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EXHIBIT 10(b)xxi
PLAN AGREEMENT
FOR
MANAGEMENT LIFE INSURANCE PLAN
This Plan Agreement for the Management Life Insurance Plan ("Agreement")
is made as of July 1, 1995, by and between Anadarko Petroleum Corporation, a
Delaware corporation (the "Corporation"), and _______________(the "Employee").
RECITALS
A. The Employee desires to insure his or her life for the
benefit and protection of his or her family under the Policy (as defined
below);
B. The Corporation desires to help the Employee provide
insurance for the benefit and protection of his or her family by providing
funds from time to time to pay the premiums due on the Policy; and
C. The Employee, as owner of the Policy, desires to assign
certain interests in the Policy to the Corporation, to the extent provided
herein, as security for repayment of certain funds provided by the Corporation
for the acquisition and/or maintenance of the Policy.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Agreement agree
as follows:
1. Definitions. For purposes of this Agreement, unless
otherwise clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any time, an
amount equal to (i) the cumulative premiums paid by the Corporation under
the Policy, less (ii) the amount of any policy dividends or interest
thereon paid in cash to the Corporation or used by the Corporation to
make premium payments, less (iii) any policy loans to the Corporation and
accrued interest thereon at such time. Despite the foregoing, Aggregate
Premiums Paid shall not include extra benefit riders or agreements, other
than those providing additional life insurance coverage on the insured.
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(b) "Base Annual Salary" shall mean the base annual
compensation, excluding bonuses, commissions, overtime, relocation
expenses, incentive payments, non-monetary awards, directors fees and
other fees, paid to the Employee for employment services rendered to the
Corporation, before reduction for compensation deferred pursuant to all
qualified, non-qualified and Code Section 125 plans of the Corporation.
For purposes of determining the Employee's Base Annual Salary as of a
particular Measurement Date, the Employee's Base Annual Salary as of the
most recent preceding July 1 will be used (which means that the
Employee's Base Annual Salary will be changed under this Agreement only
once a year to reflect the actual increase or decrease in the Employee's
actual base salary during the year preceding the applicable July 1).
(c) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender value provided under
the Policy at that time.
(d) "Change of Control Event" shall mean the Employee's
termination of employment with the Corporation following a "Change of
Control," as such term is defined in either the Company's (i) Key
Employee Change of Control Contract or (ii) Change in Control Severance
Pay Plan. The applicable definition of "Change of Control" will be based
on the plan that the terminating Employee participates in, and if the
Employee participates in both plans, the definition that is most
favorable to the Employee, in terms of allowing the Employee to receive a
more favorable benefit under this Agreement, shall be the applicable
definition. Despite the foregoing, a Change of Control Event shall not
occur with respect to the Employee unless at the time of a Change of
Control, the Employee was eligible for a benefit under either the Key
Employee Change of Control Contract or the Change in Control Severance
Pay Plan.
(e) "Collateral Assignment Agreement" shall mean an
assignment made by the Employee in favor of the Corporation in a form
mutually agreed to by the Corporation and the Employee and accepted by
the Insurer.
(f) "Collateral Interest" shall mean the Corporation's interests
in the Policy, as set forth in Section 6 below.
(g) "Employee's Death Benefit" shall mean an amount that is
equal to (i) the Employee's Base Annual Salary, determined as of the date
of his or her death, multiplied by four, less (ii) $50,000.00.
(h) "Insurer" shall mean Security Life of Denver, Sun Life
of Canada and/or such other carrier(s) as the Corporation, in its sole
discretion, may select for purposes of providing insurance under this
Plan
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(i) "Measurement Date" shall mean the earlier of:
(i) The Employee's Termination of Employment;
(ii) The termination of this Agreement in
accordance with Section 9 below;
(iii) The occurrence of a Change of Control Event;
(iv) The Employee's Retirement; or
(v) The Employee's death.
(j) "Disability" shall mean (i) a period of disability
during which the Employee qualifies for benefits under a disability plan
sponsored by the Corporation, (ii) if the Employee does not participate
in such a plan, a period of disability during which the Employee would
have qualified for benefits under such a plan had the Employee been a
participant in such a plan, or (iii) if the Corporation no longer
sponsors a long-term disability plan, a permanent disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(k) "Policy" shall mean the following policy or policies on
the life of the Employee that is issued by the Insurer:
Policy Number Insurer Type of policy
------------- ------- --------------
_____________ Sun Life of Canada Universal Life
_____________ Security Life of Denver Universal Life
(l) "Required Cash Surrender Value" shall mean, at the time
of a specified Measurement Date, the minimum amount of cash surrender
value that is needed in the Policy to support a death benefit that is
equal to one multiplied by the Employee's Base Annual Salary, determined
at the time of the specified Measurement Date, assuming that the Policy
will be held without surrender or loan until the Employee reaches age 90
and that the fixed interest rate to be used to project earnings on the
Policy up to the specified age is the Insurer's announced interest rate
under the Policy at the time of the specified Measurement Date. Despite
the foregoing, if a Change of Control Event occurs with respect to the
Employee, the Base Annual Salary that is used to calculate the Required
Cash Surrender Value shall be the higher of the Employee's Base Annual
Salary at the time of his or her Termination of Employment or at the time
of the Change of Control Event.
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(m) "Retirement" shall mean retirement (whether early,
normal or late) as defined under the Corporation's qualified retirement
plan, as that plan may be amended from time to time.
(n) "Tax Limitation Date" shall mean the date on which the
Policy will no longer be subject to those provisions of Section
7702(f)(7) and Section 7702A of the Internal Revenue Code of 1986, as
amended (the "Code"), that would cause any loan, distribution or
surrender from or under the Policy to be taxed under those Sections or
Section 72 of the Code.
(o) "Termination of Employment" shall mean the ceasing of
employment with the Company for any reason other than Retirement,
Disability, death, an authorized leave of absence or a Change of Control
Event.
(p) "Term of this Agreement" shall mean the completion of
all performances required by the Employee and the Corporation under this
Agreement.
2. Acquisition of Policy; Ownership of Insurance. The parties
to this Agreement shall cooperate in applying for and obtaining the Policy.
The Policy shall be issued to the Employee as the sole and exclusive owner of
the Policy, subject to a collateral assignment in favor of the Corporation, as
provided in this Agreement and the Collateral Assignment Agreement.
3. Premium Payments on Policy.
(a) During the Term of this Agreement, the Corporation
shall pay to the Insurer, on or before each applicable premium due date,
all applicable premiums for the Policy. In the event that the
Corporation fails to make any such payment, the Employee may make (but is
not required to make) any such payment, and the Corporation shall
immediately pay to the Employee any amount so paid. All such premium
payments made by the Corporation under this Agreement shall constitute
advances by the Corporation to the Employee for which the Employee shall
be responsible, to the extent of the Corporation's Collateral Interest,
for repayment in accordance with the terms of this Agreement.
(b) All dividends declared or distributions made on the
Policy, if any, shall be applied to buy additional paid-up insurance.
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4. Corporation's Rights. The Corporation's interests in and to
the Policy shall be specifically limited to (i) the right to be paid the
Collateral Interest upon the occurrence of the Measurement Date in accordance
with Section 6 below, and (ii) the right to obtain one or more loans or
advances on the Policy, either from the Insurer or, at any time, from other
persons, and to pledge or assign the Policy as security for such loans or
advances; provided, however, that such loans or pledges shall not in the
aggregate exceed the Aggregate Premiums Paid by the Corporation at any
specified date without the written consent of the Employee. With respect to
(ii) above, the sole signature of a duly authorized representative of the
Corporation shall be sufficient for the exercise of the Corporation's right to
borrow from the Policy or to pledge the Policy.
5. Employee's Rights.
(a) The Employee shall remain the owner of the Policy.
Except as otherwise provided in this Agreement (including Section 5(b)
below) and the Collateral Assignment Agreement, all rights in the Policy,
including, without limitation, the right to name or change the
beneficiary, shall remain exercisable by the Employee or his or her
permitted transferee. The rights granted to the Corporation by this
Agreement and the Collateral Assignment Agreement are intended to be no
greater than are necessary to secure the Corporation's Collateral
Interest, either from the Cash Surrender Value of the Policy during the
Employee's lifetime, or from the Policy's death proceeds upon the
Employee's death.
(b) Except as otherwise provided in this Agreement, without
the prior written consent of the Corporation, (i) the Employee shall have
no right to borrow against the Policy during the Term of this Agreement,
and (ii) the Employee or his or her permitted transferee shall not have
the right to surrender, cancel or assign the Policy during the Term of
this Agreement.
(c) For purposes of this Agreement, an Employee who has a
Disability will continue to be considered an employee of the Corporation
until the occurrence of a Measurement Date.
6. Collateral Interest.
(a) Upon the occurrence of the Measurement Date, the
Corporation's interest in the Policy (the "Collateral Interest") shall be
determined in the following manner:
(i) Upon the Employee's Termination of Employment, or
upon a termination of this Agreement by either party in accordance
with Section 9 below, the Corporation shall be entitled to an
amount that is equal to that portion of the Policy's Cash Surrender
Value that does not exceed the Aggregate Premiums Paid, plus the
difference, if any, between the remaining Cash Surrender Value and
the Required Cash Surrender Value, all as determined at the time of
such Measurement Date.
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(ii) Upon the Employee's Retirement, the Corporation
shall be entitled to an amount that is equal to that portion of the
Policy's Cash Surrender Value that does not exceed the Aggregate
Premiums Paid, plus the difference, if any, between the remaining
Cash Surrender Value and the Required Cash Surrender Value, all as
determined at the time of such Measurement Date. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iii) Upon a Change of Control Event with respect to
the Employee, the Corporation shall be entitled to an amount that
is equal to that portion of the Policy's Cash Surrender Value that
does not exceed the Aggregate Premiums Paid. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iv) Upon the death of the Employee, the Corporation
shall be entitled to that portion of the Policy's death proceeds
that exceeds the Employee's Death Benefit.
(b) Subject to Section 6(d) below, the Corporation's
Collateral Interest in the Policy, as determined in Section 6(a) above,
shall be paid to the Corporation in one of the following ways, as elected
by the Employee, within 30 days of the applicable Measurement Date, and
shall be paid as soon as is reasonably practical after the applicable
Measurement Date, but in no event more than 90 days after that date:
(i) Surrender, or partially surrender, the Policy and
pay to the Corporation (or arrange for the Insurer to pay directly
to the Corporation to the extent of the proceeds payable on
surrender) an amount equal to the Corporation's Collateral
Interest;
(ii) Retain the Policy and take a loan out on the
Policy and pay to the Corporation an amount equal to the
Corporation's Collateral Interest, provided that the Corporation
shall not be responsible for any interest that may accrue on any
such loan;
(iii) Retain the Policy and, from the Employee's
separate funds, pay to the Corporation an amount equal to the
Corporation's Collateral Interest; or
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(iv) Transfer ownership of the Policy, and all rights
thereunder, to the Corporation, provided that the Cash Surrender
Value of the Policy is at least equal to the Corporation's
Collateral Interest at the time of the transfer.
(c) If the Measurement Date is a result of the Employee's
death, the Corporation's Collateral Interest in the Policy, as determined
in Section 6(a) above, shall be paid from the Policy's death proceeds to
the Corporation as soon as is reasonably practical after the Employee's
death.
(d) Despite Section 6(b) above, if, at the time of the
applicable Measurement Date, the Tax Limitation Date has not occurred,
the Corporation shall have the right, in its sole discretion, to retain
its Collateral Interest in the Policy under the terms of this Agreement
as if the Measurement Date had not occurred until such time as the Tax
Limitation Date occurs (or such shorter period of time, as determined by
the Corporation, in it sole discretion). Upon the occurrence of the Tax
Limitation Date (or such earlier date), the Corporation shall be paid its
Collateral Interest, together with any additional premium payments, if
any, it has made on the Policy since the Measurement Date and earnings on
the Collateral Interest and the additional premium payments, as such
earnings are determined by reference to the performance of the Policy
during the period from the date of the applicable Measurement Date to the
occurrence of the Tax Limitation Date (or such earlier date).
(e) If, at the time of the applicable Measurement Date, the
Corporation has pledged the Policy as collateral for a loan, the
Corporation shall take all steps that are necessary to ensure that any
such pledge of the Policy is promptly released. If this is not done, the
Corporation's Collateral Interest shall be reduced to the extent of the
outstanding loan balance that relates to such pledge, and the Employee,
or his or her beneficiary, shall have the right to pay off the loan that
encumbers the Policy and to receive a release of the pledge and to pay to
the Corporation its remaining Collateral Interest.
(f) If the Employee fails to exercise any of the options
under Section 6(b) above within a 30-day period following the applicable
Measurement Date, by providing written notice of such election to the
Corporation, the Corporation shall be entitled, but not required, to
exercise the right to surrender the Policy and to receive the Policy's
Cash Surrender Value, to the extent of the Corporation's Collateral
Interest, or to transfer the ownership of and beneficial interest in the
Policy to the Corporation, and to pay to the Employee, in either case,
the Employee's interest, if any, in the Policy's Cash Surrender Value or
death proceeds.
(g) The Corporation agrees to keep records of its premium
payments and to furnish the Insurer with a statement of its Collateral
Interest whenever the Insurer requires such statement.
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(h) Concurrent with the signing of this Agreement, the
Employee will collaterally assign the Policy to the Corporation, in the
form of the Collateral Assignment Agreement, as security for the payment
of the Collateral Interest, which assignment shall not be altered or
changed without the consent of the Corporation.
(i) Promptly following the Employee's death, the
Corporation and the Employee's designated beneficiary under the Policy
shall take all steps necessary to collect the death proceeds of the
Policy by submitting the proper claims forms to the Insurer. The
Corporation shall notify the Insurer of the amount of the Employee's
Death Benefit and the Corporation's Collateral Interest in the Policy as
a result of such death. Such amounts shall be paid, respectively, by the
Insurer to the Employee's designated beneficiary and the Corporation.
(j) The Corporation shall cooperate in effecting any full
or partial policy surrender, policy loan, or surrender of paid-up
additions requested by the Employee related to the Employee's exercise of
any options provided in Section 6(b) above, provided that the Corporation
receives payment in full for its Collateral Interest in the Policy.
(k) If the Employee elects to retain the Policy in
accordance with Section 6(b) above, the Corporation shall (1) assign its
Collateral Interest in the Policy to the Employee, (2) execute and file
with the Insurer an appropriate release of the Corporation's Collateral
Interest in the Policy and (3) have no further interest in the Policy;
provided that, in all instances, the Corporation receives payment in full
for its Collateral Interest in the Policy. Further, the Employee hereby
acknowledges, understands and agrees that, upon the release of the
Corporation's Collateral Interest, the Corporation shall not have any
responsibility for the future performance of the Policy and shall have no
obligation to make any additional premium payments.
7. Insurer Not a Party. The Insurer is not a party to this
Agreement, shall in no way be bound by or charged with notice of its terms, and
is expressly authorized to act only in accordance with the terms of the Policy.
The Insurer shall be fully discharged from any and all liability under the
Policy upon payment or other performance of its obligations in accordance with
the terms of the Policy. The Insurer is authorized to recognize the
Corporation's right to borrow without the Insurer being responsible for the
calculation of the amounts permitted to be borrowed and without investigations
of the validity or amount of the request by the Corporation to borrow. The
signature of the Corporation shall be sufficient for the exercise of any rights
under the Policy granted to the Corporation under this Agreement.
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8. Named Fiduciary; Claims Procedure.
(a) The Corporation's Administration Committee is the named
fiduciary of the Management Life Insurance Plan of which this Agreement
is the written instrument.
(b) The following claims procedure shall be followed in
handling benefit claims under this Agreement:
(i) The Employee, or his or her beneficiary, (the
"Claimant"), shall file a claim for benefits by notifying the
Corporation in writing. If the claim is wholly or partially
denied, the Corporation shall provide a written notice within 90
days specifying the reasons for the denial, the provisions of this
Agreement on which the denial is based, and additional material or
information, if any, that is necessary for the Claimant to receive
benefits. Such written notice shall also indicate the steps to be
taken by the Claimant if a review of the denial is desired.
(ii) If a claim is denied, and a review is desired,
the Claimant shall notify the Corporation in writing within 60 days
after receipt of written notice of a denial of a claim. In
requesting a review, the Claimant may review plan documents and
submit any written issues and comments the Claimant feels are
appropriate. The Corporation shall then review the claim and
provide a written decision within 60 days of receipt of a request
for a review. This decision shall state the specific reasons for
the decision and shall include references to specific provisions of
this Agreement, if any, upon which the decision is based.
(iii) In no event shall the Corporation's liability
under this Agreement exceed the amount of proceeds from the Policy.
9. Amendment of Agreement; Termination. This Agreement shall
not be modified or amended except by a writing signed by the Corporation and
the Employee. Either party to this Agreement may terminate it by giving the
other party advance written notice.
10. Binding Agreement. This Agreement shall be binding upon the
heirs, administrators, executors, successors and assigns of each party to this
Agreement.
11. State Law. This Agreement shall be subject to and be
construed under the internal laws of the State of Texas.
12. Validity. In case any provision of this Agreement shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Agreement, but this Agreement shall be
construed and enforced as if such illegal or invalid provision had never been
inserted in this Agreement.
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13. Not a Contract of Employment. The terms and conditions of
this Agreement shall not be deemed to constitute a contract of employment
between the Corporation and the Employee. Such employment is hereby
acknowledged to be an "at will" employment relationship that can be terminated
at any time for any reason, with or without cause, unless expressly provided in
a separate written employment agreement. Nothing in this Agreement shall be
deemed to give the Employee the right to be retained in the service of the
Corporation or to interfere with the right of the Corporation to discipline or
discharge the Employee at any time.
14. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with regard to the subject matter of this
Agreement and supersedes all previous negotiations, agreements and commitments
in respect thereto. No oral explanation or oral information by either of the
parties to this Agreement shall alter the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the date first written above.
"Corporation"
Anadarko Petroleum Corporation
a Delaware corporation
By: _____________________________________
Senior Vice President, Administration
"Employee"
_________________________________________
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COLLATERAL ASSIGNMENT
FOR
MANAGEMENT LIFE INSURANCE PLAN
This COLLATERAL ASSIGNMENT (this "Assignment") is made and entered into
as of July 10, 1995, by and between 1~ (the "Employee"), as both the owner of
and insured under a life insurance policy, No. _______ (the "Policy"), issued
by Sun Life of Canada (the "Insurer"), and Anadarko Petroleum Corporation, a
Delaware corporation (the "Corporation").
RECITALS
A. The Employee desires to insure his or her life for the
benefit and protection of his or her family under the Policy (as defined
below);
B. The Corporation desires to help the Employee provide
insurance for the benefit and protection of his or her family by providing
funds from time to time to pay the premiums due on the Policy, as more
specifically provided for in the Plan Agreement for the Management Life
Insurance Plan (the "Agreement"), entered into between the Employee and the
Corporation as of the date hereof; and
C. In consideration of the Corporation agreeing to provide such
funds in accordance with the terms and conditions of the Agreement, the
Employee agrees to grant to the Corporation, as a security interest in the
Policy, a collateral security interest for the payment of the Corporation's
Collateral Interest (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and the mutual
agreements and covenants set forth below, the parties to this Assignment agree
as follows:
15. Assignment. The Employee hereby assigns, transfers and sets
over to the Corporation, its permitted successors and assigns certain rights in
the Policy, including any and all supplemental extra benefit riders or
agreements issued under the Policy, subject to all the terms and conditions of
the Policy, the Agreement and this Assignment. The Employee, by this
Assignment, and the Corporation by acceptance of this Assignment, hereby agree
to the conditions and provisions set forth in this Assignment. This Assignment
is made, and the Policy is to be held as collateral security for, any and all
liabilities of the Employee to the Corporation, either now existing, or that
may hereafter arise, pursuant to the terms of the Agreement.
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16. Definitions. For purposes of this Assignment, unless
otherwise clearly apparent from the context, the following phrases or terms
shall have the following indicated meanings:
(a) "Aggregate Premiums Paid" shall mean, at any time, an
amount equal to (i) the cumulative premiums paid by the Corporation under
the Policy, less (ii) the amount of any policy dividends or interest
thereon paid in cash to the Corporation or used by the Corporation to
make premium payments, less (iii) any policy loans to the Corporation and
accrued interest thereon at such time. Despite the foregoing, Aggregate
Premiums Paid shall not include extra benefit riders or agreements, other
than those providing additional life insurance coverage on the insured.
(b) "Base Annual Salary" shall mean the base annual
compensation, excluding bonuses, commissions, overtime, relocation
expenses, incentive payments, non-monetary awards, directors fees and
other fees, paid to the Employee for employment services rendered to the
Corporation, before reduction for compensation deferred pursuant to all
qualified, non-qualified and Code Section 125 plans of the Corporation.
For purposes of determining the Employee's Base Annual Salary as of a
particular Measurement Date, the Employee's Base Annual Salary as of the
most recent preceding July 1 will be used (which means that the
Employee's Base Annual Salary will be changed under this Assignment only
once a year to reflect the actual increase or decrease in the Employee's
actual base salary during the year preceding the applicable July 1).
(c) "Cash Surrender Value" shall mean an amount that
equals, at any specified time, the cash surrender value provided under
the Policy at that time.
(d) "Change of Control Event" shall mean the Employee's
termination of employment with the Corporation following a "Change of
Control," as such term is defined in either the Company's (i) Key
Employee Change of Control Contract or (ii) Change in Control Severance
Pay Plan. The applicable definition of "Change of Control" will be based
on the plan that the terminating Employee participates in, and if the
Employee participates in both plans, the definition that is most
favorable to the Employee, in terms of allowing the Employee to receive a
more favorable benefit under this Assignment, shall be the applicable
definition. Despite the foregoing, a Change of Control Event shall not
occur with respect to the Employee unless at the time of a Change of
Control, the Employee was eligible for a benefit under either the Key
Employee Change of Control Contract or the Change in Control Severance
Pay Plan.
(e) "Employee's Death Benefit" shall mean an amount that is
equal to (i) the Employee's Base Annual Salary, determined as of the date
of his or her death, multiplied by two, less (ii) $25,000.00.
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(f) "Measurement Date" shall mean the earlier of:
(i) The Employee's Termination of Employment;
(ii) The termination of the Agreement in
accordance with Section 9 of the Agreement;
(iii) The occurrence of a Change of Control Event;
(iv) The Employee's Retirement; or
(v) The Employee's death.
(g) "Disability" shall mean (i) a period of disability
during which the Employee qualifies for benefits under a disability plan
sponsored by the Corporation, (ii) if the Employee does not participate
in such a plan, a period of disability during which the Employee would
have qualified for benefits under such a plan had the Employee been a
participant in such a plan, or (iii) if the Corporation no longer
sponsors a long-term disability plan, a permanent disability as defined
in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(h) "Required Cash Surrender Value" shall mean, at the time
of a specified Measurement Date, the minimum amount of cash surrender
value that is needed in the Policy to support a death benefit that is
equal to one-half multiplied by the Employee's Base Annual Salary,
determined at the time of the specified Measurement Date, assuming that
the Policy will be held without surrender or loan until the Employee
reaches age 90 and that the fixed interest rate to be used to project
earnings on the Policy up to the specified age is the Insurer's announced
interest rate under the Policy at the time of the specified Measurement
Date. Despite the foregoing, if a Change of Control Event occurs with
respect to the Employee, the Base Annual Salary that is used to calculate
the Required Cash Surrender Value shall be the higher of the Employee's
Base Annual Salary at the time of his or her Termination of Employment or
at the time of the Change of Control Event.
(i) "Retirement" shall mean retirement (whether early,
normal or late) as defined under the Corporation's qualified retirement
plan, as that plan may be amended from time to time.
(j) "Tax Limitation Date" shall mean the date on which the
Policy will no longer be subject to those provisions of Section
7702(f)(7) and Section 7702A of the Internal Revenue Code of 1986, as
amended (the "Code"), that would cause any loan, distribution or
surrender from or under the Policy to be taxed under those Sections or
Section 72 of the Code.
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(k) "Termination of Employment" shall mean the ceasing of
employment with the Company for any reason other than Retirement,
Disability, death, an authorized leave of absence or a Change of Control
Event.
17. Corporation's Rights.
(a) The Corporation's interests in and to the Policy shall
be specifically limited to (i) the right to be paid the Collateral
Interest upon the occurrence of the Measurement Date in accordance with
Sections 3(b) and (c) below, and (ii) the right to obtain one or more
loans or advances on the Policy, either from the Insurer or, at any time,
from other persons, and to pledge or assign the Policy as security for
such loans or advances; provided, however, that such loans or pledges
shall not in the aggregate exceed the Aggregate Premiums Paid by the
Corporation at any specified date without the written consent of the
Employee. With respect to (ii) above, the sole signature of a duly
authorized representative of the Corporation shall be sufficient for the
exercise of the Corporation's right to borrow from the Policy or to
pledge the Policy.
(b) Upon the occurrence of the Measurement Date, the
Corporation's interest in the Policy (the "Collateral Interest") shall be
determined in the following manner:
(i) Upon the Employee's Termination of
Employment, or upon a termination of the Agreement by either party
in accordance with Section 9 of the Agreement, the Corporation
shall be entitled to an amount that is equal to that portion of the
Policy's Cash Surrender Value that does not exceed the Aggregate
Premiums Paid, plus the difference, if any, between the remaining
Cash Surrender Value and the Required Cash Surrender Value, all as
determined at the time of such Measurement Date.
(ii) Upon the Employee's Retirement, the
Corporation shall be entitled to an amount that is equal to that
portion of the Policy's Cash Surrender Value that does not exceed
the Aggregate Premiums Paid, plus the difference, if any, between
the remaining Cash Surrender Value and the Required Cash Surrender
Value, all as determined at the time of such Measurement Date.
Despite the foregoing, if, at the time of the Measurement Date, the
Policy's remaining Cash Surrender Value (after taking into account
the Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
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(iii) Upon a Change of Control Event with respect
to the Employee, the Corporation shall be entitled to an amount
that is equal to that portion of the Policy's Cash Surrender Value
that does not exceed the Aggregate Premiums Paid. Despite the
foregoing, if, at the time of the Measurement Date, the Policy's
remaining Cash Surrender Value (after taking into account the
Corporation's Collateral Interest described in the preceding
sentence) is less than the Required Cash Surrender Value, then the
Corporation's Collateral Interest specified in the preceding
sentence shall be reduced by the amount that the Required Cash
Surrender Value exceeds the remaining Cash Surrender Value.
(iv) Upon the death of the Employee, the
Corporation shall be entitled to that portion of the Policy's death
proceeds that exceeds the Employee's Death Benefit.
(c) Subject to Section 3(e) below, the Corporation's
Collateral Interest in the Policy, as determined in Section 3(b) above,
shall be paid to the Corporation in one of the following ways, as elected
by the Employee, within 30 days of the applicable Measurement Date, and
shall be paid as soon as is reasonably practical after the applicable
Measurement Date, but in no event more than 90 days after that date:
(i) Surrender, or partially surrender, the
Policy and pay to the Corporation (or arrange for the Insurer to
pay directly to the Corporation to the extent of the proceeds
payable on surrender) an amount equal to the Corporation's
Collateral Interest;
(ii) Retain the Policy and take a loan out on the
Policy and pay to the Corporation an amount equal to the
Corporation's Collateral Interest, provided that the Corporation
shall not be responsible for any interest that may accrue on any
such loan;
(iii) Retain the Policy and, from the Employee's
separate funds, pay to the Corporation an amount equal to the
Corporation's Collateral Interest; or
(iv) Transfer ownership of the Policy, and all
rights thereunder, to the Corporation, provided that the Cash
Surrender Value of the Policy is at least equal to the
Corporation's Collateral Interest at the time of the transfer.
(d) If the Measurement Date is a result of the Employee's
death, the Corporation's Collateral Interest in the Policy, as determined
in Section 3(b) above, shall be paid from the Policy's death proceeds to
the Corporation as soon as is reasonably practical after the Employee's
death.
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(e) Despite Section 3(c) above, if, at the time of the
applicable Measurement Date, the Tax Limitation Date has not occurred,
the Corporation shall have the right, in its sole discretion, to retain
its Collateral Interest in the Policy under the terms of this Assignment
as if the Measurement Date had not occurred until such time as the Tax
Limitation Date occurs (or such shorter period of time, as determined by
the Corporation, in it sole discretion). Upon the occurrence of the Tax
Limitation Date (or such earlier date), the Corporation shall be paid its
Collateral Interest, together with any additional premium payments, if
any, it has made on the Policy since the Measurement Date and earnings on
the Collateral Interest and the additional premium payments, as such
earnings are determined by reference to the performance of the Policy
during the period from the date of the applicable Measurement Date to the
occurrence of the Tax Limitation Date (or such earlier date).
(f) If, at the time of the applicable Measurement Date, the
Corporation has pledged the Policy as collateral for a loan, the
Corporation shall take all steps that are necessary to ensure that any
such pledge of the Policy is promptly released. If this is not done, the
Corporation's Collateral Interest shall be reduced to the extent of the
outstanding loan balance that relates to such pledge, and the Employee,
or his or her beneficiary, shall have the right to pay off the loan that
encumbers the Policy and to receive a release of the pledge and to pay to
the Corporation its remaining Collateral Interest.
(g) If the Employee fails to exercise any of the options
under Section (c) above within a 30-day period following the applicable
Measurement Date, by providing written notice of such election to the
Corporation, the Corporation shall be entitled, but not required, to
exercise the right to surrender the Policy and to receive the Policy's
Cash Surrender Value, to the extent of the Corporation's Collateral
Interest, or to transfer the ownership of and beneficial interest in the
Policy to the Corporation, and to pay to the Employee, in either case,
the Employee's interest, if any, in the Policy's Cash Surrender Value or
death proceeds.
4. Employee's Rights. For purposes of this Assignment, an
Employee who has a Disability will continue to be considered an employee of the
Corporation until the occurrence of a Measurement Date.
5. Incidents of Ownership. Except as specifically granted in
this Assignment to the Corporation, the Employee shall retain all incidents of
ownership in the Policy, other than the right to cancel, surrender or assign
the Policy or borrow against the Policy (except as provided in Section 3
above), including, but not limited to, the right to change the beneficiary of
that portion of the death proceeds to which he or she is entitled, and the
right to exercise all settlement options permitted by the terms of the Policy;
provided, however, that all rights retained by the Employee shall be subject to
the terms and conditions of this Assignment and the Agreement.
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6. Endorsement. The Corporation shall hold the Policy while
this Assignment is operative and, upon request, forward the Policy to the
Insurer, without unreasonable delay, for endorsement of any designation or
change of beneficiary, any election of optional mode of settlement, or the
exercise of any other right reserved by the Employee in this Assignment.
7. Insurer. The Insurer is hereby authorized to recognize the
Corporation's claims to rights hereunder without investigating the reason for
any action taken by the Corporation, the validity or amount of any of the
liabilities of the Employee to the Corporation under the Agreement, the
existence of any default therein, the giving of any notice required herein, or
the application to be made by the Corporation of any amounts to be paid to the
Corporation. The signature of the Corporation shall be sufficient for the
exercise of any rights under the Policy assigned hereby to the Corporation and
the receipt of the Corporation for any sums received by it shall be a full
discharge and release therefor to the Insurer. The Insurer shall not be
responsible for the sufficiency or validity of this Assignment and is not a
party to the Agreement (or any other similar split-dollar agreement) between
the Corporation and Employee.
8. Reassignment. Upon the full payment of the Corporation's
Collateral Interest in accordance with the terms and conditions of this
Assignment and the Agreement, the Corporation shall reassign to the Employee,
if the Employee retains the Policy, the Policy and all specific rights included
in this Assignment.
9. Captions. The captions of the Sections of this Assignment
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
10. Amendment of Assignment; Termination. This Assignment shall
not be modified, amended or terminated, except by a writing signed by the
Corporation and the Employee; provided, however, that this Assignment may be
terminated by either party if that Party terminates the Agreement in accordance
with Section 9 of the Agreement and the obligations of the party terminating
the Agreement are performed in full under the Agreement.
11. Binding Agreement; Assigns. This Assignment shall be binding
upon the heirs, administrators, executors and permitted successors and assigns
of each party to this Assignment. The Employee shall not assign his or her
rights under this Assignment without the prior written consent of the
Corporation.
12. State Law. This Assignment shall be subject to and be
construed under the internal laws of the State of Texas.
13. Validity. In case any provision of this Assignment shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Assignment, but this Assignment shall be
construed and enforced as if such illegal or invalid provision had never been
inserted in this Assignment.
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IN WITNESS WHEREOF, the Employee and the Corporation have signed this
Assignment as of the date first written above.
"Corporation"
Anadarko Petroleum Corporation
a Delaware corporation
By: _____________________________________
Senior Vice President, Administration
"Employee"
_________________________________________