PLAINS EXPLORATION & PRODUCTION COMPANY FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
Exhibit 10.25
PLAINS EXPLORATION & PRODUCTION COMPANY
FIRST AMENDMENT TO
WHEREAS, effective as of June 4, 2004 Plains Exploration & Production Company (the “Company”) entered into an employment agreement (the “Agreement”) with Xxxxx X. Xxxxxx (the “Employee”); and
WHEREAS, the Company and the Employee have agreed to amend the Agreement as set forth below;
NOW, THEREFORE, the Company and the Employee agree as follows:
1. Paragraph 4(b) of the Agreement shall be amended by adding the following sentence thereto:
“Such bonus, if any, shall be paid not later than the fifteenth day of the third calendar month following the later of (i) the last day of the calendar year or (ii) the last day of the Company’s fiscal year.”
2. Paragraph 6(c)(i) of the Agreement shall be amended by striking the words “immediately upon termination of Employee’s employment” from the third sentence thereof, changing “one” to “three” in such sentence and inserting the following sentence at the end thereof:
“Immediately upon termination of Employee’s employment, amounts payable pursuant to (A) above shall be contributed to the trustee of a “rabbi” trust substantially in the form attached hereto (the “Trust”). Such amounts shall be held by the trustee pursuant to the terms of such Trust and paid to Executive on the earlier of: (1) the first day that is six months following his separation from service (within the meaning of section 409A of the Internal Revenue Code of 1986 as amended (the “Code”)); or (2) as soon as administratively feasible following Executive’s date of death.”
3. Paragraph 6(c)(ii) shall be amended by striking the words “payable in full, as the case may be, with” and inserting the following sentence at the end thereof:
“Immediately upon termination of Employee’s employment, amounts payable pursuant to this paragraph shall be contributed to the trustee of the Trust. Such amounts shall be held by the trustee pursuant to the terms of such Trust and paid to Executive on the earlier of: (1) the first day that is six months following his separation from service (within the meaning of section 409A of the Internal Revenue Code of 1986 as amended (the “Code”)); or (2) as soon as administratively feasible following Executive’s date of death.”
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4. Paragraph 6(e) shall be amended to read as follows:
“(e) Resignation for Good Reason. If Employee resigns his employment for Good Reason, Employee shall be entitled to the compensation and benefits provided in Section 6(c) 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 and other than with respect to item (iv) below, without the Employee’s written consent:”
5. Paragraph 6(j) of the Agreement shall be amended to read as follows:
“(j) Full Tax Gross-Up of Excise Tax Payments. In the event that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) made or provided to or for the benefit of Employee in connection with this Agreement, or Employee’s employment with Company or the termination thereof (the “Payments”) is determined to be subject to the excise tax imposed by Section 4999 or 409A of the Code or any interest or penalties with respect to such excise taxes (such excise taxes, together with any such interest and penalties, are collectively referred to as the “Excise Taxes”), then the Employee shall be entitled to receive an additional payment (a “Gross-Up Payment”) from Company such that the net amount received by the Executive after paying any applicable Excise Taxes and any federal, state or local income or FICA taxes on such Gross-Up Payment, shall be equal to the amount Executive would have received if such Excise Taxes were not applicable to the Payments.
For purposes of determining whether any of the Payments will be subject to the Excise Taxes and the amount of such Excise Taxes, (i) all of the Payments shall be treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Employee, such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of Section 280G(b)(4)(A) of the Code; (ii) all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the base amount (as the term “base amount” is defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax; (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Tax Counsel in accordance with the principles of Sections 280G(d) and 409A of the Code; and (iv) all Payments shall be deemed subject to the Excise Tax pursuant to section 409A of the Code unless, in the opinion of Tax Counsel, such Payments are not subject to Excise Tax pursuant to section 409A. For purposes of determining the amount of the Additional Payment, the Employee shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Total Payments are made and State and local income taxes at the highest marginal rate of taxation in the State and locality of the Employee’s
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residence on the date the Total Payments are made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such State and local taxes.
In the event that the Excise Taxes are determined by the IRS, on audit or otherwise, to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make another Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Employee with respect to such excess) within the ten (10) business days immediately following the date that the amount of such excess is finally determined. The Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.
If a termination of the Employee’s employment shall have occurred, the Company shall promptly reimburse to the Employee all reasonable attorneys fees and expenses necessarily incurred by the Employee in disputing in good faith any issue with the Company or its affiliates pursuant to this Agreement or asserting in good faith any claim, demand or cause of action against the Company or its affiliates pursuant to this Agreement. Such payments shall be made within ten (10) business days after delivery of the Employee’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.
The Gross-Up Payments provided to the Employee shall be made not later than the tenth (10th) business day following the last date the Payments are made; provided, however, that if the amounts of such payments cannot be finally determined on or before the due date of any Excise Tax return required as a result of the Payments, the Company shall pay to the Employee on or before thirty (30) days preceding the due date of the Excise Tax return, an estimate of the Payments due, as determined in good faith by the Employee and the Company, the estimate to be of the minimum amount of such payments to which the Employee is clearly entitled, and shall pay the remainder of such payments together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in Section 1274(b)(2)(B) of the Code as soon as the amount thereof can be determined but in no event later than sixty (60) days after the date the Total Payments are made. In the event that the amount of the estimated payment exceeds the amount subsequently determined to have been due, such excess shall constitute a non-interest bearing loan by the Company to the Employee, payable on the tenth (10th) business day after demand by the Company. At the time the payments are made under this Agreement, the Company shall provide the Employee with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations, including, without limitations any opinions or other advice the Company has received from Tax Counsel or other advisors or consultants and any such opinions or advice which are in writing shall be attached to the statement.”
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6. Paragraph 6(l) shall be added to Agreement to read as follows:
“Notwithstanding the foregoing or anything herein to the contrary, if any amounts payable hereunder are reasonably determined by the Company to be “nonqualified deferred compensation” payable to a “specified employee” upon “separation from service” (within the meaning of section 409A of the Internal Revenue Code of 1986 as amended and any applicable regulations or other guidance issued pursuant thereto (the “Code”)) then such amounts shall not be paid upon separation from service, but shall be paid as described below. As soon as administratively feasible upon the Employee’s separation from service, or, if earlier, upon a Change of Control, the maximum amount which may become payable to Employee after separation from service shall be contributed to the trustee of the Trust. Such amounts that would otherwise be payable upon separation from service shall be held by the trustee pursuant to the terms of such Trust and paid to Employee as soon as administratively feasible following the earlier of: (1) the first day that is six months following his separation from service; or (2) Employee’s date of death. Such amounts that would otherwise be payable in installments commencing on separation from service shall be accumulated and paid in a lump sum on the date that is the earlier of (1) or (2) above and shall be paid in installments thereafter.”
7. Paragraph 12(a) of the Agreement shall be amended by deleting the reference to “6(c)(iii)” therein and substituting a reference to “6(c)(i)”.
IN WITNESS WHEREOF, the Company and the Employee have executed this First Amendment on the 10th day of February, 2006, effective for all purposes as provided above.
| PLAINS EXPLORATION & PRODUCTION COMPANY | ||
| By: | /s/ Xxxx X. Xxxxxx | |
| Xxxx X. Xxxxxx | ||
| Chairman, Organization & Compensation Committee of the Board of Directors | ||
| By: | /s/ Xxxx X. Xxxxxxxx | |
| Xxxx X. Xxxxxxxx | ||
| Executive Vice President, General Counsel and Secretary | ||
| EMPLOYEE | ||
| /s/ Xxxxx X. Xxxxxx | ||
| Xxxxx X. Xxxxxx | ||
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