EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement ("AGREEMENT") is entered into effective as of
May 8, 2001 (the "EFFECTIVE DATE") by and between Plains Resources Inc., a
Delaware corporation ("COMPANY"), and Xxxxx X. Xxxxxx ("EMPLOYEE").
WHEREAS, the Company desires to employ Employee and Employee desires to be
employed by the Company;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties, and agreements contained herein, and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. Employment. The Company hereby employs Employee, and Employee hereby
accepts employment by the Company, on the terms and conditions set forth in this
Agreement.
2. Term of Employment. Subject to the provisions for earlier termination
provided in the Agreement, the term of this Agreement (the "TERM") shall
commence on the Effective Date and shall terminate on the fifth anniversary of
the Effective Date; provided, however, that following the fifth anniversary of
the Effective Date, the Term shall automatically be extended one year and again
for successive one-year periods on each anniversary thereof, if Employee and the
Company shall have agreed to new compensation terms at least ninety days prior
to the end of the initial five-year period and any additional one-year
extensions. Notwithstanding any provision of this Agreement to the contrary,
termination of this Agreement shall not alter or impair any rights or benefits
of Employee (or Employee's estate or beneficiaries) that have arisen under this
Agreement on or prior to such termination.
3. Employee's Duties. During the Term, Employee shall serve as the Chairman
and Chief Executive Officer of the Company, with such customary duties and
responsibilities as may from time to time be assigned to him by the Board,
provided that such duties are at all times consistent with the duties of such
positions. Employee shall report directly to the Board. All other employees of
the Company shall report to Employee. Employee agrees to serve without
additional compensation, if elected or appointed thereto, in one or more offices
or a director of any of the Company's Subsidiaries. For purposes of this
Agreement, a "Subsidiary" shall mean any entity in which the Company owns a
majority of the voting stock of the class of securities (or other interests in
the case of a limited liability company or partnership) that may vote in the
election of the members of the governing body of such entity.
Employee agrees to devote his full attention and time during normal
business hours to the business and affairs of the Company and to use reasonable
best efforts to perform faithfully and efficiently such duties and
responsibilities. Notwithstanding the foregoing, during
the Term, Employee may engage in the following activities so long as they do not
interfere in any material respect with the performance of Employee's duties and
responsibilities hereunder: (i) serve on corporate, civic or charitable boards
or committees, (ii) deliver lectures, fulfill speaking engagements or teach on a
part-time basis at educational institutions but not more than 20 hours per
month, and (iii) manage his personal investments; provided, however, that in no
event shall the conduct of any such activities by Employee be deemed to
materially interfere with Employee's duties hereunder until Employee has been
notified in writing thereof by the Board and given a reasonable period in which
to cure such interference; and further provided that Employee shall notify and
obtain approval of the Board prior to accepting any of the positions described
in clause (i) above, which approval shall not be unreasonably withheld. In
addition, Employee shall be permitted to manage his personal investments
described in clause (iii) above in accordance with the preceding sentence
provided that (a) such management shall not interfere in any material respect
with the performance of Employee's duties and responsibilities hereunder or
violate the Company's conflicts policy as in effect from time to time, (b)
Employee inform the Board of any conflicts of interest (whether actual or
apparent) with the Business (as defined in Section 7(c) hereof) of the Company
and any of its Subsidiaries, including any event reasonably likely to raise the
appearance of conflicts, and (c) Employee notify the Board of, and discuss with
the Board with respect to, any opportunities presented to Employee or any of the
entities in which Employee owns a majority interest in connection with such
continued ownership and management that should be offered to the Company or its
Subsidiaries. Notwithstanding the foregoing, the Company agrees that Employee's
management of his current personal investments, as disclosed to the Company
prior to the Effective Date, shall not be deemed to materially interfere with
his duties hereunder.
The Company agrees to (a) nominate Employee as a director of the Company
during the Term and (b) use its best efforts to cause Employee to be elected or
appointed, or re-elected or re-appointed, as a director of the Company during
the Term, and (c) use its reasonable best efforts to appoint Employee a member
of each committee of the Board to the extent such membership does not create any
conflicts of interest with respect to the Company and is permitted by the
Company's certificate of incorporation or by-laws as in effect from time to time
or applicable federal, state or local laws, regulations or rules, including, but
not limited to, rules of any stock exchange.
4. Compensation.
(a) General. Employee shall be entitled to receive base salary, bonus
and any other incentive compensation in the amounts as determined by the
Board from time to time in its sole discretion.
(b) Performance Option.
(i) For services rendered by Employee under this Agreement and in
lieu of base salary and bonus, the Company shall grant the Employee as
of the
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Effective Date a performance option to purchase 1,000,000 shares
of Common Stock of the Company ("PERFORMANCE OPTION"), substantially in
the form attached hereto as Exhibit A, under the Company's 2001 Stock
Incentive Plan ("2001 PLAN"). The Performance Option shall be granted
at an exercise price equal to the "fair market value" of a share (as
defined in the 2001 Plan) as of the Effective Date. In addition, the
Performance Option granted hereunder shall be subject to shareholder
approval of the 2001 Plan, it being understood that the parties will
cooperate and use reasonable best efforts to obtain voting agreements
or other indications of support for passage and approval of the 2001
Plan from shareholders mutually agreed to by Employee and the Company.
The Company agrees to hold a shareholder meeting at which the 2001 Plan
will be presented to shareholders for their approval no later than 90
days following the Effective Date. If the 2001 Plan does not receive
requisite shareholder approval, the Company shall pay Employee a salary
of $500,000 per year for five years, retroactive to the Effective Date
and an annual bonus of $500,000 for each of the first five years of the
Term in lieu of the Performance Option. The salary shall be payable in
accordance with the Company's normal payroll schedule and the bonus
shall be payable on each anniversary of the Effective Date.
(ii) The Performance Option granted hereunder shall vest on the
first to occur of the following: (A) day prior to the fifth anniversary
of the date of grant, (B) with respect to 50% of the shares subject to
the Performance Option, a period of 10 trading days during a period of
20 consecutive trading days upon which the closing price of the Common
Stock equals or exceeds 150% of the exercise price of the Performance
Option, (C) with respect to 100% of the shares subject to the
Performance Option, a period of 10 trading days during a period of 20
consecutive trading days upon which the closing price of the Common
Stock equals or exceeds 200% of the exercise price of the Performance
Option, (D) termination of the Employee's employment: (1) by the
Company for any reason other than Cause (as defined below), (2) due to
the death of Employee or (3) upon the Employee's resignation for Good
Reason (as defined below), (E) a Change in Control (as defined below),
or if earlier, a "change in control" (as defined in the 2001 Plan), or
(F) at any such time that Employee is not a member of the Board.
(iii) If any portion of the Performance Option vests in accordance
with clause (A) of the preceding paragraph, such portion of the
Performance Option shall be exercisable until the eighth anniversary of
the Effective
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Date; provided, however, that if Employee's employment is terminated
for any reason (other than Cause) prior to such eighth anniversary, the
Performance Option shall remain exercisable only until the first
anniversary of the Date of Termination. If any portion of the
Performance Option vests in accordance with clauses (B) or (C) of the
preceding paragraph, or if any portion vests under clause (F) of the
preceding paragraph and the performance goals under either clause (B)
or (C) are later met during the Term, the Performance Option, to the
extent that the performance goals have been met under either such
clause, shall remain exercisable for a period of ten years from the
Effective Date, notwithstanding termination of Employee's employment
for any reason (other than Cause) or the earlier vesting of the
Performance Option in accordance with clause (F) of the preceding
paragraph. If the Company terminates Employee's employment during the
Term for any reason other than Cause or Disability, or if Employee
resigns for Good Reason, any portion of the Performance Option that has
vested due to such termination shall be exercisable until the later of
(A) the fifth anniversary of the Effective Date or (B) one year from
the Date of Termination plus six months for each anniversary that has
occurred coincident with or prior to the Date of Termination. Upon
termination of Employee's employment due to death or termination by the
Company due to Disability, any portion of the Performance Option that
has vested due to such termination shall be exercisable until the later
of (A) the fifth anniversary of the Effective Date or (B) one year from
the Date of Termination. If any portion of the Performance Option vests
under clause (E) of the preceding paragraph, or under clause (F) of the
preceding paragraph and the performance goals under clauses (A) or (B)
are not later met during the Term, such portion shall remain
outstanding until the later of (A) the fifth anniversary of the
Effective Date or (B) one year from the Date of Termination for any
reason (other than Cause). Notwithstanding the foregoing, the
Performance Option shall in no event remain outstanding for a period
greater than ten years from the Effective Date. Upon a termination of
employment for Cause, the Performance Option shall immediately
terminate and be forfeited unless otherwise provided by the Board upon
termination of employment.
(c) Share Grant. Employee will be entitled to receive an amount equal
to the excess of the "fair market value" (as defined in the 2001 Plan) of a
share of Common Stock on the Effective Date and $22, multiplied by
1,000,000. Such amount shall be payable in five installment payments as of
each anniversary of the Effective Date occurring during the Term in the
form of a direct grant of shares of Common Stock, the number of which is
determined by dividing the annual installment payment by the fair
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market value of a share on the applicable anniversary date, rounded down to
the nearest whole share. Notwithstanding the foregoing, the first
installment payment shall be payable on the day following the first
anniversary of the Effective Date. As of the Effective Date, the Company
and Employee shall enter into a registration rights agreement,
substantially in the form attached hereto as Exhibit B.
5. Other Benefits; Business Expenses.
(a) Employee shall be entitled to participate in all incentive
compensation plans and to receive all fringe benefits and perquisites
offered by the Company to any of its senior executive officers, including,
without limitation, participation in the various health, retirement, life
insurance, disability insurance and other employee benefit plans or
programs provided to the employees of the Company in general, subject to
the regular eligibility requirements with respect to each of such benefit
plans or programs, and such other benefits or prerequisites as may be
approved by the Board during the Term, all on a basis at least as favorable
to Employee as may be provided to similarly situated senior executive
officers of the Company. Employee shall be entitled to take appropriate
and reasonable annual vacation time provided that such vacation time does
not interfere with his duties hereunder.
(b) The Company shall reimburse Employee for all reasonable business
expenses incurred by Employee in the performance of his duties; which
expenses will be subject to the oversight of the Company's audit committee
in the normal course. It is understood that Employee is authorized to
incur reasonable business expenses for promoting the business of the
Company, including reasonable expenditures for travel, lodging, meals and
client or business associate entertainment. Request for reimbursement for
such expenses must be accompanied by appropriate documentation.
6. Termination. This Agreement may be terminated prior to the end of its
Term as set forth below.
(a) Resignation. Employee may resign his position at any time. In
the event of such resignation, except in the case of resignation for Good
Reason (as defined below), Employee shall not be entitled to further
compensation pursuant to this Agreement except as may be provided by the
terms of any benefit plans of the Company in which Employee may be a
participant.
(b) Death. If Employee's employment is terminated due to his death,
this Agreement shall terminate and the Company shall have no obligations to
his legal representatives with respect to this Agreement other than the
payment of benefits as described in Section 6(c)(i) below.
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(c) Discharge.
(i) The Company may terminate this Agreement and Employee's
employment for any reason deemed sufficient by the Company upon notice
as provided in Section 10. However, in the event that Employee's
employment is terminated during the Term by the Company for any reason
other than Cause, in the event of Employee's death or Disability, or if
Employee's employment is terminated for Good Reason, then: (A) the
Company shall pay Employee immediately upon termination of Employee's
employment a lump sum equal to $2,500,000; (B) for the 36-month period
after the Date of Termination (as defined below), the Company shall
provide or arrange to provide Employee (and Employee's dependents) with
health insurance benefits no less favorable than the health plan
benefits provided by the Company (or any successor) during such 36-month
period to any senior executive officer of the Company; provided,
further, to the extent the coverage or benefits received are taxable to
Employee, the Company shall make Employee "whole" on a net after tax
basis; and provided, however, that such coverage shall cease if Employee
obtains comparable replacement coverage (although Employee shall have no
obligation to pursue such coverage); (C) the Performance Option shall
become immediately vested and exercisable in full in accordance with
Section 4 hereof; and (D) the remainder of the share grant listed in
Section 4(c) hereof shall be payable in full provided that the number of
shares to be paid to Employee or his estate, as the case may be, shall
be determined by dividing the amount equal to the aggregate unpaid
annual installments divided by the fair market value of a share on the
Date of Termination, provided that in the event the share price is less
than $22 on the Date of Termination, payment of the remaining share
grant shall be in the form of cash; payment of the remaining share grant
shall be made within 30 days of the Date of Termination.
(ii) Notwithstanding the foregoing provisions of this Section 6, in
the event Employee is terminated because of Cause, the Company shall
have no obligations pursuant to this Agreement after the Date of
Termination other than reimbursement of expenses incurred prior to such
date. For purposes herein, "Cause" means (A) the failure by Employee to
perform reasonably assigned duties with the Company, (B) the engaging by
Employee in conduct which is demonstrably and materially injurious to
the Company and its Subsidiares taken as a whole, (C) Employee's having
been convicted of, or entered a plea of nolo contendere to burglary,
larceny, murder or arson or a crime involving deceit,
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fraud, perjury or embezzlement, or (D) failure to notify the Company of
any actual or apparent conflicts of interest relating to Employee's
management of personal investments in accordance with Section 3 of this
Agreement. Notwithstanding the foregoing, prior to any termination for
Cause under clauses (A), (B) or (D) of the preceding sentence, (X) the
Company must provide Employee with reasonable notice detailing the
failure or conduct which the Board believes to constitute Cause, (Y) the
Company must provide Employee a reasonable opportunity to cure such
failure or conduct, and (Z) after such notice and an opportunity to
cure, a majority of the Board must reasonably determine that Employee
has not cured such failure or conduct. Notwithstanding the foregoing
provisions, Employee shall not be deemed to have been terminated for
Cause unless and until Employee shall have been provided an opportunity
to be heard in person by the Board (with the assistance of Employee's
counsel if Employee so desires).
(d) Disability. If Employee shall have been absent from the full-
time performance of Employee's duties with the Company for six
consecutive months as a result of Employee's incapacity due to physical
or mental illness as determined by Employee's physician ("DISABILITY"),
Employee's employment may be terminated by the Company for Disability.
If Employee's employment is terminated for Disability, Employee shall be
entitled to the compensation and benefits provided in Section 6(c)(i)
hereof. If Employee fails during any period during the Term to perform
Employee's full-time duties with the Company as a result of incapacity
due to physical or mental illness, as determined by Employee's
physician, Employee shall continue to receive his benefits under this
Agreement during such period until this Agreement is terminated for
Disability by the Company.
(e) Resignation for Good Reason. Employee shall be entitled to
terminate his employment for Good Reason as defined herein. If Employee
terminates his employment for Good Reason, Employee shall be entitled to
the compensation and benefits provided in Section 6(c)(i) hereof. "GOOD
REASON" shall mean (1) the material breach of any of the Company's
obligations under this Agreement without Employee's written consent or
(2) the occurrence of any of the following circumstances, as the case
may be, without Employee's written consent:
(i) the assignment by the Board to Employee of any duties that
materially adversely alter the nature or status of Employee's
office, title, responsibilities, including reporting
responsibilities, from those in effect immediately prior to such
assignment;
(ii) the failure by the Company to continue in effect any
compensation plan in which Employee participates that is material
to Employee's total compensation unless an equitable arrangement
(embodied in an ongoing substitute
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or alternative plan) has been made with respect to such plan, or
the failure by the Company to continue Employee's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable to Employee, unless any such failure to
continue in effect any compensation plan or participation relates
to a discontinuance of such plans or participation on a management-
wide or Company-wide basis;
(iii) the taking of any action by the Company which would
directly or indirectly materially reduce or deprive Employee of any
material pension, welfare or fringe benefit then enjoyed by
Employee, unless such action relates to a discontinuance of
benefits on a management-wide or Company-wide basis;
(iv) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 12 hereof;
(v) the relocation of the Company's principal executive offices
outside the greater Houston, Texas metropolitan area, or the
Company's requiring Employee to relocate anywhere other than the
location of the Company's principal executive offices, except for
required travel on the Company's business to an extent
substantially consistent with Employee's obligations under this
Agreement;
(vi) the failure to nominate Employee as a director of the
Company or to use best efforts to cause Employee to be elected or
appointed, or re-elected or re-appointed, as a director of the
Company or to use reasonable best efforts to appoint Employee a
member of a committee in accordance with, and to the extent
provided in, Section 3 hereof; or
(vii) the Employee's termination of his employment with the
Company or any successor who has assumed this Agreement in
accordance with Section 12 hereof within the 30-day period
following the anniversary of a Change in Control of the Company.
Employee's right to terminate employment pursuant to this
subsection shall not be affected by Employee's incapacity due to physical
or mental illness. In addition, Employee's continued employment following
any event, act or omission, regardless of the length of such continued
employment, shall not constitute Employee's consent to, or a waiver of
Employee's rights with respect to, such event, act or omission constituting
a Good Reason circumstance hereunder.
(f) Notice of Termination. Any purported termination of Employee's
employment by the Company or by Employee shall be communicated by written
Notice
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of Termination to the other party hereto in accordance with Section 10
hereof. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall
mean a notice which shall set forth in reasonable detail the reason for
termination of Employee's employment, or in the case of resignation for
Good Reason, said notice must specify in reasonable detail the basis for
such resignation. No purported termination which is not effected pursuant
to this Section 6(f) shall be effective.
(g) Date of Termination, Etc. "DATE OF TERMINATION" shall mean in the
case of Employee's death, his date of death, and in all other cases, the
date specified in the Notice of Termination. If no notice is given by
Employee, termination shall be effective on the last date Employee reported
for work with the Company, and shall be deemed to be a voluntary
termination without Good Reason.
(h) Mitigation. Employee shall not be required to mitigate the amount
of any payment or benefit provided for in this Section 6 by seeking other
employment or otherwise, nor, except as provided in clause (B) of Section
6(c)(1), shall the amount of any payment or benefit provided for in this
Agreement be reduced by any compensation or benefit earned by Employee as a
result of employment by another employer, self-employment earnings, by
retirement benefits, by offset against any amount claimed to be owing by
Employee to the Company, or otherwise.
(i) Full Tax Gross-Up of Parachute Payments. (i) In the event that
any payments or benefits made or provided to or for the benefit of Employee
in connection with this Agreement, or Employee's employment with the
Company or the termination thereof (the "PAYMENTS") are determined to be
subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to
as the "EXCISE TAX"), then the Employee shall be entitled to receive an
additional payment (a "GROSS-UP PAYMENT") from the Company in an amount
equal to the Excise Tax (excluding any income tax or employment tax imposed
upon the Gross Up Payment). The determination of whether the Payments are
subject to the Excise Tax and, if so, the amount of the Gross-Up Payment,
shall be made by a nationally recognized United States public accounting
firm that has not, during the two years preceding the date of its
selection, acted in any way on behalf of the Company or any of its
affiliates; provided, however, that if the accounting firm has determined
that Section 4999 does not apply, and the Internal Revenue Service claims
that Section 4999 applies to the Payments (or any portion thereof), then
paragraph (ii) below of this Section 6(i) shall be applicable.
(ii) Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of a Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten (10) business days after Employee
is informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which
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such claim is requested to be paid. Employee shall not pay such claim prior
to the expiration of the thirty (30) day period following the date on which
he gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies Employee in writing prior to the expiration of such period
that it desires to contest such claim, Employee shall:
(A) give the Company any information reasonably requested by
the Company relating to such claim,
(B) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
Company,
(C) cooperate with the Company in good faith in order
effectively to contest such claim, and
(D) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest, penalties,
accountant's and legal fees) incurred in connection with such contest and
shall indemnify and hold Employee harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs
and expenses. Without limitation on the foregoing provisions of this
subsection, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct Employee to pay the tax claimed and commence a proceeding to
obtain a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however,
that if the Company directs Employee to pay such claim and seek a refund,
the Company shall advance the amount of such payment to Employee, on an
interest-free basis, and shall indemnify and hold Employee harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or
with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of Employee with respect to which
such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder, and Employee
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shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(iii) If, after the receipt by Employee of an amount advanced by
the Company pursuant to the foregoing, Employee becomes entitled to receive
any refund with respect to such claim, Employee shall (subject to the
Company's complying with the requirements of the foregoing) promptly pay to
the Company the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt by
Employee of an amount advanced by the Company pursuant to the previous
subsection, a determination is made that Employee shall not be entitled to
any refund with respect to such claim and the Company does not notify
Employee in writing of its intent to contest such denial of refund prior to
the expiration of thirty (30) days after such determination, such advance
shall be forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.
(j) Change in Control. For purposes of this Agreement, a Change in
Control shall mean an occurrence of the following during the Term:
(i) The "acquisition" by any "Person" (as the term person is used
for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act")) of "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 0000 Xxx) of any securities of
the Company which generally entitles the holder thereof to vote for the
election of directors of the Company (the "Voting Securities") which, when
added to the Voting Securities then "Beneficially Owned" by such Person,
would result in such Person either "Beneficially Owning" fifty percent
(50%) or more of the combined voting power of the Company's then
outstanding Voting Securities or having the ability to elect fifty percent
(50%) or more of the Company's directors; provided, however, that for
purposes of this paragraph (i) of Section 6(j), a Person shall not be
deemed to have made an acquisition of Voting Securities if such Person: (a)
becomes the Beneficial Owner of more than the permitted percentage of
Voting Securities solely as a result of [open market] acquisition of Voting
Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by such Person; (b) is the Company or any corporation or
other Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by the
Company (a "Controlled Entity"); (c) acquires Voting Securities in
connection with a "Non-Control Transaction" (as defined in paragraph (iii)
of this Section 6(j)); or (d) becomes the Beneficial Owner of more than the
permitted percentage of Voting Securities as a result of a transaction
approved by a majority of the Incumbent Board (as defined in paragraph (ii)
below); or
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(ii) The individuals who, as of the Effective Date, are members
of the Board (the "Incumbent Board"), cease for any reason to constitute at
least a majority of the Board; provided, however, that if either the
election of any new director or the nomination for election of any new
director by the Company's stockholders was approved by a vote of at least a
majority of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 promulgated
under the 0000 Xxx) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or settle
any Election Contest or Proxy Contest; or
(iii) The consummation of a merger, consolidation or
reorganization involving the Company (a "Business Combination"), unless (1)
the stockholders of the Company, immediately before the Business
Combination, own, directly or indirectly immediately following the Business
Combination, at least fifty percent (50%) of the combined voting power of
the outstanding voting securities of the corporation resulting from the
Business Combination (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities immediately
before the Business Combination, and (2) the individuals who were members
of the Incumbent Board immediately prior to the execution of the agreement
providing for the Business Combination constitute at least a majority of
the members of the Board of Directors of the Surviving Corporation, and (3)
no Person (other than (x) the Company or any Controlled Entity, (y) a
trustee or other fiduciary holding securities under one or more employee
benefit plans or arrangements (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any Controlled
Entity, or (z) any Person who, immediately prior to the Business
Combination, had Beneficial Ownership of fifty percent (50%) or more of the
then outstanding Voting Securities) has Beneficial Ownership of fifty
percent (50%) or more of the combined voting power of the Surviving
Corporation's then outstanding voting securities (a Business Combination
described in clauses (1), (2) and (3) of this paragraph shall be referred
to as a "Non-Control Transaction");
(iv) A complete liquidation or dissolution of the Company; or
(v) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a
Controlled Entity).
Notwithstanding the foregoing, if Employee's employment is terminated
and Employee reasonably demonstrates that such termination (x) was at the
request of a third party who has indicated an intention or has taken steps
reasonably calculated to effect a Change in Control and who effectuates a
Change in Control or (y) otherwise occurred in
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connection with, or in anticipation of, a Change in Control which actually
occurs, then for all purposes hereof, the date of a Change in Control with
respect to Employee shall mean the date immediately prior to the date of
such termination of employment.
A Change in Control shall not be deemed to occur solely because fifty
percent (50%) or more of the then outstanding Voting Securities is
Beneficially Owned by (x) a trustee or other fiduciary holding securities
under one or more employee benefit plans or arrangements (or any trust
forming a part thereof) maintained by the Company or any Controlled Entity
or (y) any corporation which, immediately prior to its acquisition of such
interest, is owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their ownership of stock in
the Company immediately prior to such acquisition.
7. Restrictive Covenants.
(a) Employer Covenants. The Company agrees that during the Term, the
Company shall disclose to Employee or provide Employee with access to trade
secrets or confidential information of the Company or its Subsidiaries; or
place Employee in a position to develop business goodwill on behalf of the
Company or its Subsidiaries; or entrust Employee with business
opportunities of the Company or its Subsidiaries.
(b) Confidential Information; Unauthorized Disclosure. During the
period of his employment hereunder and for any period following the
termination of employment, the Employee shall not, whether during the
period of his employment hereunder or thereafter, without the written
consent of the Board or a person authorized thereby, disclose to any
person, other than an employee of the Company or a person to whom
disclosure is reasonably necessary or appropriate in connection with the
performance by the Employee of his duties as an executive of the Company,
any confidential information obtained by him while in the employ of the
Company with respect to the Company's business, including but not limited
to technology, know-how, processes, maps, geological and geophysical data,
other proprietary information and any information whatsoever of a
confidential nature, the disclosure of which he knows or should know will
be damaging to the Company; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Employee) or any
information which the Employee may be required to disclose by any
applicable law, order, or judicial or administrative proceeding.
(c) Non-Competition. As part of the consideration for the compensation
and benefits to be paid to Employee hereunder; to protect the trade secrets
and confidential information of the Company or its Subsidiaries that have
been and will in the future be disclosed or entrusted to Employee, the
business good will of the Company or its Subsidiaries that has been and
will in the future be developed by Employee or the business opportunities
that have been and will in the future be disclosed or entrusted to
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Employee by the Company or its Subsidiaries, and as an additional incentive
for the Company to enter into this Agreement, the Company and Employee
agree to the following competition provisions:
During the Term and for a period of one year thereafter, Employee shall not
in North America, directly or indirectly engage in or become interested
financially in as a principal, employee, partner, shareholder, agent,
manager, owner, advisor, lender, guarantor of any person engaged in any
business substantially identical to the Business (defined below); provided,
however, that (a) Employee may invest in stock, bonds or other securities
in any such business (without participating in such business) if: (i)(A)
such stock, bonds or other securities are listed on any United States
securities exchange or are publicly traded in an over the counter market
and (B) its investment does not exceed, in the case of any capital stock of
any one issuer, 5% of the issued and outstanding capital stock, or in the
case of bonds or other securities, 5% of the aggregate principal amount
thereof issued and outstanding, or (ii) such investment is completely
passive and no control or influence over the management or policies of such
business is exercised, or (b) any such business shall be deemed to exclude
(i) ownership by Employee or any affiliated entity of interests in Plains
All American GP LLC, Plains AAP LP and any of their respective subsidiaries
and any board positions with respect to such entities, and (ii) the
business of Sable Minerals, Inc. as it exists on the date hereof. The term
"Business" shall mean the exploration, development and production of crude
petroleum and natural gas. Notwithstanding the foregoing provisions of
this Section 7(c), in the event of a termination of Employee's employment
by the Company without Cause or in the event of Employee's resignation for
Good Reason, Employee shall have no further obligations under this Section
7(c).
(d) Non-Solicitation. Employee undertakes toward the Company and is
obligated, during the Term and for a period of one year thereafter, not to
solicit or hire, directly or indirectly, in any manner whatsoever (except
in response to a general solicitation), in the capacity of employee,
consultant or in any other capacity whatsoever, one or more of the
employees, directors or officers or other persons (hereinafter collectively
referred to as "EMPLOYEES") who at the time of solicitation or hire, or in
the 90-day period prior thereto, are working full-time or part-time for the
Company or any of its Subsidiaries and not to endeavour, directly or
indirectly, in any manner whatsoever, to encourage any of said Employees to
leave his or her job with the Company or any of its Subsidiaries and not to
endeavour, directly or indirectly, and in any manner whatsoever, to incite
or induce any client of the Company or any of its Subsidiaries to
terminate, in whole or in part, its business relations with the Company or
any of its Subsidiaries.
(e) Enforcement. It is the desire and intent of the parties that the
provisions of this Section 7 shall be enforced to the fullest extent
permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Accordingly, if any particular provision
of this Section 7 shall be adjudicated to be invalid or unenforceable,
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such provision shall be deemed amended to delete therefrom the portion thus
adjudicated to be invalid or unenforceable. Such deletion shall apply only
with respect to the operation of such provisions of this Section 7 in the
particular jurisdiction in which such adjudication is made. In addition, if
the scope of any restriction contained in this Section 7 is too broad to
permit enforcement thereof to its fullest extent, then such restriction
shall be enforced to the maximum extent permitted by law, and the Executive
hereby consents and agrees that such scope may be judicially modified in
any proceeding brought to enforce such restriction.
(f) Remedies. In the event of a breach or threatened breach by the
Executive of the provisions of this Section 7, the Company shall be
entitled to an injunction and such other equitable relief as may be
necessary or desirable to enforce the restrictions contained herein.
Nothing herein contained shall be construed as prohibiting the Company from
pursuing any other remedies available for such breach or threatened breach
or any other breach of this Agreement.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company or any of its
affiliated companies and for which Employee may qualify, nor shall anything
herein limit or otherwise adversely affect such rights as Employee may have
under any stock option or other agreements with the Company or any of its
affiliated companies.
9. Assignability. The obligations of Employee hereunder are personal and
may not be assigned or delegated by him or transferred in any manner whatsoever,
nor are such obligations subject to involuntary alienation, assignment or
transfer, except by will or the laws of descent and distribution.
10. Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by overnight
courier or by facsimile with confirmation of receipt or on the third business
day after being mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to the Company at its principal office
address and facsimile number, directed to the attention of the Board with a copy
to the Secretary of the Company, and to Employee at Employee's residence address
and facsimile number on the records of the Company or to such other address as
either party may have furnished to the other in writing in accordance herewith
except that notice of change of address shall be effective only upon receipt.
11. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.
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12. Successors; Binding Agreement.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and assets of the Company ("SUCCESSOR") or any corporation which
becomes the ultimate parent corporation of the Company or any such Successor
("ULTIMATE PARENT") to expressly assume and agree in writing satisfactory to the
Employee to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place; provided, however, that express assumption shall not be required where
this agreement is assumed by operation of law. As used in this Agreement,
including, without limitation, in Section 3, the term "COMPANY" shall include
any Successor and Ultimate Parent which executes and delivers the Agreement as
provided for in this Section 12 or which otherwise becomes bound by all terms
and provisions of this Agreement by operation of law.
(b) After the death or Disability of Employee, this Agreement and all
rights of Employee hereunder shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
13. Indemnification. During the Term and for a period of six years
thereafter, the Company shall cause Employee to be covered by and named as an
insured under any policy or contract of insurance obtained by it to insure its
directors and officers against personal liability for acts or omissions in
connection with service as an officer or director of the Company or service in
other capacities at the request of the Company. The coverage provided to
Employee pursuant to this Section 13 shall be of a scope and on terms and
conditions at least as favorable as the most favorable coverage provided to any
other officer or director of the Company (or any successor). In addition, to the
maximum extent permitted by the by-laws of the Company in effect from time to
time and applicable law, during the Term and for a period of six years
thereafter, the Company shall indemnify Employee against and hold Employee
harmless from any costs, liabilities, losses and exposures for Employee's
services as an employee, officer and director of the Company (or any successor).
14. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and such officer as may be specifically
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or in compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. This Agreement is an integration of the parties'
agreement; no agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement. Employee represents
and warrants that the execution of this Agreement will not result in any breach
of any prior or existing agreement executed by Employee with respect to any
third party. The validity,
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interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
16. Entire Agreement. This Agreement contains the entire understanding of
the parties in respect of the subject matter and supersedes and replaces in full
all prior written or oral agreements and understandings between the parties with
respect to such subject matters.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of May 8,
2001 effective for all purposes as provided above.
PLAINS RESOURCES INC.
By: /s/ Xxx Xxxxx
----------------------------
Xxx Xxxxx
EMPLOYEE
/s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
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