to read as follows: |
Determination of Performance Shares Earned.
| (a) | The number of shares of Stock earned (the “Earned Shares”) will equal the sum of the number of shares of Stock earned for each of the three performance periods set forth on Exhibit A (each, a “Performance Period”). The number of shares earned for a particular Performance Period shall equal the product of (a) one-third (1/3) of the Target Shares multiplied by (b) the earned percentage (the “Earned Percentage”) for that Performance Period, determined as set forth on Exhibit A. The Compensation Committee (the “Committee”) of the Board of Directors of the Company will make all final determinations regarding the number of Earned Shares for each Performance Period on a date within six weeks following the end of the applicable Performance Period (each such date, a “Determination Date,” and the final Determination Date, the “Release Date”); provided, however, that, subject to Section 2(b), such Earned Shares shall remain subject to the Participant’s satisfaction of the employment requirements of Section 6. |
| (b) | If the Participant’s employment with the Company and its affiliates terminates prior to the Release Date as a result of (i) the Participant’s Retirement (as defined below) or (ii) the Participant’s death (either of (i) or (ii), a “Qualifying Termination”), then the Participant shall be eligible to earn a pro rata portion of the shares subject to this Agreement as Earned Shares. Such pro rata portion shall be equal to, for each one-third (1/3) of the total shares subject to this Agreement subject to a Performance Period (each “Tranche”), the product of (A) the Earned Percentage applicable to the Tranche of shares multiplied by (B) the quotient of (x) the number of days during the Performance Period applicable to the Tranche of shares on which the Participant was employed by the Company or an affiliate divided by (y) the total number of days in the Performance Period applicable to the Tranche of shares. |
| (c) | “Retirement” shall mean the termination of the Participant’s employment (i) following the Participant’s having reached the age of sixty (60) with at least ten (10) years of service as an employee of the Company or one of its affiliates and (ii) at a time when Participant’s employment could not have been terminated for Cause (as defined in the Executive Employment and Severance Agreement between the Participant and the Company). |
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| 2. | Paragraph 3 of the Performance Share Agreement relating to awards granted in 2018 is amended and restated in its entirety to read as follows: |
Restrictions; Forfeiture of Unearned Shares.
| (a) | Except as otherwise provided herein, none of the Target Shares may be sold, transferred, pledged, assigned, encumbered or otherwise alienated or hypothecated until the Committee has determined the number of Earned Shares and the Participant has satisfied the employment requirements of Section 6 or had a Qualifying Termination. |
| (b) | To the extent the cumulative number of Earned Shares determined by the Committee exceeds the number of Target Shares (which, for purposes of clarity, shall be the number of Target Shares on the date of this Agreement), the Company or an affiliate shall make a cash payment to the Participant equal to the product of (i) the excess of the Earned Shares over the Target Shares and (ii) the Fair Market Value of a Share determined (A) as of the Release Date or (B) if such cash payment ceases to be subject to a substantial risk of forfeiture prior to the Release Date, as of the date on which such substantial risk of forfeiture lapses. Such cash payment shall be paid within thirty (30) days of the Release Date or, if such cash payment ceases to be subject to a substantial risk of forfeiture prior to the Release Date, within thirty (30) days of the date on which such substantial risk of forfeiture lapses. |
| (c) | To the extent the cumulative number of Earned Shares determined by the Committee is fewer than the number of Target Shares (which, for purposes of clarity, shall be the number of Target Shares on the date of this Agreement), then shares of Stock equal to the excess of the Target Shares over the Earned Shares will be forfeited to the Company on the Release Date. |
| 3. | The second sentence of Paragraph 4 of the Performance Share Agreement relating to awards granted in 2018 is amended and restated in its entirety to read as follows: |
Unless forfeited as provided herein, on the Release Date (or, following an earlier Qualifying Termination, upon the later of such Qualifying Termination or the Determination Date for the applicable Performance Period) (a) Target Shares that become Earned Shares shall cease to be held in such segregated account and (b) certificates for such Target Shares shall be delivered, or such shares of Stock shall be transferred electronically, to the Participant, and such delivered or transferred shares of Stock shall become free of the restrictions set forth in Section 3.
| 4. | Paragraph 6 of the Performance Share Agreement relating to awards granted in 2018 is amended and restated in its entirety to read as follows: |
Other Termination of Employment or Death Prior to Retirement Eligibility. If the Participant’s employment with the Company and its affiliates is terminated other than in a Qualifying Termination (including death prior to Retirement eligibility) prior to the Release Date, all shares subject to this Agreement shall be forfeited to the Company as of the date on which such termination occurs.
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| 5. | Paragraph 9 of the Performance Share Agreement relating to awards granted in 2018 is amended and restated in its entirety to read as follows: |
Tax Withholding.
| (a) | As a condition for any Stock, Dividends, or cash to be issued or paid to the Participant hereunder, the Participant agrees that the Participant shall pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes incurred by reason of the award of the Stock, Dividends or cash, as a result of the termination of the restrictions on such Stock or Dividends, or the payment of cash, hereunder, or in connection with any other event relating to the shares subject to this Agreement. |
| (b) | The Participant may satisfy withholding tax requirements with respect to shares of Stock by electing to have the Company withhold that number of shares of Stock otherwise deliverable to the Participant from the segregated account hereunder or otherwise issuable to the Participant to deliver to the Company a number of shares of Stock, in each case, having a Fair Market Value (as defined in the Plan) on the Tax Date (as defined below) equal to the amount required to be withheld as a result of the termination of the restrictions on or issuance of such shares of Stock or other event relating to shares subject to this Agreement; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. The election must be made in writing and must be delivered to the Company prior to the Tax Date. If the number of shares of Stock so determined shall include a fractional share, the Participant shall deliver cash in lieu of such fractional share (or such cash shall be withheld from any cash payment due hereunder). All elections shall be made in a form approved by the Committee and shall be subject to disapproval, in whole or in part, by the Committee. As used herein, “Tax Date” means the date on which the Participant must include in his or her gross income for federal income tax purposes the fair market value of shares of Stock over the purchase price therefor, if any. With respect to any payment of cash hereunder, the withholding taxes related thereto shall be deducted from such cash payment. |
| (c) | To the extent the Participant has not made a payment or election contemplated by subparagraph (a) or (b), the Company or an affiliate may withhold such taxes from other amounts owed to the Participant or may choose to satisfy withholding obligations relating to the shares of Stock subject to this Agreement by withholding that number of shares otherwise held in escrow for the Participant hereunder having a Fair Market Value on the Tax Date equal to the amount required to be withheld; provided, however, that the amount to be withheld in shares of Stock shall not exceed the maximum statutory tax rate associated with the transaction to the extent required for the Company to avoid adverse accounting treatment. |
| 6. | Paragraph 13 of the Performance Share Agreement relating to awards granted in 2018 is amended by adding the following to the end thereof: |
For the avoidance of doubt, this Section 13 shall not apply to shares of Stock that have previously been released or with respect to which payments have previously been made.
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Amendment to Executive Employment and Severance Agreement
Section 7(b)(i) of the Executive Employment and Severance Agreement is amended by adding the word “or” immediately before clause (B) thereof and by deleting the following text therefrom: “, or (C) serving as a director of an entity that has less than 10% of its assets located in the Whiting Fields and Plays”.
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Exhibit 10.2
WHITING PETROLEUM CORPORATION
RESTRICTED STOCK UNIT AWARD AGREEMENT (STOCK-SETTLED)
(Officer Form)
THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (this “Agreement”) is made and entered into as of [●], 20[●], by and between Whiting Petroleum Corporation, a Delaware corporation with its principal offices at Denver, Colorado (the “Company”), and the employee of the Company or one of its affiliates whose signature is set forth on the signature page hereof (the “Participant”).
W I T N E S S E T H :
WHEREAS, the Company has adopted the Whiting Petroleum Corporation 2013 Equity Incentive Plan (the “Plan”), which permits the Company to issue equity-based awards to certain key salaried employees and non-employee directors of the Company and any affiliate of the Company; and
WHEREAS, the Participant is an employee of the Company or one of its affiliates, and the Company desires such person to remain in such capacity and wishes to provide such person with the opportunity to receive monetary payments based on the value of the Company’s shares of common stock (the “Shares”) to align the personal interests of the Participant with the interests of shareholders and the success of the Company.
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows:
1. Award of RSUs. Subject to the terms and conditions set forth herein, the Company hereby awards the Participant the number of restricted stock units set forth on the signature page hereof (the “RSUs”).
2. Vesting. Subject to Sections 4, 5 and 12, one-third of the RSUs shall vest on each of the first, second, and third anniversaries of the Grant Date specified on the signature page hereof.
3. Settlement. As soon as reasonably practicable (but no more than thirty (30) days) after each vesting date or event (in the case of Sections 4 and 12), the Company will issue to the Participant a number of Shares equal to the number of RSUs that vested on such date or event. Notwithstanding the foregoing, if the RSUs are deferred compensation subject to Section 409A of the Code, and if the Participant is a “specified employee” as of the date of his or her “separation from service” (as those terms are defined in Section 409A of the Code), then the issuance of any Shares that would otherwise be made upon the date of the Participant’s separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date and will instead be issued on the date that is six (6) months and one day after the date of the Participant’s separation from service, but only if such delay in the issuance of the Shares is necessary to avoid the imposition of additional taxation on the Participant in respect of the Shares under Section 409A of the Code.
4. Retirement or Death Following Retirement-Eligibility. If the Participant’s employment is terminated by Retirement (as defined below) or as a result of the Participant’s death when the Participant is Retirement eligible, then the RSUs shall become 100% vested as of the date of such termination of employment, unless the RSUs were previously forfeited under the terms of this Agreement. “Retirement” shall mean the termination of the Participant’s employment (a) following the Participant’s having reached the age of sixty (60) with at least ten (10) years of service as an employee of the Company or one of its affiliates and (b) at a time when Participant’s employment could not have been terminated for Cause (as defined in the Executive Employment and Severance Agreement between the Participant and the Company).
5. Other Termination of Employment or Death Prior to Retirement Eligibility. If the Participant’s employment with the Company and its affiliates is terminated for any reason other than the Participant’s Retirement or the Participant’s death following Retirement eligibility (including death prior to Retirement eligibility), then all RSUs that have not vested as of the date of termination shall be forfeited as of the date on which such termination occurs.
6. Rights as a Shareholder; Dividend Equivalents. The Participant shall not have any rights of a shareholder with respect to the Shares underlying the RSUs (including, without limitation, any voting rights or any right to dividends), until the Shares have been issued hereunder. If, however, after the Grant Date and prior to the settlement date, a record date with respect to a cash dividend on the Shares occurs, then on the date that such dividend is paid to Company shareholders the Participant shall be credited with “dividend equivalents” in an amount equal to the dividends that would have been paid to the Participant if the Participant owned a number of Shares equal to the number of outstanding RSUs hereunder as of such record date. The dividend equivalents will be deemed to be reinvested in additional restricted stock units (determined by multiplying the cash dividends paid by the Fair Market Value of a Share on the dividend payment date) and will be subject to the same terms and conditions, and shall vest and be settled or be forfeited (if applicable) at the same time as the RSUs to which they are attributable.
7. Tax Withholding. As a condition of receiving this award of RSUs, the Participant agrees to pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes due by reason of the grant, vesting or settlement of, or by reason of any other event relating to, the RSUs, or the Participant may elect to have the Company satisfy such withholding obligations by withholding a number of Shares otherwise issuable hereunder having a Fair Market Value on the date the tax obligation arises equal to the amount to be withheld; provided, however, that the amount to be withheld may not exceed the total maximum statutory tax rates associated with the transaction to the extent needed for the Company to avoid adverse accounting treatment. If the Participant does not make such payment or election, then the Company or an affiliate may withhold such taxes from other amounts owed to the Participant or may choose to satisfy the withholding obligations by withholding Shares otherwise issuable hereunder in accordance with the preceding sentence.
8. No Right to Employment or Service. Nothing in this Agreement shall confer upon the Participant any right to continue in the employment or service of the Company or any affiliate, or interfere with or limit in any way the right of the Company or an affiliate to terminate the Participant’s employment or service at any time.
9. Interpretation by Committee. The Participant agrees that any dispute or disagreement which may arise in connection with this Agreement shall be resolved by the Committee, in its sole discretion, and that any interpretation by the Committee of the terms of this Agreement or the Plan and any determination made by the Committee under this Agreement or the Plan may be made in the sole discretion of the Committee and shall be final, binding, and conclusive. Any such determination need not be uniform and may be made differently among Participants awarded restricted stock units.
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10. Transferability. The Participant may not transfer any interest in the RSUs other than under the Participant’s will or as required by the laws of descent and distribution. The RSUs also may not be pledged, attached, or otherwise encumbered. Any purported assignment, alienation, sale, transfer, pledge, attachment or encumbrance of the RSUs in violation of the terms of this Agreement shall be null and void and unenforceable against the Company or its successors. In addition, notwithstanding anything to the contrary herein, the Participant agrees and acknowledges with respect to any Shares issued hereunder that have not been registered under the Securities Act of 1933, as amended (the “Act”) (a) he or he or she will not sell or otherwise dispose of such Shares except pursuant to an effective registration statement under the Act and any applicable state securities laws, or in a transaction which, in the opinion of counsel for the Company, is exempt from such registration, and (b) a legend will be placed on the certificates for the Shares to such effect.
11. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and to be performed therein between residents thereof.
(b) This Agreement may not be amended or modified except by the written consent of the parties hereto.
(c) The captions of this Agreement are inserted for convenience of reference only and shall not be taken into account in construing this Agreement.
(d) Any notice, filing or delivery hereunder or with respect to the RSUs shall be given to the Participant at either his or her usual work location or his or her home address as indicated in the records of the Company, and shall be given to the Committee or the Company at 1700 Broadway, Suite 2300, Denver, Colorado 80290-2300, Attention: Corporate Secretary. All such notices shall be given by first class mail, postage prepaid, or by personal delivery.
(e) This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and shall be binding upon and inure to the benefit of the Participant and the Participant’s heirs and legal representatives.
(f) This Agreement is subject in all respects to the terms and conditions of the Plan.
12. Change of Control. Notwithstanding any other provision to the contrary contained in this Agreement, effective upon a Change in Control (as defined in the Plan), the RSUs shall become 100% vested as of the date of such Change in Control, unless the RSUs were previously forfeited under the terms of this Agreement.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer and the Participant has hereunto affixed his or her signature, all as of the day and year first set forth above.
| COMPANY |
PARTICIPANT | |
| WHITING PETROLEUM CORPORATION |
||
| By: |
| |
| No. of Restricted Stock Units: | ||
| Grant Date: | ||
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Exhibit 10.3
WHITING PETROLEUM CORPORATION
PERFORMANCE SHARE UNIT AWARD AGREEMENT
(Officer Form)
THIS PERFORMANCE SHARE UNIT AWARD AGREEMENT (this “Agreement”) is made and entered into as of [●], 20[●] by and between Whiting Petroleum Corporation, a Delaware corporation with its principal offices at Denver, Colorado (the “Company”), and the employee of the Company or one of its affiliates whose signature is set forth on the signature page hereof (the “Participant”).
W I T N E S S E T H :
WHEREAS, the Company has adopted the Whiting Petroleum Corporation 2013 Equity Incentive Plan (the “Plan”) to permit shares of the Company’s common stock (the “Stock”) or cash to be awarded to certain key salaried employees and non-employee directors of the Company and any affiliate of the Company; and
WHEREAS, the Participant is an employee of the Company or one of its affiliates, and the Company desires such person to remain in such capacity and to further an opportunity for his or her stock ownership in the Company in order to increase his or her proprietary interest in the success of the Company;
NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows:
1. Award of PSUs. Subject to the terms and conditions set forth herein, the Company hereby awards the Participant the number of performance share units (“PSUs”) set forth on the signature page hereof as the target number of PSUs subject to this Agreement (the “Target PSUs”).
2. Determination of PSUs Earned.
(a) The number of PSUs earned (the “Earned PSUs”) will equal the sum of the number of PSUs earned for each of the three performance periods set forth on Exhibit A (each, a “Performance Period”). The number of PSUs earned for a particular Performance Period shall equal the product of (a) one-third (1/3) of the Target PSUs multiplied by (b) the earned percentage (the “Earned Percentage”) for that Performance Period, determined as set forth on Exhibit A. The Compensation Committee (the “Committee”) of the Board of Directors of the Company will make all final determinations regarding the number of Earned PSUs for each Performance Period on a date within six weeks following the end of the applicable Performance Period (each such date, a “Determination Date”); provided, however, that, subject to Section 2(b), such Earned PSUs shall remain subject to the Participant’s satisfaction of the employment requirements of Section 4. Any PSUs determined not to be earned on the Determination Date applicable to such PSUs shall be forfeited on such Determination Date.
(b) If the Participant’s employment with the Company and its affiliates terminates prior to the Determination Date following the final Performance Period (the “Final Determination Date”) as a result of (i) the Participant’s Retirement (as defined below) or (ii) the Participant’s death when the Participant is Retirement-eligible (either of (i) or (ii), a “Qualifying Termination”), then the Participant shall be eligible to receive a pro rata portion of the PSUs as Earned PSUs. Such pro rata portion shall be equal to, for each one-third (1/3) of the total PSUs subject to this Agreement subject to a Performance Period (each “Tranche”), the product of (A) the Earned Percentage applicable to the Tranche of PSUs multiplied by (B) the quotient of (x) the number of days during the Performance Period applicable to the Tranche of PSUs on which the Participant was employed by the Company or an affiliate divided by (y) the total number of days in the Performance Period applicable to the Tranche of PSUs.
(c) “Retirement” shall mean the termination of the Participant’s employment (i) following the Participant’s having reached the age of sixty (60) with at least ten (10) years of service as an employee of the Company or one of its affiliates and (ii) at a time when Participant’s employment could not have been terminated for Cause (as defined in the Executive Employment and Severance Agreement between the Participant and the Company).
3. Settlement of PSUs.
(a) As soon as reasonably practicable (but no more than thirty (30) days) after the Determination Date following the end of the final Performance Period (the “Final Determination Date”), the Company will issue to the Participant a number of Shares (or pay cash to the extent provided by Section 3(b)) equal to the number of the Earned PSUs determined to be earned on the Final Determination Date and the preceding Determination Dates; provided, however, that if the Participant’s employment with the Company terminates prior to the Final Determination Date as a result of a Qualifying Termination, then the Company will issue to the Participant a number of Shares (or pay cash to the extent provided by Section 3(b)) equal to the number of PSUs determined to be Earned PSUs pursuant to Section 2(b) as follows:
(i) if the Qualifying Termination occurs at or prior to the end of the first Performance Period, then (A) Shares subject to any Earned PSUs to which the first Performance Period applies (“First Tranche Earned PSUs”) shall be issued during the first quarter of the first calendar year following the calendar year in which such termination of employment occurs, (B) Shares subject to any Earned PSUs to which the second Performance Period applies (“Second Tranche Earned PSUs”) shall be issued (or cash paid to the extent provided in Section 3(b)) during the first quarter of the second calendar year following the calendar year in which such termination of employment occurs and (C) Shares subject to any Earned PSUs to which the third Performance Period applies (“Third Tranche Earned PSUs”) shall be issued (or cash paid to the extent provided in Section 3(b)) within thirty (30) days following the Final Determination Date.
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(ii) if the Qualifying Termination occurs after the end of the first Performance Period, then (A) Shares shall be issued (or cash paid to the extent provided in Section 3(b)) in settlement of any First Tranche Earned PSUs and any Second Tranche Earned PSUs during the first quarter of the first calendar year following the calendar year in which such termination of employment occurs and (B) Shares shall be issued (or cash paid to the extent provided in Section 3(b)) in settlement of any Third Tranche Earned PSUs within thirty (30) days following the Final Determination Date.
(b) Notwithstanding anything to the contrary herein:
(i) To the extent the total number of Shares that would otherwise be issued to the Participant in settlement of PSUs pursuant to the terms of this Agreement exceeds the Target PSUs (which, for purposes of clarity, shall be the Target PSUs on the date of this Agreement), the Participant shall be paid cash equal to the Fair Market Value of such excess Shares in lieu of being issued Shares.
(ii) If the PSUs are deferred compensation subject to Section 409A of the Code, and if the Participant is a “specified employee” as of the date of his or her “separation from service” (as those terms are defined in Section 409A of the Code), then the issuance of any Shares or other payment in settlement of PSUs that would otherwise be made upon the date of the Participant’s separation from service or within the first six (6) months thereafter will not be made on the originally scheduled date and will instead be issued or paid on the date that is six (6) months and one day after the date of the Participant’s separation from service, but only if such delay in the issuance or other payment is necessary to avoid the imposition of additional taxation on the Participant in respect of the Shares under Section 409A of the Code.
4. Other Termination of Employment or Death Prior to Retirement Eligibility. If the Participant’s employment with the Company and its affiliates is terminated other than in a Qualifying Termination (including death prior to Retirement Eligibility) prior to the Final Determination Date, then all PSUs shall be forfeited as of the date on which such termination occurs.
5. Rights as a Shareholder; Dividend Equivalents. The Participant shall not have any rights of a shareholder with respect to the Shares underlying the PSUs (including, without limitation, any voting rights or any right to dividends), until the Shares have been issued hereunder. If, however, after the grant date of the PSUs and prior to the settlement date, a record date with respect to a cash dividend on the Shares occurs, then on the date that such dividend is paid to Company shareholders the Participant shall be credited with “dividend equivalents” in an amount equal to the dividends that would have been paid to the Participant if the Participant owned a number of Shares equal to the number of PSUs subject to this Agreement as of such record date. The dividend equivalents will be deemed to be reinvested in additional performance share units (determined by multiplying the cash dividends paid by the Fair Market Value of a Share on the dividend payment date) and will be subject to the same terms and conditions, and shall be earned, vested, settled or forfeited (if applicable) at the same time and to the same extent, as the PSUs to which they are attributable.
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6. Tax Withholding. As a condition of receiving this award of PSUs, the Participant agrees to pay to the Company upon demand such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state, or local income or other taxes due by reason of the grant, vesting or settlement of, or by reason of any other event relating to, the PSUs, or the Participant may elect to have the Company satisfy such withholding obligations by withholding a number of Shares otherwise issuable or cash otherwise payable hereunder having a Fair Market Value on the date the tax obligation arises equal to the amount to be withheld; provided, however, that the amount to be withheld may not exceed the total maximum statutory tax rates associated with the transaction to the extent needed for the Company to avoid adverse accounting treatment. If the Participant does not make such payment or election, then the Company or an affiliate may withhold such taxes from other amounts owed to the Participant or may choose to satisfy the withholding obligations by withholding Shares otherwise issuable or cash otherwise payable hereunder in accordance with the preceding sentence.
7. No Right to Employment or Service; Forfeiture for Breach of Contract. Nothing in this Agreement shall confer upon the Participant any right to continue in the employment or service of the Company or any affiliate, or interfere with or limit in any way the right of the Company or an affiliate to terminate the Participant’s employment or service at any time. Notwithstanding anything to the contrary in this Agreement, if, after the Participant’s employment or service is terminated for any reason, the Participant breaches any material provision of any applicable confidentiality, non-compete, non-solicit, general release, covenant not-to-sue or other agreement with the Company or any affiliate, then any PSUs that have not previously been forfeited shall be forfeited immediately effective as of the date on which such breach occurs.
8. Interpretation by Committee. The Participant agrees that any dispute or disagreement which may arise in connection with this Agreement shall be resolved by the Committee, in its sole discretion, and that any interpretation by the Committee of the terms of this Agreement or the Plan and any determination made by the Committee under this Agreement or the Plan may be made in the sole discretion of the Committee and shall be final, binding, and conclusive. Any such determination need not be uniform and may be made differently among Participants awarded performance share units.
9. Transferability. The Participant may not transfer any interest in the PSUs other than under the Participant’s will or as required by the laws of descent and distribution. The PSUs also may not be pledged, attached, or otherwise encumbered. Any purported assignment, alienation, sale, transfer, pledge, attachment or encumbrance of the PSUs in violation of the terms of this Agreement shall be null and void and unenforceable against the Company or its successors. In addition, notwithstanding anything to the contrary herein, the Participant agrees and acknowledges with respect to any Shares issued hereunder that have not been registered under the Securities Act of 1933, as amended (the “Act”) (a) he or he or she will not sell or otherwise dispose of such Shares except pursuant to an effective registration statement under the Act and any applicable state securities laws, or in a transaction which, in the opinion of counsel for the Company, is exempt from such registration, and (b) a legend will be placed on the certificates for the Shares to such effect.
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10. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware applicable to contracts made and to be performed therein between residents thereof.
(b) This Agreement may not be amended or modified except by the written consent of the parties hereto.
(c) The captions of this Agreement are inserted for convenience of reference only and shall not be taken into account in construing this Agreement.
(d) Any notice, filing or delivery hereunder or with respect to the PSUs shall be given to the Participant at either his or her usual work location or his or her home address as indicated in the records of the Company, and shall be given to the Committee or the Company at 1700 Broadway, Suite 2300, Denver, Colorado 80290-2300, Attention: Corporate Secretary. All such notices shall be given by first class mail, postage prepaid, or by personal delivery.
(e) This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and shall be binding upon and inure to the benefit of the Participant and the Participant’s heirs and legal representatives.
(f) This Agreement is subject in all respects to the terms and conditions of the Plan, and the PSUs shall be considered Performance Units for purposes of the Plan.
11. Change in Control. Notwithstanding any other provision to the contrary contained in this Agreement, effective upon a Change in Control (as defined in the Plan) that occurs prior to the end of the last Performance Period, a number of PSUs equal to the sum of the PSUs described in (a) and (b) below shall be deemed to have been earned and shall be settled in Shares (or cash, to the extent provided by Section 3(b)) as of the date of the Change in Control (provided that such PSUs have not previously been forfeited or settled pursuant to the terms of this Agreement):
(a) with respect to each Performance Period that has been completed as of the date of the Change in Control (if any), the number of PSUs earned for such completed Performance Period; and
(b) with respect to each Performance Period that has not been completed as of the date the Change in Control occurs, one-third (1/3) of the Target PSUs (subject to, if the Participant has had a Qualifying Termination prior to the Change in Control, pro ration pursuant to Section 2(b)); provided that, if the terms of any employment or similar agreement in effect between the Participant and the Company or an affiliate as of the date of the Change in Control provide a better result, then the relevant provisions of such agreement are deemed incorporated by reference herein for such purpose and such provisions shall supercede the foregoing.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer and the Participant has hereunto affixed his or her signature, all as of the day and year first set forth above.
WHITING PETROLEUM CORPORATION
| By: | ||||||
| «Name» |
| Target PSUs: | ||||||
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