EXHIBIT 10.1
NON-COMPETITION AGREEMENT
This NON-COMPETITION AGREEMENT (this "Agreement") is entered into as of the
29th day of October, 2004, between Xxxx X. Xxxxxx, an individual (the
"Restricted Party"), and Pioneer Natural Resources Company, a Delaware
corporation ("Parent").
RECITALS:
WHEREAS, on May 3, 2004, Parent, Evergreen Resources, Inc., a Colorado
corporation ("Evergreen"), and BC Merger Sub, Inc., a Colorado corporation
("Merger Sub"), entered into an Agreement and Plan of Merger that provided for
the merger (the "Merger") of Merger Sub with and into Evergreen (the "Merger
Agreement");
WHEREAS, at the time of the execution of the Merger Agreement, Restricted
Party and Parent entered into a Consulting and Non-Competition Agreement /or
Non-Competition Agreement dated May 3, 2004 (hereinafter referred to as the "May
3rd Agreement");
WHEREAS, subsequent to execution of the Merger Agreement a disagreement
between Parent and Restricted Party arose regarding certain payments to be made
to the Restricted Party pursuant to the Change in Control Agreement (defined
hereinafter);
WHEREAS, contemporaneously herewith Parent and Restricted Party are
entering into an Agreement to resolve the disagreement described above
("Settlement Agreement"); and
WHEREAS, the Restricted Party, as Xxxx X. Xxxxxx and an executive officer
of Evergreen and a stockholder of Evergreen at the time of the execution of the
Merger Agreement, has special expertise in the oil and gas business and
knowledge of the Confidential Information acquired by Parent under the Merger
Agreement and, as a result, the obligation of Parent and Merger Sub to enter
into the Merger Agreement was expressly conditioned upon the execution and
delivery of the May 3rd Agreement by the Restricted Party, and the obligation of
Parent to enter into the Settlement Agreement is expressly conditioned upon the
execution and delivery of this Agreement by the Restricted Party to preserve and
expand certain of the obligations of the May 3rd Agreement; and
WHEREAS, the Restricted Party has agreed to execute, deliver and perform
his obligations under this Agreement (i) in connection with the sale of
Evergreen by means of the Merger; (ii) to protect the goodwill and Confidential
Information acquired by Parent under the Merger Agreement; and (iii) to induce
Parent to enter into the Settlement Agreement and consummate the transactions
contemplated thereby, pursuant to which the Restricted Party will receive
specified and agreed upon consideration.
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NOW, THEREFORE, in consideration of the payment to Restricted Party of
$3,091,750.00 and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Defined Terms. When used in this Agreement, the following terms will have
the following meanings:
"Affiliate" means, with respect to any Person, each other Person that
directly or indirectly (through one or more intermediaries or otherwise)
controls, is controlled by, or is under common control with such Person. The
term "control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the actual power to
direct or cause the direction of the management policies of a Person, whether
through the ownership of stock, by contract, credit arrangement or otherwise;
"Business Enterprise" means any corporation, partnership, limited liability
company, sole proprietorship, joint venture, joint stock company, bank,
association, trust, trust company, land trust, business trust or other business
association or entity;
"Change in Control Agreement" means that certain Change in Control
Agreement dated as of March 1, 2002 between Evergreen and the Restricted Party;
"Closing" means the closing of the transactions contemplated by the Merger
Agreement;
"Closing Date" means the date on which the Closing occurred;
"Competing Business" means any Oil and Gas Business on or with respect to
the Non Competition Area;
"Confidential Information" means all information relating to the Evergreen
Companies and/or the Evergreen Oil and Gas Interests, including without
limitation information relating to title matters, environmental matters,
financial statements and other financial matters, engineering reports reflecting
the Evergreen Oil and Gas Interests, estimates of reserves, quality of reserves,
geological matters, asset listings, production and operating costs, production
capabilities, marketing, tax, forecasts and projections, in whatever form
(whether documentary, computer storage or other), in all cases pertaining to the
Non-Competition Area;
"Derivative Information" means any notes, summaries, evaluations, analyses
and other material derived by the Restricted Party Group from any of the
Confidential Information;
"Equity Interest" means the equity ownership rights in a Business
Enterprise, whether in the form of capital stock, ownership unit, limited
liability company interest, limited or general partnership interest or any other
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form of ownership, or any right, option, warrant, convertible security or
indebtedness or other instrument enabling any Person to acquire any of the same;
"Evergreen Company" or "Evergreen Companies" means Evergreen and each of
its Subsidiaries;
"Evergreen Oil and Gas Interests" means all Oil and Gas Interests in which
any Evergreen Company has any ownership, working, income and/or net profits
interest (including without limitation fee or leasehold interest);
"Hydrocarbons" means, oil, condensate, gas, casinghead gas and other liquid
or gaseous hydrocarbons;
"Non-Competition Area" means any area within the Raton Basin in Colorado or
New Mexico;
"Oil and Gas Business" means owning, managing, acquiring, attempting to
acquire, soliciting the acquisition of, operating, controlling or developing Oil
and Gas Interests or engaging in or being connected with, as a principal, owner,
officer, director, employee, shareholder, promoter, consultant, contractor,
partner, member, joint venturer, agent, equity owner or in any other capacity
whatsoever, any of the foregoing activities or the oil and gas exploration and
production business;
"Oil and Gas Interests" means (a) direct and indirect interests in and
rights with respect to oil, gas, mineral and related properties (including
revenues therefrom) and assets of any kind and nature, direct or indirect,
including without limitation working, royalty and overriding royalty interests,
mineral interests, leasehold interests, production payments, operating rights,
net profits interests, other non-working interests and non-operating interests;
(b) interests in and rights with respect to Hydrocarbons and other minerals or
revenues therefrom and contracts or agreements in connection therewith and
claims and rights thereto (including oil and gas leases, operating agreements,
unitization and pooling agreements and orders, division orders, transfer orders,
mineral deeds, royalty deeds, oil and gas sales, exchange and processing
contracts and agreements and, in each case, interests thereunder), surface
interests, fee interests, reversionary interests, reservations and concessions;
(c) easements, rights of way, licenses, permits, leases, and other interests
associated with, appurtenant to, or necessary for the operation of any of the
foregoing; and (d) interests in equipment and machinery (including well
equipment and machinery), oil and gas production, gathering, transmission,
compression, treating, processing and storage facilities (including tanks, tank
batteries, pipelines and gathering systems), pumps, water plants, electric
plants, gasoline and gas processing plants, refineries and other tangible
personal property and fixtures associated with, appurtenant to, or necessary for
the operation of any of the foregoing, regardless of location;
"Parent Company" or "Parent Companies" means Parent and each of its
Subsidiaries, including, after the Closing, the Evergreen Companies;
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"Person" means any natural person, Business Enterprise or governmental
authority;
"Preferential Right Area" means any area within 20 miles of any Oil and Gas
Interests owned by an Evergreen Party at the time of Closing in any of the three
areas generally described as the Uintah and Piceance Basins in Utah and Colorado
and the Western Sedimentary Basin in Canada;
"Restricted Party Group" means the Restricted Party together with (a) each
member of the Restricted Party's immediate family that lives in his household
and (b) any Business Enterprise in which the Restricted Party, any one or more
members of the Restricted Party's immediate family or the Restricted Party and
one or more members of the Restricted Party's immediate family collectively own
or have the right to acquire an Equity Interest in excess of 5% or otherwise
have any right, through the ownership of a voting interest or otherwise, to
direct the activities of such Business Enterprise; and
"Subsidiary" or "Subsidiaries" means, with respect to any party, any
entity, whether incorporated or unincorporated, of which at least a majority of
the securities or ownership interests having by their terms voting power to
elect a majority of the board of directors or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries.
2. Consideration. The Restricted Party has entered into this Agreement and
made the covenants hereinafter set forth (i) in connection with the sale of
Evergreen by means of the Merger; (ii) to protect the goodwill and Confidential
Information acquired by Parent under the Merger Agreement; and (iii) to induce
Parent to enter into the Settlement Agreement and consummate the transactions
contemplated thereby, pursuant to which transactions the Restricted Party has or
will receive consideration for his Equity Interest in Evergreen and will receive
payments under the Settlement Agreement.
3. Advisory Board Services. Parent acknowledges that Restricted Party has
agreed to act as a member of the Advisory Board of Heartland Oil and Gas Corp.
for a period of two years. Parent agrees that none of the Restricted Party's
activities in connection with his service on that Advisory Board shall be
considered a breach of any obligation under this Agreement or the May 3rd
Agreement.
4. Restriction on Activities
(a) From the Closing Date through the second anniversary thereof (the
"Restricted Period"), no member of the Restricted Party Group shall,
without prior written consent of Parent, directly or indirectly:
(i) engage in, carry on or assist, individually or as
a principal, owner, officer, director, employee, shareholder,
promoter, consultant, contractor, partner, member, joint
venturer, agent, equity owner, lender or in any other capacity
whatsoever, directly or indirectly, any (A) Competing Business
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or (B) Business Enterprise that is otherwise directly
competitive with any Parent Company on or with respect to the
Non-Competition Area;
(ii) perform for any Business Enterprise engaged in a
Competing Business any duty such member of the Restricted
Party Group performed for the Evergreen Companies; that
involved such member's access to, or knowledge or application
of, Confidential Information;
(iii) advise, request, induce or attempt to induce
any customer, supplier, licensee or other business relation of
any Parent Company to curtail, limit or cease doing business
with any Parent Company, or in any way interfere with the
relationship between any such customer, supplier, licensee or
business relation and any Parent Company;
(iv) individually or as a principal, owner, officer,
director, employee, shareholder, promoter, consultant,
contractor, partner, member, joint venturer, agent, equity
owner or in any other capacity whatsoever with or in any
Business Enterprise, own, acquire, attempt to acquire or
solicit the acquisition of (or assist any person or Business
Enterprise to own, acquire, attempt to acquire or solicit the
acquisition of) (A) any Oil and Gas Interest on or with
respect to the Non-Competition Area or (B) any Equity Interest
in any Business Enterprise with any Oil and Gas Interests on
or with respect to the Non-Competition Area;
(v) contact or solicit with respect to hiring (A) any
person who is an employee of any Parent Company, or (B) within
180 days after such person ceases to be so employed, any
person who was an employee of any Parent Company;
(vi) interfere with any of the Evergreen Oil and Gas
Interests or in any way attempt to do any of the foregoing or
assist any other Person to do or attempt to do any of the
foregoing; or
(vii) individually or as a principal, owner, officer,
director, employee, shareholder or beneficial owner of 5% or
more of the outstanding shares, promoter, consultant,
contractor, partner, member, joint venturer, agent, equity
owner or in any other capacity whatsoever with, or in, any
Business Enterprise, acquire or assist any person or Business
Enterprise to acquire, (A) any Oil and Gas Interest on or with
respect to the Preferential Right Area or (B) any Equity
Interest in any Business Enterprise with any Oil and Gas
Interests on or with respect to the Preferential Right Area
without providing Parent 30 days prior written notice and
offering Parent the right to acquire up to 50% of the Oil and
Gas Interest or Equity Interest in any Business Enterprise
without any promote. Notice to Parent shall be in writing and
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set forth costs and all other relevant terms and conditions of
such acquisition, along with copies of all applicable
documentation related thereto including, without limitation, a
copy of the relevant contracts, leases, assignments, farm-in
agreements or equivalent agreements. Parent must make its
election to participate in the transaction by written
notification within 10 days after receipt of documentation
that such Restricted Party has consummated the transaction.
(b) The Restricted Party, on behalf of the Restricted Party Group,
acknowledges that each of the covenants of Sections 4(a)(i) through
4(a)(vii) are in addition to, and shall not be construed as a
limitation upon, any other covenant provided in Section 4(a). The
Restricted Party, on behalf of the Restricted Party Group, agrees that
the geographic boundaries, scope of prohibited activities and time
duration of each of the covenants set forth in Sections 4(a)(i) through
4(a)(vii) are reasonable in nature and are no broader than are
necessary to protect the goodwill and Confidential Information of the
Evergreen Companies, the assets or Equity Interests of which are being
acquired by Parent indirectly through the merger of Merger Sub with and
into Evergreen, and to protect the other legitimate business interests
of the Evergreen Companies, including without limitation any goodwill
developed by the Restricted Party with the Evergreen Companies'
customers, suppliers, licensees and business partners.
(c) The parties hereto intend that the covenants contained in each of
Sections 4(a)(i) through 4(a)(vii) be construed as a series of separate
covenants, one for each county in the Non-Competition Area or
Preferential Right Area. Except for geographic coverage, each such
separate covenant shall be deemed identical in terms to the applicable
covenant contained in Sections 4(a)(i) through 4(a)(vii). Furthermore,
each of the covenants in Sections 4(a)(i) through 4(a)(vii) hereof
shall be deemed a separate and independent covenant, each being
enforceable irrespective of the enforceability (with or without
reformation) of the other covenants contained in Sections 4(a)(i)
through 4(a)(vii) hereof. The Restricted Party admits, acknowledges,
and agrees that the restrictions set forth in this Section 4 are (i)
made in connection with a contract for the purchase and sale of a
business as contemplated by C.R.S. 8-2-113(2)(a) and (ii) designed and
intended to protect the Parent's trade secrets as contemplated by
C.R.S. 8-2-113(2)(b). As such, the Restricted Party and the Parent
agree that the restriction set forth in this Section 4 are valid and
enforceable pursuant to Colorado law.
5. Confidentiality. The Restricted Party hereby acknowledges that, during the
term of the Restricted Party's relationship with the Evergreen Companies, the
Restricted Party Group has developed and had access to Confidential Information
and Derivative Information. The Restricted Party hereby agrees as follows with
respect to all Confidential Information and Derivative Information:
(a) Upon the Closing, the Restricted Party will, and will cause each
member of the Restricted Party Group to, immediately deliver to Parent
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all Confidential Information and Derivative Information in the
possession of the Restricted Party Group.
(b) During the Restricted Period, the Restricted Party will, and will
cause each member of the Restricted Party Group to, keep all
Confidential Information and Derivative Information strictly
confidential and will not, and will cause each member of the Restricted
Party Group not to, use (other than in the performance of duties for or
on behalf of the Parent Companies) any of such data, information or
results or disclose any such data, information or results to any Person
unless otherwise required by law or regulation, and then only after
written notice to Parent of the Restricted Party's determination of the
need for disclosure.
(c) In the event that the Restricted Party or any member of the
Restricted Party Group becomes legally compelled to disclose any
Confidential Information and/or Derivative Information, the Restricted
Party will provide Parent with prompt notice so that Parent may seek a
protective order or other appropriate remedy and/or waive the
Restricted Party's compliance with the confidentiality and
non-disclosure provisions of this Agreement, and the Restricted Party
will cooperate with Parent to obtain such protective order or other
remedy. In the event that such protective order or other remedy is not
obtained, the Restricted Party Group will furnish only that portion of
the Confidential Information and/or Derivative Information which it is
advised by counsel is legally required.
6. Responsibility for Restricted Party Group. The Restricted Party will be
responsible for any violation of the provisions hereof by any member of the
Restricted Party Group.
7. Miscellaneous. It is further agreed as follows:
(a) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
by telecopy, by facsimile, or mailed by registered or certified mail
(return receipt requested), or sent by Federal Express or other
recognized overnight courier, to the parties at the following addresses
(or at such other address for a party as shall be specified by like
notice):
To Parent: With a copy to:
Pioneer Natural Resources USA, Inc. Pioneer Natural Resources USA, Inc.
Attn: Xxxxx Xxxxxxx Attn: Xxxx Xxxxxxx
0000 X. X'Xxxxxx Xxxx., Xxxxx 000 0000 X. X'Xxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxx 00000 Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
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To the Restricted Party:
Xxxx X. Xxxxxx
00000 Xxxxx Xxxx
Xxxxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
(b) Severability. In the event that any provision of this
Agreement, or the application thereof to any Person or circumstance, is
held by a court of competent jurisdiction to be invalid, illegal or
unenforceable in any respect, such invalid, illegal or unenforceable
provision shall be fully severable, this Agreement shall then be
construed and enforced as if such provision had not been contained in
this Agreement, and the remaining provisions of this Agreement shall
remain in full force and effect and shall not be affected by such
provision or by its severance from this Agreement. Furthermore, in lieu
of each such illegal, invalid, or unenforceable provision, there shall
be added automatically as part of this Agreement a provision as similar
in terms to such provision as may be possible and be legal, valid and
enforceable. Notwithstanding the above, in the event any such
invalidity, illegality or unenforceability of any portion of Section
4(a) hereof is caused by such provision being held to be excessively
broad as to time, duration, geographical scope, activity or subject in
any jurisdiction, then such provision shall, at the option of Parent,
remain a part of this Agreement and shall be reformed and construed
within such jurisdiction by limiting and reducing it so as to be
enforceable to the extent compatible with then applicable law.
(c) Entire Agreement. This Agreement constitutes the entire
agreement and supercedes any and all previous agreements between the
parties with respect to the subject matter hereof including the May 3rd
Agreement. Neither this Agreement nor any of the provisions hereof can
be changed, waived, discharged or terminated except by an instrument
signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(d) Waiver. Waiver of performance of any obligation or term
contained in this Agreement by any party, or waiver by one party of the
other's default hereunder, will not operate as a waiver of performance
of any other obligation or term of this Agreement or a future waiver of
the same obligation or a waiver of any future default.
(e) Governing Law. This Agreement will be interpreted,
construed and enforced in accordance with the laws of the State of
Colorado (excluding Colorado choice-of-law principles that might call
for the application of some other state's law).
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(f) Specific Enforcement. The Restricted Party acknowledges
on behalf of the Restricted Party Group that the covenants of the
Restricted Party contained in Section 4, 5 and 6 of this Agreement are
special and unique, that a breach by any member of the Restricted Party
Group of any term or provision of any of such Sections may cause
irreparable injury to Parent, and that remedies at law for the breach
of any terms or provisions of Sections 4, 5 and 6 hereof may be
inadequate. Accordingly, in addition to any other remedies they may
have in the event of breach, Parent shall be entitled to enforce
specific performance of the terms and provisions of Sections 4, 5 and 6
hereof, to obtain temporary and permanent injunctive relief to prevent
the continued breach of such terms and provisions without the necessity
of posting a bond or of proving actual damage, and to obtain attorneys'
fees in respect of the foregoing if Parent prevails in such action or
proceeding.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
PIONEER NATURAL RESOURCES COMPANY
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
/s/ Xxxx X. Xxxxxx
-----------------------------
Xxxx X. Xxxxxx
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