EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of September 17, 2002 (this
"Agreement") by and among PIONEER COMPANIES, INC., a Delaware corporation (the
"Company"), and Xxxxxxx X. XxXXXXXX (the "Executive").
WITNESSETH:
WHEREAS, the Company desires to engage Executive as President
and Chief Executive Officer upon the terms and conditions contained in this
Agreement; and
WHEREAS, Executive desires to be so employed by the Company
from and after the Effective Date, as hereinafter defined, upon the terms and
conditions contained in this Agreement; and
WHEREAS, the parties hereto desire to enter this Agreement
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual covenants and agreements herein contained and for other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties, intending legally to be bound, hereby agree as
follows:
1. Employment. The Company hereby employs Executive, and
Executive hereby accepts such employment, upon the terms and conditions
hereinafter set forth.
(a) Position. Executive shall be the President and
Chief Executive Officer of the Company. At all times during the term of this
Agreement, the Company shall cause Executive to be nominated as a member of the
Company's Board of Directors (the "Board").
(b) Duties. Subject to the Board's authority and
oversight, the Executive shall have full responsibility for all the day-to-day
activities of the Company and its affiliated companies and over all officers and
employees of the Company, including, but not limited to, the power to hire and,
subject to contractual commitments, fire employees, and shall have
responsibilities commensurate with those normally performed by a chief executive
officer. In such capacity, the Executive shall report solely and directly to the
Board.
(c) Place of Employment. During the term of this
Agreement, the Executive shall perform the services required by this Agreement
at the principal executive office of the Company, subject to travel necessary to
appropriately discharge Executive's responsibilities, recognizing that the
Company has operations, customers and suppliers in locations other than that of
its principal executive office.
(d) Performance of Duties. The Executive agrees to
devote his full time and best efforts to the performance of his duties and to
serve the Company well and
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faithfully in conformity with the direction of the Board and written policies of
the Company. The foregoing shall not prevent Executive from serving on the
boards of directors of which he is a member as of the Effective Date (which have
been disclosed and approved prior to the execution hereof as listed on Appendix
A) so long as such service does not interfere or conflict with the Executive's
discharge of his duties under this Agreement.
2. Term.
(a) Effective Date. This Agreement shall become
effective on September 17, 2002 (the "Effective Date") and have an initial term
of two (2) years after the Effective Date; provided, however, that the term of
this Agreement shall automatically be extended from day to day so that it always
has a remaining term of (2) years, unless terminated pursuant to Section 2(b)
below.
(b) Termination Date. The term of employment under
this Agreement shall terminate upon the earliest to occur of the following
events (the date specified in each such event is referred to as the "Termination
Date"):
(i) the date upon which the Company terminates
the Executive's employment by the Company for Cause or without Cause (it being
understood that the date of termination shall be the date upon which the Company
provides the Executive written notice of such event);
(ii) the date of the Executive's death;
(iii) the date upon which the Company terminates
Executive's employment by the Company as a result of Executive's Disability;
(iv) the date upon which Executive effects a
Voluntary Termination (it being understood that the date of termination shall be
the date upon which the Executive provides the Company written notice of such
event); or
(v) upon or after the date of a Change of
Control, but only as expressly provided in Section 4(e).
(c) Performance of Duties Following Notice of
Termination. In the event that either (i) the Company terminates the Executive's
employment pursuant to Section 2(b)(i) hereof or (ii) Executive effects a
Voluntary Termination pursuant to Section 2(b)(iv), Executive, if requested by
the Company, shall continue to render services hereunder to the Company for a
period not to exceed 30 days from the Termination Date, and shall, in such
event, be paid the compensation and benefits hereunder for such period.
3. Compensation and Benefits.
(a) Base Salary.
(i) The Company shall pay the Executive a base
salary at the annual rate of $450,000 per year ("Base Salary").
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(ii) The Base Salary shall be paid in equal
installments, consistent with the manner in which other senior executives of the
Company are paid, and subject to all applicable withholding and deductions, in
accordance with the usual payroll practices of the Company, but not less
frequently than monthly.
(b) Bonus.
(i) The Executive shall be entitled to
participate in the annual bonus plan to be established for senior executives on
such terms and conditions as shall be determined by the Board (the bonus to be
paid under such plan is referred to herein as the "Performance Bonus"). It is
understood that for fiscal year 2002, the Board is not expected to implement a
normal bonus plan and depending on financial results may not implement any bonus
plan for senior executives. With respect to years following fiscal year 2002, it
is understood that the bonus plan for senior executives will depend upon the
Board's judgment of the Company's ability to pay bonuses after taking into
consideration the levels of EBITDA and cash flow expected to be achieved, the
Company's debt service and capital requirements, and such other factors as the
Board considers relevant to a determination as to whether to have a bonus plan
and, if a bonus plan is implemented, the levels of payments under such plan.
(ii) In the event the Executive's employment is
terminated (other than if such termination is by the Company for Cause or
pursuant to Section 2(b)(i) in which case there shall be no Performance Bonus
payable), the Performance Bonus, if any, to which the Executive may be entitled
for the fiscal year in which the termination occurs shall be prorated, such
prorated portion being the portion of such Performance Bonus corresponding to
the period commencing with the beginning of such fiscal year in which such
termination occurs and ending on the date of termination.
(c) Benefits. During the term of this Agreement, the
Executive shall be entitled to all such benefits as may, from time to time, be
made generally available to employees and senior executives of the Company,
including, but not limited to, pension or other retirement plans, medical plans,
disability plans, incentive plans, stock plans, investment plans, additional
compensation plans and all other group and other insurance plans and benefits to
the extent that the Executive is, and remains, eligible to participate therein
and subject to eligibility provisions of such plans then in effect.
(d) Business Expenses. The Company shall pay, either
directly or by reimbursement to the Executive, all documented expenses incurred
by the Executive, including travel and entertainment expenses, in the
performance of his duties upon submission of appropriate evidence thereof and on
a basis consistent with the Company's then current policies.
(e) Vacation. For each year of this Agreement, the
Executive shall be entitled to paid vacation in accordance with the Company's
standard policy for the Company's executives.
(f) Stock Options. On the Effective Date, the
Executive shall receive a grant of nonqualified stock options under the Pioneer
Companies, Inc. 2001 Employee Stock Option Plan covering (1) 150,000 shares of
the Company's common stock, par value $.01 (the
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"Common Stock") and (2) 75,000 shares of Common Stock; provided, however that
the vesting of the stock options for the 75,000 shares covered by clause (2)
above shall be subject to satisfaction of special vesting requirements in
addition to satisfaction of the requirements related to the stock options for
the 150,000 shares covered by clause (1) above, all as set forth in, and
governed by, the form of the Employee Nonqualified Stock Option Agreement
attached hereto as Appendix B, which shall be entered into by Executive and the
Company as of the Effective Date.
(g) Moving Expenses. The Company shall pay (either
directly or by reimbursement to the Executive), consistent with its existing
policy for executives, (i) the reasonable costs of the Executive's temporary
apartment housing in Houston, Texas, and related commuting expenses between
Dallas and Houston, Texas and (ii) the reasonable costs of Executive's initial
relocation expenses for permanently moving to Houston, Texas.
4. Compensation Upon Termination of Employment.
(a) Termination Upon Death. If Executive's employment
by the Company is terminated as a result of the occurrence of Executive's death
pursuant to Section 2(b)(ii), the Company shall be obligated to pay to the
Executive's estate any unpaid compensation and other benefits expressly provided
under this Agreement through the Termination Date, and any unpaid Performance
Bonus for any prior fiscal period.
(b) Termination Because of Disability. If Executive's
employment by the Company is terminated by the Company as a result of the
occurrence of Executive's Disability pursuant to Section 2(b)(iii), the Company
shall pay Executive the compensation and other benefits expressly provided under
this Agreement through the Termination Date, and any unpaid Performance Bonus
for any prior fiscal period.
(c) Termination by the Company for Cause. If
Executive's employment by the Company is terminated by the Company for Cause
pursuant to Section 2(b)(i), Executive shall receive the compensation and other
benefits expressly provided under this Agreement through the Termination Date.
(d) Termination by the Company without Cause. If
Executive's employment by the Company is terminated by the Company without Cause
pursuant to Section 2(b)(i), the Company shall pay Executive (i) the
compensation and other benefits expressly provided under this Agreement through
the Termination Date, (ii) any unpaid Performance Bonus for any prior fiscal
period, and (iii) a lump sum payment equal to two (2) times the Base Salary.
(e) Termination Following Change of Control.
(i) If immediately prior to and immediately
following a Change of Control, the Fair Market Value per share of the Common
Stock is less than five dollars ($5) and if the Executive's employment with the
Company is Constructively Terminated within eighteen (18) months following such
Change in Control, such Constructive Termination shall be treated as a
termination of the Executive's employment under Section 4(d).
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(ii) Notwithstanding the preceding clause (i),
if immediately prior to or immediately following a Change of Control, the Fair
Market Value per share of the Common Stock is at least five dollars ($5), the
Change of Control shall be treated as a termination of the Executive's
employment under Section 4(d).
(f) Voluntary Termination by Executive. If the
Executive's employment by the Company is terminated as a result of a Voluntary
Termination by the Executive pursuant to Section 2(b)(iv), the Company shall pay
the Executive the compensation and other benefits expressly provided under this
Agreement through the Termination Date, and any unpaid Performance Bonus for any
prior fiscal year.
(g) No Mitigation. If the Executive's employment
described herein is terminated, the Executive shall have no duty to mitigate his
damages or seek other employment, and the Company shall have no right to offset
any amounts which are paid to or earned by Executive from other employment
obtained by Executive (including self-employment) against any amounts which are
payable to Executive pursuant to this Agreement.
(h) Continuation of Health and Life Insurance
Coverage. At Executive's own expense, Executive and Executive's dependents shall
also be entitled to any continuation of health insurance coverage rights after
the Termination Date under any applicable law; provided, however, that in the
event of the termination of Executive's employment with the Company pursuant to
Section 4(d), health and life insurance coverage shall be provided at the
Company's expense for two (2) years after the Termination Date on the same basis
as for other senior executives of the Company, including the same employee
contributions and co-payments which are required for other employees; provided,
further, that if the Company cannot legally provide the Executive with such
coverage under the Company's then existing plans as a retired or former employee
or otherwise, then, for a period terminating on the earlier of (i) two (2) years
after the Termination Date or (ii) the date on which the Executive obtains
health insurance coverage through another employer which is reasonably
comparable (as determined by the Company) to the coverage provided under the
Company's health plan, the Company shall pay for any premiums incurred by the
Executive in order for Executive and Executive's dependents to receive
continuation coverage under the Company's health plan pursuant to the
Consolidated Omnibus Reconciliation Act of 1986, as amended.
(i) Effects of Termination; Payments.
(i) Effective as of the Termination Date, the
Executive shall be deemed to have resigned from all offices and directorships
then held with the Company and its subsidiaries.
(ii) The covenants and agreements of the
Executive contained in Sections 5, 6 and 7 shall survive termination of the
Executive's employment by the Company and the termination of this Agreement.
(iii) All payments due to Executive or his
estate pursuant to Section 4 shall be paid as soon as practicable after the
Termination Date, but in no event later than ten (10) days thereafter, except in
the case of the Performance Bonus for any prior fiscal
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period which shall be paid as soon as practicable after the end of such fiscal
period, but not later than sixty (60) days thereafter, and except for benefits
provided by the Company pursuant to Section 4(h).
5. Confidentiality and Non-Disclosure. The Executive
recognizes and acknowledges that he will have access to certain information
concerning the Company that is confidential and proprietary and constitutes
valuable and unique property of the Company. The Executive agrees that he will
not at any time disclose to others, use, copy or permit to be copied, except
pursuant to his duties on behalf of the Company or its successors, assigns or
nominees, any secret or confidential information of the Company (whether or not
developed by the Executive) without the prior written consent of the Board of
Directors of the Company. The term "secret or confidential information of the
Company" (sometimes referred to herein as "Confidential Information") shall
include, without limitation, the Company's plans, strategies, potential
acquisitions, costs, prices, systems for buying, selling, and/or trading
relating to the manufacture and marketing of chlorine, caustic soda and related
products, client lists, pricing policies, financial information, the names of
and pertinent information regarding suppliers, computer programs, policy or
procedure manuals, training and recruiting procedures, accounting procedures,
the status and content of the Company's contracts with its suppliers or clients,
or servicing methods and techniques at any time used, developed, or investigated
by the Company, before or during the Executive's tenure of employment to the
extent any of the foregoing are (i) not generally available to the public and
(ii) maintained as confidential by the Company. The Executive further agrees to
maintain in confidence any confidential information of third parties received as
a result of the Executive's employment and duties with the Company. Upon
termination, the Executive will deliver to the Company, as determined
appropriate by the Company, all correspondence, memoranda, notes, records,
client lists, computer systems, programs, or other documents and all copies
thereof made, composed or received by the Executive, solely or jointly with
others, and which are in his possession, custody or control at such date and
which are related in any manner to the past, present or anticipated business of
the Company. The provisions of this Section 5 are in addition to any other
agreements which Executive now has or enters into in the future regarding the
Company's secret or confidential information. The provisions of this Section 5
shall survive the termination of this Agreement.
6. Non-Solicitation. During the term of this Agreement and for
a period of two (2) years following the Executive's termination of employment,
the Executive agrees that he will not solicit, raid, entice, encourage or induce
any person who at the time of his termination of employment is an employee of
the Company, or any of its parents, subsidiaries or affiliates or to become
employed by any person, firm or corporation or to discontinue their employment
with the Company. The Executive further agrees, for the two (2) year period
following his termination of employment, to refrain from approaching any such
employee for such purpose or authorizing or knowingly approving such actions by
any other person, firm or corporation or assisting any such person, firm or
corporation in taking such action. The provisions of this Section 6 are in
addition to any other agreements which Executive now has or enters into in the
future regarding the Executive's relationship with Company employees following
Executive's termination of employment. The provisions of this Section 6 shall
survive the termination of this Agreement.
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7. Enforcement. It is understood and agreed by the parties
that no amount of money would adequately compensate the Company for damages
which the parties acknowledge would be suffered as a result of a violation by
the Executive of the covenants contained in Sections 5 and 6 above, and that,
therefore, the Company shall be entitled, upon application to a court of
competent jurisdiction, to obtain injunctive relief (without the need to post
bond) to enforce the provisions of Sections 5 and 6, which injunctive relief
shall be in addition to any other rights or remedies available to the Company.
The provisions of this Section 7 shall survive the termination of this
Agreement.
8. Certain Defined Terms. For purposes of this Agreement the
following terms and phrases shall have the following meanings:
"Cause" shall mean: (i) the Executive shall have
committed an act of fraud, embezzlement or misappropriation against the Company
or committed a material breach of fiduciary duty owed to the Company; or (ii)
the Executive shall have been convicted by a court of competent jurisdiction (or
entered a plea of guilty or nolo contendere) of any felony or crime involving
moral turpitude or fraud (other than a traffic offense); or (iii) the Executive
shall have engaged in willful misconduct, material breach of his obligations
under this Agreement or the refusal or failure to perform his duties as required
by this Agreement (other than as a result of incapacity due to physical or
mental illness) which violations are not remedied within 15 days after receipt
of written notice from the Company specifying such violations.
"Change of Control" means (a) the sale, lease or
other transfer of all or substantially all of the assets of the Company to any
person or group (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")); (b) the adoption by the
stockholders of the Company of a plan relating to the liquidation or dissolution
of the Company; (c) the merger or consolidation of the Company with or into
another entity or the merger of another entity into the Company or any
subsidiary thereof with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such transaction (or their
affiliates) hold less than fifty percent (50%) of the total voting power of all
securities generally entitled to vote in the election of directors, managers or
trustees of the entity surviving such merger or consolidation; or (d) the
acquisition by any person, entity or group, within the meaning of Section 13(d)
or 14(d) of the Exchange Act (other than Xxxxxx Investments, any of its
affiliates, and/or any group including any of them ("Xxxxxx") or Xxxxx X.
Xxxxxxx, any of his affiliates, and/or any group including any of them
("Xxxxxxx"); provided that either Xxxxxx or Xxxxxxx own individually at least
12% or collectively at least 20%, of the total voting power of all securities
generally entitled to vote in the election of directors) of more than fifty
percent (50%) of the voting power of all securities of the Company generally
entitled to vote in the election of directors of the Company other than as part
of a merger or business combination transaction, which shall be subject to the
test set forth in clause (c) and not this clause (d).
"Company" as used in this Agreement, the term "the
Company" includes the Company, any assignee or other successor of interest in
the Company, and any parent, subsidiary, or other corporation or partnership
under common ownership or control with the Company.
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"Constructive Termination" means a material
diminution of the title or management responsibilities of the Executive (i.e, a
material reduction in the operating assets of the Company over which the
Executive has management responsibilities) which is not remedied within 30 days
after written notice thereof is given by the Executive. Notwithstanding the
foregoing, a change in the management oversight body to which the Executive
shall report following a Change in Control, including a requirement that the
Executive report to an executive of the entity which acquired control of the
Company in lieu of a Board of Directors, shall not be deemed a Constructive
Termination.
"Disability" means an inability by the Executive to
perform a substantial portion of the Executive's duties by reason of physical or
mental incapacity or disability for a total of ninety (90) days or more in any
consecutive period of three hundred and sixty-five (365) days, as determined by
the reasonable judgment of a physician selected by the Executive and reasonably
acceptable to the Company.
"Fair Market Value" means, as of a particular date,
with respect to any security, the fair value thereof determined by the Board in
good faith taking into account all relevant factors, including recently reported
trades of such security.
"Voluntary Termination" shall mean the voluntary
termination by Executive of Executive's employment from the Company by voluntary
resignation or any other means (other than (i) death or Disability or (ii)
simultaneous with or following termination for Cause or an event which if known
to the Company at the time of such voluntary termination by Executive would
constitute Cause).
9. Miscellaneous Provisions.
(a) Arbitration. Any controversy or claim arising out
of or relating to this Agreement, including the making, interpretation or breach
thereof, or the employment or termination of employment of Executive shall be
resolved by expedited arbitration in the City of the principal offices of the
Company in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof, and any
party to the arbitration may, if such party so elects, institute proceedings in
any court having jurisdiction for the specific performance of any such award.
The powers of the arbitrator(s) shall include, but not be limited to, the
awarding of injunctive relief. Notwithstanding any other provision of this
Section 9(a) to the contrary, the parties agree that any monetary award arising
out of a claim or controversy relating to this Agreement which may be awarded by
the arbitrator(s) or any court having jurisdiction thereof shall be limited to
the prevailing party's actual damages and shall not include any monetary awards
for punitive, special, consequential, exemplary, indirect or other damages of
any kind; provided, however, that (i) the arbitrator(s) shall include in any
award in which Executive is the prevailing party the amount of his reasonable
attorneys' fees and expenses and all other reasonable costs and expenses of
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the arbitration; and (ii) in the event the arbitrator(s) do not rule in favor of
Executive in respect to all of the material claims alleged by Executive, the
arbitrator(s) may include in the award in favor of Executive, if any, the amount
of Executive's reasonable costs and expenses of the arbitration, if any, as the
arbitrator(s) deem just and equitable under the circumstances. Except as
provided above, each party shall bear his or its own attorneys' fees and
expenses, and the parties shall bear equally all other costs and expenses of the
arbitration. The provisions of this Section 9 shall survive the termination of
this Agreement.
(b) Entire Agreement. This Agreement sets forth the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, arrangements, and
understandings between the parties with respect to the subject matter hereof.
(c) Modification. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms or covenants
hereof may be waived, only by a written instrument executed by both of the
parties or in the case of a waiver, by the party waiving compliance.
(d) Waiver. The failure of either party at any time
or times to require performance of any provision hereof in no manner shall
affect the right at a later time to enforce the same. No waiver by either party
of a breach of any term or covenant contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any such breach or waiver of any
other term or covenant contained in this Agreement.
(e) Notices. Any and all notices or other
communications provided for herein shall be given in writing and shall be
hand-delivered or sent by United States mail, postage prepaid, registered or
certified, return receipt requested, addressed as follows:
If to the Company:
Pioneer Companies, Inc.
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Board of Directors
With a copy to:
Xxxxx Xxxxx, L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: J. Xxxxx Xxxxxxxx, Jr.
If to Executive:
Xxxxxxx X. XxXxxxxx
0000 Xxx Xxxxx
Xxxxxx, Xxxxx 00000
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provided, however, that any of the parties may, from time to time, give notice
to the other parties of some other address to which notices or other
communications to such party shall be sent, in which event, notices or other
communications to such party shall be sent to such address. Any notice or other
communication shall be deemed to have been given and received hereunder as of
the date the same is actually hand delivered or, if mailed, three days after
deposit in the United States mail, postage prepaid, registered or certified,
return receipt requested.
(f) Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of Texas applicable to
contracts made and to be performed wholly within such state.
(g) Assignability. This Agreement, and the
Executive's rights and obligations hereunder, may not be assigned by the
Executive. The Company may assign its rights, together with its obligations
hereunder, only to a successor by merger or by the purchase of all or
substantially all of the assets and business of the Company and such rights and
obligations shall inure to, and be binding upon, any such successor.
(h) Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective legal
representatives, heirs, permitted successors and permitted assigns.
(i) Captions. Headings and titles in this Agreement
are for convenience of reference only and shall not control the construction or
interpretation of any provisions hereof. The words "herein," "hereof,"
"hereunder," and the words of similar import, when used anywhere in this
Agreement, refer to this Agreement as a whole and not merely to a subdivision in
which such words appear, unless the context otherwise requires. The singular
shall include the plural unless the context otherwise requires.
(j) Indemnification. The Company agrees that the
Executive shall be entitled to indemnification and payment or reimbursement of
expenses (including attorneys' fees and expenses) to the fullest extent provided
in the Company's Certificate of Incorporation, as in effect on the date hereof
and as it may be hereafter amended (but in no event on terms less favorable to
the Executive than those in effect on the date hereof), for all damages, losses
and expenses incurred by the Executive in connection with any claim, action,
suit or proceeding which arises from the Executive's services and/or activities
as an officer and/or employee of the Company or any affiliate thereof. This
Section shall survive any termination of the term of this Agreement.
(k) Separability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such validity or
unenforceability without rendering invalid or unenforceable the
(l) Remaining terms and provisions of this Agreement
or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
THE COMPANY:
PIONEER COMPANIES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chairman of the Board
EXECUTIVE:
/s/ Xxxxxxx X. XxXxxxxx
-----------------------------------------
Xxxxxxx X. XxXxxxxx
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APPENDIX A
APPROVED DIRECTORSHIPS
Xxxxxxxx Petroleum Corporation
Coho Energy, Inc.
Greystar, Inc.
Page 00
XXXXXXXX X
FORM OF EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
