Severance Agreement

Amendment to Severance Agreement

Amendment 2 to Severance Agreement

Change in Control Agreement

 

EXHIBIT 10.2

PIONEER NATURAL RESOURCES COMPANY

SEVERANCE AGREEMENT

     This Severance Agreement (“Agreement”) is entered into, as of August 16, 2005, among Pioneer Natural Resources Company, a Delaware corporation (“Parent”), Pioneer Natural Resources USA, Inc., a Delaware corporation that is a wholly-owned subsidiary of Parent (“Employer”) and Scott D. Sheffield (“Employee”). As used henceforth in this Agreement, the term “Company” shall be deemed to include Parent and its direct or indirect majority-owned subsidiaries.

Recitals

     Parent and Employer acknowledge that Employee possesses skills and knowledge instrumental to the successful conduct of the Company’s business. Parent and Employer are willing to enter into this Agreement with Employee in order to better ensure themselves of access to the continued services of Employee.

     NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

     1. Term. The term of this Agreement shall commence on the date indicated above (the “Effective Date”) and end on September 30, 2007. Thereafter, on the date on which the term of this Agreement (as it may be extended from time to time under this paragraph 1) would otherwise expire, so long as Employee is still an employee of the Company on such date, such term will be automatically extended for 12 months, unless Parent shall have provided written notice to Employee at least 6 months before the date that the term would otherwise expire that it does not want the term to be extended. Parent may deliver a conditional notice of non-renewal that will be effective only if Employee does not agree, within the time period specified by Parent, to any amendment or modification of this Agreement that Parent shall request be executed as a condition to allowing the term hereof to be extended. Notwithstanding the foregoing, so long as Employee is in the employ of the Company on the date on which a Potential Change in Control occurs, the term of this Agreement shall continue in effect following such Potential Change in Control until the date on which the term of any separate agreement between Parent and Employer and Employee relating to the provision of severance and other benefits after a Change in Control (the “Change in Control Agreement”) expires; provided, however, that upon the occurrence of such a Change in Control, this Agreement shall terminate and such Change in Control Agreement shall govern the rights of Employee to, or obligations of Parent and Employer to provide, severance and other benefits to Employee.

     2. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

     (a) “Accrued Obligations” shall mean any vested amounts or benefits owing to Employee under any of the Company’s employee benefit plans and programs in which Employee has participated, including any compensation previously deferred by Employee (together with any accrued earnings thereon) and not yet paid.

     (b) “Base Salary” shall mean Employee’s annualized base salary at the rate in effect at the relevant date or event as reflected in Employer’s regular payroll records.

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     (c) “Change in Control” shall mean an event that constitutes a “change in control” as defined in Parent’s Long-Term Incentive Plan (the “LTIP”), as in effect on the Effective Date or as subsequently amended from time to time (except that any amendment to such definition adopted (1) on or within 180 days prior to a Change in Control or Potential Change in Control or (2) on or after a Potential Change in Control shall not be applied in determining the definition of such term under this Agreement unless such amendment is favorable to Employee).

     (d) “Date of Termination” shall mean

     (1) In the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein; and

     (2) In all other cases, the actual date on which Employee’s employment terminates.

     (e) “Disability” shall mean Employee’s physical or mental impairment or incapacity of sufficient severity such that

     (1) In the opinion of a qualified physician selected by Parent, after taking into account all reasonable accommodations that the Company has made or could make, Employee is unable to continue to perform Employee’s duties and responsibilities as an employee of the Company; or

     (2) Employee’s condition entitles Employee to long-term disability benefits under any employee benefit plan maintained by the Company in which Employee participates.

For purposes of subparagraph (e)(1), Employee agrees to provide such access to Employee’s medical records and to submit to such physical examinations or medical tests as, in the opinion of the physician selected by Parent, is reasonably necessary to make the determination required as to Employee’s ability to perform Employee’s duties and responsibilities. If such physician is unable to render an opinion as to Employee’s ability to perform such duties and responsibilities due to Employee’s failure to provide such access to any of Employee’s medical records or to submit to any such examination or test (unless, in the opinion of such physician such failure is a direct result of Employee’s physical or mental impairment), any failure by Employee to perform Employee’s duties and responsibilities shall be deemed not to be on account of Employee’s physical or mental impairment or incapacity.

     (f) “Earned Salary” shall mean the Base Salary earned by Employee, but unpaid, through Employee’s Date of Termination.

     (g) “Normal Retirement Date” shall mean the date on which Employee attains age 60.

     (h) “Notice of Termination” shall mean a written notice given by the party effecting the termination of Employee’s employment which shall

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     (1) Indicate the specific termination provision in this Agreement relied upon;

     (2) Set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated; and

     (3) If the Date of Termination is other than the date of receipt of such notice, specify the Date of Termination (which date shall be not more than 30 days after the giving of such notice).

The failure by Employee or Parent or Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Termination for Good Reason or Termination for Cause shall not waive any right of such party hereunder or preclude such party from asserting such fact or circumstance in enforcing such party’s rights hereunder. In the event that a Potential Change in Control has occurred, any Notice of Termination by Parent or Employer intended to effect a Termination for Cause must be given with 45 days of Parent or Employer’s having actual knowledge of the events giving rise to Termination for Cause.

     (i) “Potential Change in Control” shall mean the occurrence of any of the following events:

     (1) Any person or group shall have announced publicly an intention to effect a Change in Control, or commenced any action (such as the commencement of a tender offer for Parent’s common stock or the solicitation of proxies for the election of any of Parent’s directors) that, if successful, could reasonably be expected to result in the occurrence of a Change in Control;

     (2) Parent enters into an agreement the consummation of which would constitute a Change in Control; or

     (3) Any other event occurs which the Board of Directors of Parent (the “Board”) declares to be a Potential Change in Control.

     (j) “Separation Payment” shall mean any lump sum payment in excess of Earned Salary and Accrued Obligations payable to Employee under this Agreement.

     (k) “Termination for Cause” shall mean a termination of Employee’s employment by the Company following the occurrence of any of the following:

     (1) Employee’s continued failure to substantially perform Employee’s duties and responsibilities (other than any such failure resulting from Employee’s physical or mental impairment or incapacity);

     (2) Employee’s engaging in fraud or other misconduct that is injurious to the Company, monetarily or otherwise;

     (3) Employee’s engaging in insubordination;

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     (4) Employee’s violation of, or failure to comply with, any material written policy, guideline, rule or regulation of the Company;

     (5) Employee’s conviction of (or plea of guilty or nolo contendere to a charge of) any felony, or any crime or misdemeanor involving moral turpitude or financial misconduct;

     (6) Employee’s failure, following a written request from Parent, reasonably to cooperate (including, without limitation, the refusal by Employee to be interviewed or deposed, or to give testimony) in connection with any investigation or proceeding, whether internal or external (including, without limitation, by any governmental or quasi-governmental agency) into the business practices or operations of the Company; or

     (7) A material violation by Employee of the provisions of paragraphs 5 or 6 of this Agreement.

     (l) “Termination for Good Reason” shall mean a termination of Employee’s employment by Employee due to the occurrence of any of the following, without the written consent of Employee:

     (1) The assignment to Employee of any duties inconsistent in any material adverse respect with Employee’s position, authority or responsibilities as of the Effective Date (or as the same may be enhanced after the Effective Date),

     (2) Any other material adverse change in Employee’s position referenced in subclause (1), including titles, authority or responsibilities from those in effect immediately prior to such change, provided, however, that it is understood that removal of Employee from the position of Chairman of the Board, shall not, standing alone, be deemed to constitute a basis for a Termination for Good Reason;

     (3) If Employee is serving as a member of the Board at any time during the term of this Agreement, any failure of the Company to nominate Employee for re-election, or any failure of the shareholders to re-elect Employee, as a member of the Board (other than due to Employee’s death, Disability, Termination for Cause or voluntary resignation from the Board), regardless of whether any such failure is susceptible of cure; or

     (4) Any failure by the Company, other than an insubstantial or inadvertent failure remedied by the Company promptly after receipt of notice thereof given by Employee, to provide Employee with Base Salary at the level payable to Employee on the Effective Date or, if more favorable to Employee, at the highest rate made available to Employee at any time thereafter.

     3. Termination of Employment, Relocation.

     (a) Right to Terminate. Nothing in this Agreement shall be construed in any way to limit the right of the Company to terminate Employee’s employment, with or without cause, or for Employee to terminate Employee’s employment with the Company, with or without reason; provided, however, that the Company and Employee must

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nonetheless comply with any duty or obligation such party has at law or under any agreement (including paragraphs 5 and 6 of this Agreement) between the parties.

     (b) Termination due to Death or Disability. Employee’s employment with the Company shall be terminated upon Employee’s death. By written notice to the other party, either the Company or Employee may terminate Employee’s employment due to Disability.

     (c) RelocationNothing in this Agreement shall be construed in any way to limit the right of the Company to require Employee to perform Employee’s services on behalf of the Company at a different location or locations than the one at which Employee was performing Employee’s services immediately prior to the date hereof, or to require the Company to pay or provide any benefits to Employee on account of such relocation, other than to the extent benefits would be payable to Employee under the Company’s applicable relocation policy as in effect at the relevant time.

     4. Amounts Payable Upon Termination of Employment. The following provisions shall apply to any termination of Employee’s employment:

     (a) Death, Disability or Normal Retirement. In the event that Employee’s employment terminates due to Employee’s death or Disability (regardless of whether such Disability termination is initiated by Employee or the Company), or due to the voluntary retirement by Employee (which is not a Termination for Good Reason) at or after attaining Employee’s Normal Retirement Date, Parent or Employer shall pay Employee (or, if applicable, Employee’s beneficiaries or legal representative(s)):

     (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination;

     (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice; and

     (3) A Separation Payment in an amount equal to Employee’s Base Salary, which shall be paid, in all cases other than voluntary retirement on or after Normal Retirement Date, within 10 days following Employee’s Date of Termination, and, in the case of voluntary retirement on or after Normal Retirement Date, 6 months and 1 day after Employee’s Date of Termination.

     (b) Cause and Voluntary Termination. If Employee’s employment is terminated by the Company in a Termination for Cause or voluntarily by Employee (other than in a Termination for Good Reason or at or after Normal Retirement Date), Parent or Employer shall pay Employee

     (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination; and

     (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice.

     (c) Termination for Good Reason or Not for Cause. If Employee terminates Employee’s employment in a Termination for Good Reason, or the Company terminates

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Employee’s employment for any reason other than those described in paragraphs 4(a) and (b) above, Parent or Employer shall pay or shall provide to Employee the following benefits and compensation:

     (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination;

     (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice;

     (3) A Separation Payment, as soon as practicable (but not more than 10 days) following the expiration of the revocation period stated in the General Release Agreement described in subparagraph 4(d) below, in an amount equal to the sum of

     (i) 3 times Employee’s Base Salary;

     (ii) The product of (A) the monthly amount that, on the Date of Termination, Employee would be required to pay to continue coverage under the Employer’s group health plan(s) (as defined by the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for Employee and Employee’s eligible dependents, if any, covered thereunder immediately prior to the Date of Termination and (B) 36; provided, however, that, if Employee is covered under group health plan(s) not subject to COBRA, instead of including this amount as part of the Separation Payment, the Company shall either, at its election, provide Employee and Employee’s covered dependents continued coverage under such medical plan, at its expense, for a number of months equal to the number specified in this subparagraph (c)(3)(ii)(B) or include in the Separation Payment an amount equal to the value of such continued coverage. For the avoidance of doubt, such payment shall not in any way alter, modify or affect Employee’s right to (and the conditions upon which, and the period during which, Employee may elect to) continue coverage for Employee and Employee’s eligible dependents under COBRA ; and

     (iii) If the termination of employment is by the Company and if the Date of Termination is less than 30 days after the date Notice of Termination is given, an amount equal to 1/12 (one twelfth) of Employee’s Base Salary, which amount shall be paid in cash on the Date of Termination; and

     (4) Full vesting, as of the Date of Termination, of all of the grants (other than stock options granted on or before the date hereof which would not have become vested upon such a termination under the terms thereof in effect immediately prior to the date of this Agreement) made to Employee under the LTIP which are outstanding on the Date of Termination.

     (d) Separation Payment Contingent on Release. Any Separation Payment payable to Employee under subparagraph 4(c) shall be subject to, and contingent upon, Employee’s execution and non-revocation of a General Release Agreement in favor of

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 the Company in substantially the form and substance as the one attached hereto as Schedule A.

     5. Nonpublic Information.

     (a) Acknowledgement of Access. Employee hereby acknowledges that, in connection with Employee’s employment with the Company, Employee has received, and will continue to receive, various information regarding the Company and its business, operations and affairs. All such information, to the extent not publicly available other than as a result of a disclosure by Employee in violation of this Agreement, is referred to herein as the “Nonpublic Information.”

     (b) Agreement to Keep Confidential. Employee hereby agrees that, from and after the Effective Date and continuing until 3 years following the Employee’s Date of Termination, Employee will keep all Nonpublic Information confidential and will not, without the prior written consent of the Board or the President of Parent, disclose any Nonpublic Information in any manner whatsoever or use any Nonpublic Information other than in connection with the performance of Employee’s services to the Company; provided, however, that the provisions of this subparagraph shall not prevent Employee from

     (1) Disclosing any Nonpublic Information to any other employee of the Company or to any representative or agent of the Company (such as an independent accountant, engineer, attorney or financial advisor) when such disclosure is reasonably necessary or appropriate (in Employee’s judgment) in connection with the performance by Employee of Employee’s duties and responsibilities;

     (2) Disclosing any Nonpublic Information as required by applicable law, rule, regulation or legal process (but only after compliance with the provisions of subparagraph (c) of this paragraph); and

     (3) Disclosing any information about this Agreement and Employee’s other compensation arrangement to Employee’s spouse, financial advisors or attorneys, or to enforce any of Employee’s rights under this Agreement.

     (c) Commitment to Seek Protective Order. If Employee is requested pursuant to, or required by, applicable law, rule, regulation or legal process to disclose any Nonpublic Information, Employee will notify Parent promptly so that the Company may seek a protective order or other appropriate remedy or, in Parent’s sole discretion, waive compliance with the terms of this subparagraph, and Employee will fully cooperate in any attempt by the Company to obtain any such protective order or other remedy. If no such protective order or other remedy is obtained, or if Parent waives compliance with the terms of this subparagraph, Employee will furnish or disclose only that portion of the Nonpublic Information as is legally required and will exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Nonpublic Information that is so disclosed.

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     6. Non-Solicitation and Non-Interference.

     (a) Non-Solicitation of Employees. During the period of Employee’s employment with the Company (the “Employment Period”) and during the 2 year period following Employee’s Date of Termination (the “Restriction Period”), Employee shall not directly or indirectly induce any employee of the Company to terminate employment with such entity, and shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company unless such person shall have ceased to be employed by the Company for a period of at least 6 months.

     (b) Non-Interference with Business Relationships. During the Employment Period and the Restriction Period, Employee shall not directly or indirectly take any actions which can reasonably be expected to, or are intended to, disrupt or interfere with in any significant way any existing relationship that the Company has with any third party.

     (c) No Disparaging Comments. Except to the extent otherwise required or compelled at law or under subpoena, during the Employment Period and the Restriction Period, Employee shall refrain from making any public derogatory or disparaging comment concerning the Company or any of the current or former officers, directors or employees of the Company. Notwithstanding the immediately preceding sentence, nothing herein shall be construed to preclude Employee from enforcing any rights or claims Employee may have against the Company (or to defend against any claims by the Company) arising under this Agreement.

     (d) Company Property. Promptly following Employee’s Date of Termination, Employee shall return to the Company all property of the Company, and all copies thereof in Employee’s possession or under Employee’s control.

     7. Miscellaneous Provisions.

     (a) No Mitigation, No Offset. Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by Employee as the result of employment by another employer after the Date of Termination or otherwise. Except as provided in subparagraph 4(d), Parent’s or Employer’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against Employee or others whether by reason of the subsequent employment of Employee or otherwise.

     (b) Arbitration. Except to the extent provided in paragraph 7(d), any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held in Dallas, Texas and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both Parent and Employee. If the parties cannot agree on an acceptable arbitrator, the

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dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. The arbitrator may award pre-judgment interest on any amount found to be due under this Agreement at a rate not in excess of the rate that would be payable with respect to judgments rendered in a Texas state court.

     (c) Attorney Fees. All legal fees and other costs incurred by Employee in connection with the resolution of any dispute or controversy under or in connection with this Agreement shall be reimbursed by the Company to Employee if such dispute or controversy is resolved in favor of Employee. The Company shall be responsible for, and shall pay, all legal fees and other costs incurred by the Company in connection with the resolution of any dispute or controversy under or in connection with this Agreement, regardless of whether such dispute or controversy is resolved in favor of the Company or Employee.

     (d) Equitable Relief Available. Employee acknowledges that remedies at law may be inadequate to protect the Company against any actual or threatened breach by Employee of the provisions of paragraphs 5 or 6. Accordingly, without prejudice to any other rights or remedies otherwise available to the Company, Employee agrees that the Company shall have the right to equitable and injunctive relief (without requirement to post any bond) to prevent any breach of the provisions of paragraphs 5 or 6 (without any requirement to post any bond), as well as to such damages or other relief as may be available to the Company by reason of any such breach that does occur.

     (e) Not A Contract of Employment. Employee acknowledges that that this Agreement is not an “employment agreement” or “employment contract” (written or otherwise), as either term is used or defined in, or contemplated by or under

 

(1)

 

Parent’s LTIP;

 

 

(2)

 

Any other plan or agreement to which the Company is a party; or

 

 

(3)

 

Applicable statutory, common or case law.

     (f) Notices. Any Notice of Termination or other communication called for by the terms of this Agreement shall be in writing and either delivered personally or by registered or certified mail (postage prepaid and return receipt requested) and shall be deemed given when received at the following addresses (or at such other address for a party as shall be specified by like notice):

     (1) If to Parent, Employer or the Company, 5205 North O’Connor Boulevard, Suite 900, Irving, Texas 75039, Attention: General Counsel;

     (2) If to Employee, the address of Employee set forth below Employee’s signature on the signature page of this Agreement.

     (g) Assignment. Employer may assign its duties and obligations hereunder to any other direct or indirect, majority-owned subsidiary of Parent, but shall remain secondarily liable for the performance of this Agreement by Parent and/or any such assignee. Except pursuant to the immediately preceding sentence or an assumption by a successor described in subparagraph (h) of this paragraph, the rights and obligations

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of Parent and Employer pursuant to this Agreement may not be assigned, in whole or in part, by Parent or Employer to any other person or entity without the express written consent of Employee. The rights and obligations of Employee pursuant to this Agreement may not be assigned, in whole or in part, by Employee to any other person or entity without the express written consent of the Board.

     (h) Successors. Parent shall require any successor (whether direct or indirect) to all or substantially all of the business or assets of Parent (whether by purchase of securities, merger, consolidation, sale of assets or otherwise), to expressly assume and agree to perform the obligations to be performed by the Company under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall be binding on, and shall inure to the benefit of, Parent, Employer, the Company, Employee and their respective successors, permitted assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees and legatees, as applicable.

     (i) Amendments and Waivers. No provision of this Agreement may be amended or otherwise modified, and no right of any party to this Agreement may be waived, unless such amendment, modification or waiver is agreed to in a written instrument signed by Employee and Company. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

     (j) Complete Agreement. This Agreement replaces and supersedes all prior agreements, including, but not limited to, the Severance Agreement between Parent and Employee, as in effect immediately prior to the date hereof, among the parties with respect to payments to be made to Employee upon the termination of Employee’s employment prior to a Change in Control, and the provisions of this Agreement constitute the complete understanding and agreement among the parties with respect to such subject matter. Nothing in this subparagraph (j) is intended to, or shall be construed to (1) supercede the Change in Control Agreement or (2) limit Employee’s rights under the LTIP or any other Company plan, program, policy or practice (other than any plan, program, policy or practice primarily providing severance or other termination benefits) generally applicable to similarly situated employees.

     (k) Governing LawTHIS AGREEMENT IS BEING MADE AND EXECUTED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF TEXAS AND SHALL BE GOVERNED, CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS.

     (l) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement.

     (m) Construction. The captions of the paragraphs, subparagraphs and sections of this Agreement have been inserted as a matter of convenience of reference only and shall not affect the meaning or construction of any of the terms or provisions of this Agreement. Unless otherwise specified, references in this Agreement to a “paragraph,” “subparagraph,” “section,” “subsection” or “schedule” shall be considered to be references to the appropriate paragraph, subparagraph, section, subsection or

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schedule, respectively, of this Agreement. As used in this Agreement, the term “including” shall mean “including, but not limited to.”

     (n) Validity and Severability. If any term or provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, (1) such term or provision shall be fully severable, (2) this Agreement shall be construed and enforced as if such term or provision had never comprised a part of this Agreement and (3) the remaining terms and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable term or provision, there shall be added automatically as a part of this Agreement, a term or provision as similar to such illegal, invalid or unenforceable term or provision as may be possible and be legal, valid and enforceable.

     (o) Survival. Notwithstanding anything else in this Agreement to the contrary, paragraphs 5, 6 and 7, and, to the extent that any of Parent’s and Employer’s obligations thereunder have not theretofore been satisfied, paragraph 4 of this Agreement shall survive the termination hereof.

     (p) Joint and Several Liability. Parent and Employer (or any assignee of Employer pursuant to paragraph 7(g)) shall each be jointly and severally liable to Employee hereunder with regard to any obligation imposed by the terms hereof on Parent or Employer.

(SIGNATURE PAGE ATTACHED)

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     In Witness Whereof, the parties have executed this Agreement to be effective as of the Effective Date.

 

 

 

 

 

 

 

PIONEER NATURAL RESOURCES COMPANY

 

 

 

 

 

 

 

By:

 

/s/ Mark S. Berg

 

 

 

 

 

 

 

Name:
Title:

 

Mark S. Berg
Executive Vice President

 

 

 

 

 

 

 

PIONEER NATURAL RESOURCES USA, INC.

 

 

 

 

 

 

 

By:

 

/s/ Mark S. Berg

 

 

 

 

 

 

 

Name:
Title:

 

Mark S. Berg
Executive Vice President

 

 

 

 

 

 

 

EMPLOYEE:

 

 

 

 

 

 

 

/s/ Scott D. Sheffield

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

5205 North O’Connor Blvd.

 

 

Suite 900

 

 

Irving, Texas 75039-3746

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Schedule A

GENERAL RELEASE AGREEMENT

NOTICE: You should thoroughly review and understand the effect of this General Release Agreement (“Release”) before signing it, and you are advised to discuss this document with your attorney. In accordance with the requirements of the Older Workers Benefit Protection Act (“OWBPA”), you are allowed at least [number] days from the date of your receipt of this document to consider the offer made to you and to return an executed copy of this Release to the Vice President Administration. Additionally, after you have executed this Release, you have seven (7) days to reconsider and revoke your agreement.

GENERAL RELEASE: In consideration of my acceptance of the payments and benefits offered to me under the Pioneer Natural Resources Company Severance Agreement effective [date][, as amended,] (the “Agreement”), I hereby release and discharge Pioneer Natural Resources Company (the “Company”) and its subsidiaries and affiliates, and the officers, directors, employees, agents, predecessors, successors, and assigns of such entities (collectively the “Released Parties) from any and all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which I have or claim against any of them as a result of my employment the termination of my employment or any other act or omission relating to any matter arising on or before the date I sign this Release, including but not limited to claims arising under federal, state, or local laws prohibiting employment discrimination, including, but not limited to, the Age Discrimination in Employment Act, and including, but not limited to, claims arising out of any legal restrictions, contractual or otherwise, on the Company’s right to terminate the employment of its employees (any and all “Potential Claims”), and I do hereby agree not to file a lawsuit, arbitral proceeding or other legal action to assert such Potential Claims. I acknowledge and agree that the Released Parties may recover from me any loss, including attorney’s fees and costs of defending against any such legal action, that they may suffer arising out of my breach of this Release.

I understand that this Release is final and binding, and I agree not to challenge its enforceability other than as permitted by applicable laws. If I do challenge the enforceability of this Release other than with respect to claims of age discrimination, I agree initially to tender to the Company an amount equivalent to the payment and benefits I received pursuant to the Agreement, and invite the Company to retain such amount and agree with me to cancel this Release. In the event the Company accepts this offer, the Company shall retain such amount and this Release will be void. In the event the Company does not accept such offer, the Company shall so notify me, and shall place such amount in an interest-bearing escrow account pending the resolution of any dispute as to whether this Release shall be set aside and/or otherwise be rendered unenforceable. If I am successful in challenging the enforceability of this Release as to age discrimination claims, then, to the extent permitted by law, any damages I may recover for those claims will be offset by any payments and benefits made to me under the Agreement.

I acknowledge and agree that the Company has no legal obligation to provide the payments and/or benefits offered to me under the Agreement, except in exchange for this Release, and my acceptance of such payments and benefits constitutes my agreement to all terms and conditions set forth in this Release.

I acknowledge and agree that, except to the extent otherwise provided in the Agreement or prohibited by law (for example by the OWBPA with respect to claims of age discrimination), this Release constitutes a waiver of any and all Potential Claims that I have or may have against the Released Parties. I further acknowledge and agree that this Release has no effect on any obligations I have assumed under the Agreement with respect to confidentiality, non-solicitation, non-interference and other such matters and that any such obligations shall survive my execution of this Release in accordance with the terms of the Agreement.

I acknowledge that I have [number] days to consider this Release before executing it, although I may execute it any time during this [number] day period (but not before my last day of employment), that I may revoke this Release within 7 days after I execute it by written notice to the Company’s Vice President of Administration and that this Release will not become effective or enforceable, and the payments and benefits offered under the Agreement will not be made or provided, until expiration of this 7 day period without my revocation.

I have carefully read and fully understand all of the provisions of this Release. I further acknowledge that entering into this General Release Agreement is knowing and voluntary on my part, that I have had a reasonable time to deliberate regarding its terms, and that I have had the right to consult with an attorney prior to executing this Release if I so desired.

 

 

 

 

 

 

 

 

Date signed:

 

Signature of [employee]

 

 

 

 

 

 

 

 

 

 

Date signed:

 

Witness

 

 

 


 

Schedule I

1. The Company entered into a Severance Agreement with Timothy L. Dove which varied from Exhibit 10.2 in the following respects:

a. The definition of “Termination for Good Reason” does not include the failure of the Company or its shareholders to nominate and re-elect the employee as a member of the Board of Directors of the Company.

b. The Separation Payment due under Section 4(c)(3) consists of (i) 2.5 times the employee’s base salary, (ii) an amount equal to 30 months of medical premiums and (iii) an amount equal to 1/12 of the employee’s base salary if the date of termination is less than 30 days following the notice of termination and the employee’s employment is terminated by the Company .

2. The Company entered into Severance Agreements with each of A.R. Alameddine, Mark S. Berg, Chris J. Cheatwood, Richard P. Dealy, Darin G. Holderness and Danny L. Kellum, which varied from Exhibit 10.2 in the following respects:

a. The definition of “Termination for Good Reason” in Section 2(n) was modified to provide, in its entirety, the following:

“Termination for Good Reason” shall mean a termination of Employee’s employment by Employee within 30 days after

(1) the earlier of receipt by Employee of (i) written notice of an Excessive Salary Reduction and (ii) Employee’s first paycheck that reflects an Excessive Salary Reduction; or

(2) if Employee is an officer of Parent or Employer, the demotion of Employee to either a non-officer position or an officer position with such entity that is junior to the officer position held by Employee immediately prior to such demotion.

b. The Separation Payment due under Section 4(c)(3) consists of (i) 1 times the employee’s base salary, (ii) an amount equal to 18 months of medical premiums and (iii) an amount equal to 1/12 of the employee’s base salary if the date of termination is less than 30 days following the notice of termination and the employee’s employment is terminated by the Company.

c. Section 4(c)(4) was modified to provide, in its entirety, the following:

Any additional rights that may be afforded to Employee in accordance with the terms of the LTIP with respect to awards made to Employee thereunder which are not vested as of such Date of Termination.

 

 

EX-10 2 pxdnov258kx101.htm PXD NOV25/08 8-K EXH 10.1

EXHIBIT 10.1

 

PIONEER NATURAL RESOURCES COMPANY

AMENDMENT TO SEVERANCE AGREEMENT

 

WHEREAS, Pioneer Natural Resources Company (the “Parent“), Pioneer Natural Resources USA Inc. (the “Employer”) and the employee whose name appears on the signature page of this Amendment (the “Employee”) have previously entered into a Severance Agreement (the “Agreement”) which provides the Employee with certain termination benefits in the event Employee’s employment is terminated in certain circumstances prior to the occurrence of a change in control;

WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), imposes certain limitations and restrictions on the times at which certain types of compensation, including severance benefits, may be payable;

WHEREAS, all documents that provide for the payment of compensation that is subject to Section 409A must be brought into compliance with the requirements of Section 409A on or before December 31, 2008, or the employee to whom such compensation is payable will be subjected to certain adverse tax consequences, including, but not limited to, having to pay an additional tax of at least 20% on such compensation; and

WHEREAS, the parties desire to adopt amendments to the Agreement to avoid any such adverse tax consequences for the Employee by reason of the compensation provided herein and certain other amendments;

NOW, THEREFORE, the Agreement is amended in the manner set forth below:

1. Paragraph 2 of the Agreement is amended to delete the definition of “Change in Control” and “Date of Termination” in their entirety, and to add the following definitions in appropriate alphabetical order:

“Change in Control” shall mean an event that constitutes a “change in control” as defined in Parent’s LTIP. Any modification to the definition of “change in control” in Parent’s LTIP (including by virtue of the adoption by the Parent of a successor plan thereto setting forth a modified definition of “change in control”) adopted after the Effective Date shall apply for purposes of this Agreement, except that any modification to such definition adopted on or after, or within 180 days prior to, a Change of Control or Potential Change of Control shall not apply in determining the definition of such term under this Agreement unless such amendment is favorable to Employee; and provided further that any change to the definition of a change in control in Parent’s LTIP adopted in 2008 to comply with the requirements of Section 409A of the Code shall be deemed to be favorable to Employee.

 


Date of Termination” shall mean

(1)  In the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein; and

(2)  In all other cases, the actual date on which Employee’s employment terminates;

provided, however, that if Employee continues to provide or, in the 12 month period following such termination of employment, Employee is expected to provide, sufficient services that, under the Parent’s written and generally applicable policies regarding what constitutes a “separation from service” for purpose of Section 409A of the Code, Employee does not incur a separation of service for purposes of such Section 409A on the date of termination, Employee’s Date of Termination for purposes of this Agreement shall be the date on which such Employee incurs a separation from service under such policies.

Parent’s LTIP” shall mean the Parent’s 2006 Long-Term Incentive Plan, as the same may be amended from time to time, or any successor plan thereto.

2.         References throughout the Agreement to the term “LTIP” shall be changed to “Parent’s LTIP.”

3.         Paragraph 4 is amended to delete subparagraph (a)(3) thereof, and to insert a new subparagraph (a)(3) to read as follows:

(3)       A Separation Payment in an amount equal to Employee’s Base Salary, which shall be paid 10 days following Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a “specified employee” within the meaning of Section 409A of the Code, as determined in accordance with the procedures specified or established by the Parent in accordance with such Section 409A and the regulations thereunder (a Specified Employee), and the Separation Payment is payable due to Disability or a voluntary retirement on or after Normal Retirement Date, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, it shall be paid with interest from the Date of Termination at a rate equal to Employer’s cost of borrowing under its principal credit facility as in effect at the Date of Termination, as determined in good faith by the Parent’s Chief Financial Officer (the “Employer’s Borrowing Cost”). 

4.         Paragraph 4(c)(3) is amended to delete the phrase “as soon as practicable (but not more than 10 days) following the expiration of the revocation period stated in the General Release Agreement described in subparagraph 4(d) below,” in the portion thereof preceding subclause (i), to delete the phrase “, which amount shall be paid in cash on the Date of Termination” in subclause (iii) thereof and to insert the following new paragraph following (and not as part of) subclause (iii):

 

2

 

 


Payment of such Separation Payment shall be made 10 days following Employee’s Date of Termination,provided that, if, at the Date of Termination, Employee is a Specified Employee, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, it shall be paid with interest from the Date of Termination at a rate equal to Employer’s Borrowing Cost.

5.         Paragraph 4(c)(4) is amended to insert the following proviso at the end thereof::

(4) Full vesting, as of the Date of Termination, of all of the grants (other than stock options granted on or before the date hereof which would not have become vested upon such a termination under the terms thereof in effect immediately prior to the date of this Agreement) made to Employee under Parent’s LTIP and under the Parent’s Long Term Incentive Plan adopted in 1997 that are outstanding on the Date of Termination; provided, however, that in the case of any award that vests upon the attainment of specified performance conditions, the extent to which such award becomes vested and payable will be contingent (to the extent specified in the applicable award agreement) upon the achievement of such criteria.

6.         Paragraph 4(d) is amended to insert the words “and delivery within 60 days of Employee’s Date of Termination” after the words “Employee’s execution”.

7          Paragraph 7(c) is amended to add a new sentence following the first sentence thereof, to read as follows:

Reimbursement of such fees shall be made not later than 75 days following final resolution of the matter.

 

3

 

 


            IN WITNESS WHEREOF, the parties hereunder have caused this Amendment to be executed as of the 20th day of November, 2008.

 

PIONEER NATURAL RESOURCES COMPANY

 

 

 

 

EX-10 3 pxdnov258kx102.htm PXD NOV 25/08 8-K EXH 10.2

EXHIBIT 10.2

 

PIONEER NATURAL RESOURCES COMPANY

AMENDMENT TO SEVERANCE AGREEMENT

 

WHEREAS, Pioneer Natural Resources Company (the “Parent”), Pioneer Natural Resources USA Inc. (the “Employer”) and the employee whose name appears on the signature page of this Amendment (the “Employee”) have previously entered into a Severance Agreement (the “Agreement”) which provides the Employee with certain termination benefits in the event Employee’s employment is terminated in certain circumstances prior to the occurrence of a change in control;

WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”), imposes certain limitations and restrictions on the times at which certain types of compensation, including severance benefits, may be payable;

WHEREAS, all documents that provide for the payment of compensation that is subject to Section 409A must be brought into compliance with the requirements of Section 409A on or before December 31, 2008, or the employee to whom such compensation is payable will be subjected to certain adverse tax consequences, including, but not limited to, having to pay an additional tax of at least 20% on such compensation; and

WHEREAS, the parties desire to adopt amendments to the Agreement to avoid any such adverse tax consequences for the Employee by reason of the compensation provided herein and certain other amendments;

NOW, THEREFORE, the Agreement is amended in the manner set forth below:

1. Paragraph 2 of the Agreement is amended to delete the definitions of “Change in Control” and “Date of Termination” in their entirety, and to add the following definitions in appropriate alphabetical order:

“Change in Control” shall mean an event that constitutes a “change in control” as defined in Parent’s LTIP. Any modification to the definition of “change in control” in Parent’s LTIP (including by virtue of the adoption by the Parent of a successor plan thereto setting forth a modified definition of “change in control”) adopted after the Effective Date shall apply for purposes of this Agreement, except that any modification to such definition adopted on or after, or within 180 days prior to, a Change of Control or Potential Change of Control shall not apply in determining the definition of such term under this Agreement unless such amendment is favorable to Employee; and provided further that any change to the definition of a change in control in Parent’s LTIP adopted in 2008 to comply with the requirements of Section 409A of the Code shall be deemed to be favorable to Employee.

 


Date of Termination” shall mean

(1)  In the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein; and

(2)  In all other cases, the actual date on which Employee’s employment terminates;

provided, however, that if Employee continues to provide or, in the 12 month period following such termination of employment, Employee is expected to provide, sufficient services that, under the Parent’s written and generally applicable policies regarding what constitutes a “separation from service” for purpose of Section 409A of the Code, Employee does not incur a separation of service for purposes of such Section 409A on the date of termination, Employee’s Date of Termination for purposes of this Agreement shall be the date on which such Employee incurs a separation from service under such policies.

Parent’s LTIP” shall mean the Parent’s 2006 Long-Term Incentive Plan, as the same may be amended from time to time, or any successor plan thereto.

2.         References throughout the Agreement to the term “LTIP” shall be changed to “Parent’s LTIP.”

3.         Paragraph 4 is amended to delete subparagraph (a)(3) thereof, and to insert a new subparagraph (a)(3) to read as follows:

(3)       A Separation Payment in an amount equal to Employee’s Base Salary, which shall be paid 10 days following Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a “specified employee” within the meaning of Section 409A of the Code, as determined in accordance with the procedures specified or established by the Parent in accordance with such Section 409A and the regulations thereunder (a Specified Employee), and the Separation Payment is payable due to Disability or a voluntary retirement on or after Normal Retirement Date, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, it shall be paid with interest from the Date of Termination at a rate equal to Employer’s cost of borrowing under its principal credit facility as in effect at the Date of Termination, as determined in good faith by the Parent’s Chief Financial Officer (the “Employer’s Borrowing Cost”).

4.         Paragraph 4(c)(3) is amended to delete the phrase “as soon as practicable (but not more than 10 days) following the expiration of the revocation period stated in the General Release Agreement described in subparagraph 4(d) below),” in the portion thereof preceding subclause (i), to delete the phrase “, which amount shall be paid in cash on the Date of Termination” in subclause (iii) thereof and to insert the following new paragraph following (and not as part of) subclause (iii):

 

2

 

 


Subject to Employee’s timely execution and delivery of, and having not revoked, the General Release Agreement described in subparagraph 4(d) below, payment of such Separation Payment shall be made 10 days following Employee’s Date of Termination,provided that, if, at the Date of Termination, Employee is a Specified Employee, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, it shall be paid with interest from the Date of Termination at a rate equal to Employer’s Borrowing Cost.

5.         Paragraph 4(d) is amended to insert the words “and delivery within 60 days of Employee’s Date of Termination” after the words “Employee’s execution”.

6.         Paragraph 7(c) is amended to add a new sentence following the first sentence thereof, to read as follows:

Reimbursement of such fees shall be made not later than 75 days following final resolution of the matter.

IN WITNESS WHEREOF, the parties hereunder have caused this Amendment to be executed as of the 20th day of November, 2008.

 

PIONEER NATURAL RESOURCES COMPANY

 

 

 

 

 

 

EXHIBIT 10.3

 

 

 

EX-10.1 2 pxdmar48kx101.htm EXHIBIT

 

 

EXHIBIT 10.1

PIONEER NATURAL RESOURCES COMPANY

CHANGE IN CONTROL AGREEMENT

 

This Change in Control Agreement (“Agreement”) is entered into, as of March 4, 2013among Pioneer Natural Resources Company, a Delaware corporation (“Parent”), Pioneer Natural Resources USA, Inc., a Delaware corporation that is a wholly-owned subsidiary of Parent (“Employer”), and Scott D. Sheffield (“Employee”). As henceforth used in this Agreement, the term “Company” shall be deemed to include Parent and its direct or indirect majority-owned subsidiaries.

 

Recitals

 

Parent and Employer acknowledge that Employee possesses skills and knowledge instrumental to the successful conduct of the Company’s business. Parent and Employer are willing to enter into this Agreement with Employee in order to better ensure themselves of access to the continued services of Employee both before and after a Change in Control.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

 

1.     Term. The term of this Agreement shall commence on the date indicated above (the “Effective Date”) and end on September 30, 2014. Thereafter, on the date on which the term of this Agreement (as it may be extended from time to time under this paragraph 1) would otherwise expire, so long as Employee is still an employee of the Company on such date, such term will be automatically extended for 12 months, unless Parent shall have provided written notice to Employee at least 6 months before the date that the term would otherwise expire that it does not want the term to be extended. Parent may deliver a conditional notice of non-renewal that will be effective only if Employee does not agree, within the time period specified by Parent, to any amendment or modification of this Agreement that Parent shall request be executed as a condition to allowing the term hereof to be extended. Notwithstanding the foregoing, and regardless of whether Parent has theretofore delivered a notice of non-renewal and/or sought agreement from Employee to amendments to this Agreement, if a Potential Change in Control or a Change in Control occurs during the term hereof, the term of this Agreement shall be automatically extended to the second anniversary of the date on which the Change in Control occurs (the “Change in Control Date”); provided, however, that if no Change in Control has occurred prior to the first anniversary of the occurrence of a Potential Change in Control and the Board of Directors of Parent (the “Board”), acting in good faith, thereafter adopts a resolution that such Potential Change in Control will not result in the occurrence of a Change in Control, the term of this Agreement shall expire on a date specified by the Board not earlier than the first anniversary of the adoption of such resolution (unless otherwise extended pursuant to the second sentence of this paragraph 1).

 

2.     Operation of Agreement. Except as expressly provided below, no benefits shall be payable under this Agreement if Employee is not employed by the Company on the Change in Control Date. Notwithstanding anything else contained herein to the contrary, if Employee’s employment is terminated (a) by the Company and such termination is not a Termination for Cause and (b) after the occurrence of a Potential Change in Control but prior to a Change in Control and a Change in Control occurs within 12 months after such termination, Employee shall be deemed, solely for purposes of determining Employee’s rights under this Agreement, to have remained

 

1


 

 

employed until the Change in Control Date and to have been terminated by the Company without cause immediately thereafter; provided, however, that, in such case, the Separation Payment payable hereunder shall be reduced by the amount of any other cash severance benefits theretofore paid to Employee in connection with such termination. If Employee is still an employee of the Company on the Change in Control Date, or Employee is deemed, for purposes of this Agreement, to continue to be in the employ of the Company until the Change in Control Date pursuant to the immediately preceding sentence, upon the occurrence of a Change in Control this Agreement shall supercede any other individual agreement between Parent and Employer and Employee the primary purpose of which is to provide Employee the right to receive severance benefits and certain other benefits ancillary to such severance benefits in connection with the termination of Employee’s employment (the “Severance Agreement”), subject, if applicable, to the offset set forth in the immediately preceding sentence.

 

3.     Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

 

“Accrued Obligations” shall mean any vested amounts or benefits owing to Employee under any of the Company’s employee benefit plans and programs in which Employee has participated, including any compensation previously deferred by Employee (together with any accrued earnings thereon) and not yet paid.

 

“Base Salary” shall mean Employee’s annualized base salary at the rate in effect at the relevant date or event as reflected in Employer’s regular payroll records.

 

“Change in Control” shall mean an event that constitutes a “change in control” as defined in Parent’s LTIP, except that, solely for purposes of determining whether Employee is eligible for benefits under this Agreement due to a termination of employment occurring after a Potential Change in Control, but prior to the occurrence of a Change in Control, an event shall only constitute a Change in Control if it both qualifies as such under Parent’s LTIP and is a change in the ownership or effective control or in the ownership of a substantial portion of the assets of the Parent for purposes of Section 409A of the Code. Any modification to the definition of “change in control” in Parent’s LTIP (including by virtue of the adoption by the Parent of a successor plan thereto setting forth a modified definition of “change in control”) adopted after the Effective Date shall apply for purposes of this Agreement, except that any modification to such definition adopted on or after, or within 180 days prior to, a Change in Control or Potential Change in Control shall not apply in determining the definition of such term under this Agreement unless such amendment is favorable to Employee; and provided further that any change to the definition of a change in control in Parent’s LTIP adopted in 2008 to comply with the requirements of Section 409A of the Code shall be deemed to be favorable to Employee.

 

Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor provision thereto.

 

Date of Termination” shall mean

 

(1)    In the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein; and

 

 

2


 

 

(2)     In all other cases, the actual date on which Employee’s employment terminates;

 

provided, however, that if Employee continues to provide or, in the 12 month period following such termination of employment, Employee is expected to provide, sufficient services that, under the Parent’s written and generally applicable policies regarding what constitutes a “separation from service” for purpose of Section 409A of the Code, Employee does not incur a separation of service for purposes of such Section 409A on the date of termination, Employee’s Date of Termination for purposes of this Agreement shall be the date on which such Employee incurs a separation from service under such policies.

 

“Disability” shall mean Employee’s physical or mental impairment or incapacity of sufficient severity such that

 

(1)    In the opinion of a qualified physician selected by Parent with the consent of Employee or Employee’s legal representative (which consent shall not be unreasonably withheld), after taking into account all reasonable accommodations that the Company has made or could make, Employee is unable to continue to perform Employee’s duties and responsibilities as an employee of the Company; and

 

(2)    Employee’s condition entitles Employee to long-term disability benefits under any employee benefit plan maintained by the Company or any of its affiliates that are at least comparable to those made available to Employee by the Company prior to the Change in Control.

 

For purposes of subparagraph (1) of this definition, Employee agrees to provide such access to Employee’s medical records and to submit to such physical examinations and medical tests as, in the opinion of the physician selected by Parent, is reasonably necessary to make the determination required as to Employee’s ability to perform Employee’s duties and responsibilities.

 

“Earned Salary” shall mean the Base Salary earned by Employee, but unpaid, through Employee’s Date of Termination.

 

“Normal Retirement Date” shall mean the date on which Employee attains age 60.

 

“Notice of Termination” shall mean a written notice given, in the case of a Termination for Cause, within 45 days of Parent’s or Employer’s having actual knowledge of the events giving rise to such termination, and in the case of a Termination for Good Reason, within 90 days of the later to occur of (x) the Change in Control Date or (y) Employee’s having actual knowledge of the events giving rise to such termination. Any such Notice of Termination shall

 

(1)    Indicate the specific termination provision in this Agreement relied upon;

 

 

3


 

 

(2)     Set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated; and

 

(3)     If the Date of Termination is other than the date of receipt of such notice, specify the Date of Termination (which date shall be not more than 30 days after the giving of such notice).

 

The failure by Employee to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Termination for Good Reason shall not waive any right of Employee hereunder or preclude Employee from asserting such fact or circumstance in enforcing Employee’s rights hereunder.

 

Parent’s LTIP” shall mean the Parent’s 2006 Long-Term Incentive Plan, as the same may be amended from time to time, or any successor plan thereto.

 

“Potential Change in Control” shall mean the occurrence of any of the following events:

 

(1)     Any person or group shall have announced publicly an intention to effect a Change in Control, or commenced any action (such as the commencement of a tender offer for Parent’s common stock or the solicitation of proxies for the election of any of Parent’s directors) that, if successful, could reasonably be expected to result in the occurrence of a Change in Control;

 

(2)     Parent enters into an agreement the consummation of which would constitute a Change in Control; or

 

(3)     Any other event occurs which the Board declares to be a Potential Change in Control.

 

“Separation Payment” shall mean any lump sum cash payment in excess of Earned Salary and Accrued Obligations payable to Employee under this Agreement.

 

Target Bonus” shall mean the greater of

 

(1)    the average of the target bonuses made available to Employee under any Company annual bonus program (which, if not stated as the target for a full year of service, shall be annualized) for the year in which the Change in Control Date occurs and for each of the last 2 years ended prior to the year in which the Change in Control Date occurs (or, if less, the number of years prior to the year in which the Change in Control Date occurs during which Employee was employed by the Company); and

 

(2)     Employee’s highest target bonus made available to Employee under the annual bonus program in which Employee participated for services rendered or to be rendered by Employee in any calendar year after the calendar year in which the Change in Control Date occurs;

 

in either case as reflected in Employer’s records.

 

4


 

 

 

 

“Termination for Cause” shall mean a termination of Employee’s employment by Parent and Employer due to the occurrence of any of the following

 

(1)    Employee’s continued failure (i) to substantially perform Employee’s duties and responsibilities (other than any such failure resulting from Employee’s physical or mental impairment or incapacity) or (ii) to comply with any material written policy of the Company generally applicable to all officers of the Company and, if applicable, the successor in interest to Parent or, if such successor is a subsidiary of any other entity, the direct or indirect ultimate parent of such successor (such successor or such ultimate parent entity, the “Parent Successor”), which specifically provides that Employee may be dismissed (or Employee’s employment terminated) as a consequence of any such failure to comply, in either case more than 10 business days after written demand for substantial performance or compliance with the policy is delivered by Parent specifically identifying the manner in which Parent believes Employee has not substantially performed Employee’s duties and responsibilities or not complied with the written policy;

 

(2)     Employee’s engaging in an act or acts of gross misconduct which result in, or are intended to result in, material damage to the Company’s business or reputation;

 

(3)     Employee’s failure, following a written request from Parent, reasonably to cooperate (including, without limitation, the refusal by Employee to be interviewed or deposed, or to give testimony) in connection with any investigation or proceeding, whether internal or external (including, without limitation, by any governmental or quasi-governmental agency), into the business practices or operations of the Company; or

 

(4)     Employee’s conviction of (or plea of guilty or nolo contendere to a charge of) any felony or any crime or misdemeanor, in either case, involving moral turpitude or financial misconduct which results in significant monetary damage to the Company.

 

For purposes of subparagraph (2)of this definition, an act, or failure to act, on Employee’s part shall only be considered “misconduct” if done, or omitted, by Employee not in good faith and without reasonable belief that such act, or failure to act, was in the best interest of the Company.

 

“Termination for Good Reason” shall mean a termination of Employee’s employment by Employee due to the occurrence of any of the following, without the express written consent of Employee, after the occurrence of a Potential Change in Control or a Change in Control:

 

(1)    (i) The assignment to Employee of any duties inconsistent in any material adverse respect with Employee’s position, authority or responsibilities as in effect immediately prior to a Potential Change in Control or a Change in Control, or (ii) any other material adverse change in such position, including titles, authority or responsibilities, which, in the case of any officer of Parent, shall be deemed to

 

5


 

 

have occurred unless, following the Change in Control Date, Employee holds such position or positions with the Parent Successor that are substantially comparable to the position or positions held by Employee with Parent immediately prior to the Change in Control Date (or, if higher, immediately prior to the occurrence of a Potential Change in Control);

 

(2)     Any failure by the Company or the Parent Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof given by Employee, to provide Employee with an annual Base Salary which is at least equal to the Base Salary payable to Employee immediately prior to the Change in Control Date (or, if higher, immediately prior to the occurrence of a Potential Change in Control) or, if more favorable to Employee, at the rate made available to Employee at any time thereafter (the “Protected Base Salary”);

 

(3)    Any failure by the Company or the Parent Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof given by Employee, to provide Employee with a reasonably achievable opportunity (determined in a manner consistent with the Company’s practices prior to the Change in Control) to receive an annual bonus ranging from 100%, at targeted levels of performance, to 200%, at superior levels of performance, of Employee’s Target Bonus;

 

(4)    Any failure by the Company or the Parent Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof given by Employee, to provide Employee with annual awards of long-term incentive compensation that have a value (using the same valuation methodologies used for valuing long-term incentive compensation awards of a similar type made to senior officers of Parent and, if applicable, the Parent Successor) at least equal to the average dollar value assigned thereto by the Company at the date of grant of the last three annual long-term incentive compensation awards (including, without limitation, equity and equity-based awards) granted to Employee in respect of Employee’s employment with the Company (or if Employee has received less than three such annual grants, the average of the value of the number of grants received by Employee prior to the Change in Control Date);

 

(5)    Any failure by the Company or the Parent Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof given by Employee, to permit Employee (and, to the extent applicable, Employee’s dependents) to participate in or be covered under all pension, retirement, deferred compensation, savings, medical, dental, health, disability, group life, accidental death and travel accident insurance plans and programs at a level that is materially less favorable in the aggregate than the benefits provided under the plans of the Company and its affiliated companies prior to the Change in Control Date (or, if more favorable to Employee, at the level made available to Employee or other similarly situated officers at any time thereafter); or

 

(6)    If, not later than the Change in Control Date, any Parent Successor shall have failed to agree in writing to assume and perform this Agreement as required by paragraph 7(h) hereof.

 

 

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4.     Termination of Employment.

 

(a)    Right to Terminate. Nothing in this Agreement shall be construed in any way to limit the right of the Company to terminate Employee’s employment, with or without cause, or for Employee to terminate Employee’s employment with the Company, with or without reason; provided, however, that the Company and Employee must nonetheless comply with any duty or obligation such party has at law or under any agreement (including paragraph 6 of this Agreement) between the parties.

 

(b)     Termination due to Death or Disability. Employee’s employment with the Company shall be terminated upon Employee’s death. By written notice to the other party, either the Company or Employee may terminate Employee’s employment due to Disability.

 

5.     Amounts Payable Upon Termination of Employment. The following provisions shall apply to any termination of Employee’s employment occurring (or which, pursuant to paragraph 2, is deemed to occur) at the time of, or at any time within 2 years following, a Change in Control:

 

(a)    Death or Disability. In the event that Employee’s employment terminates due to Employee’s death or Disability (regardless of whether such Disability termination is initiated by Employee or the Company) , Parent or Employer shall pay Employee (or, if applicable, Employee’s beneficiaries or legal representative(s)):

 

(1)    The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination;

 

(2)    The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice; and

 

(3)    A Separation Payment in an amount equal to Employee’s Base Salary, which shall be paid 10 days following Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a “specified employee” within the meaning of Section 409A of the Code, as determined in accordance with the procedures specified or established by the Parent in accordance with such Section 409A and the regulations thereunder (a “Specified Employee”), and the Separation Payment is payable due to Disability, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, it shall be paid with interest from the Date of Termination at a rate equal to Employer’s cost of borrowing under its principal credit facility as in effect at the Date of Termination, as determined by the Parent’s Chief Financial Officer.

 

(b)    Cause and Voluntary Termination. If Employee’s employment is terminated by the Company in a Termination for Cause or voluntarily by Employee, Parent or Employer shall pay Employee

 

(1)    The Earned Salary as soon as practicable (but in no event more than 10 days), following Employee’s Date of Termination; and

 

(2)     The Accrued Obligations in accordance with applicable law and the provisions of any applicable plan, program, policy or practice.

 

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(c)    Termination After Normal Retirement. If the Employee’s employment terminates after Normal Retirement Date due to the Employee’s voluntary retirement, in addition to the payments under subparagraph 5(b), Parent or Employer shall pay Employee a Separation Payment in an amount equal to Employee’s Base Salary, which shall be paid 10 days following Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a Specified Employee, the Separation Payment shall be made six months and one day after Employee’s Date of Termination. In the event that the Separation Payment is made six months and one day after the Date of Termination, an amount equal to such Separation Payment shall be contributed by the Company or Employer within five (5) business days following the Date of Termination to a grantor trust in the United States subject to the claims of the grantor’s creditors (a “Grantor Trust”), with such amount to be invested through the trust in U.S. Treasury securities or money market investments, with the principal investment purpose being to preserve principal (“Fixed Income Securities”). When payment of any such deferred portion of the Separation Payment is made in accordance with the second preceding sentence, it shall be increased by an amount equal to the earnings on the amounts contributed to such Grantor Trust in respect of such deferred Separation Payment.

 

(d)    Termination for Good Reason or Without Cause. If Employee terminates Employee’s employment in a Termination for Good Reason or the Company terminates Employee’s employment for any reason other than those described in paragraphs 5(a) and (b) above, Parent or Employer shall pay or shall provide to Employee the following benefits and compensation:

 

(1)    The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination;

 

(2)    The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice;

 

(3)    Continued coverage, at the same costs that apply to similarly situated active employees, for Employee and Employee’s eligible dependents under the Employer’s group medical plans or, to the extent such continued coverage cannot be provided under such plan without adverse consequences for the Company or Employee due to non-discrimination requirements, then under an individual or group insurance policy that is substantially similar in all material respects to the coverage made available under such group health plans, for each of the following two periods (i) from the Employee’s Date of Termination until and including the 18 month anniversary of such termination; and (ii) from the day after the 18 month anniversary of the Employee’s Date of Termination and continuing until the earlier of (x) the lifetime of Employee (and, if she shall survive him, Employee’s Spouse) or (y) until the date Employee (and, in respect of any coverage available to Employee’s spouse, until such spouse) is eligible for full medical benefits under the provisions of Medicare; it being understood that standard coordination of benefits provisions apply so that any coverage made available to Employee hereunder shall be secondary to any such coverage made available to Employee by a subsequent employer or other entity providing such coverage in respect of Employee’s services and that Employee must accept that available coverage; and

 

 

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(4)    If Employee shall have relocated Employee’s principal residence to enter into the Company’s employ, or otherwise relocated such residence at the request of the Company, within 1 year of the Change in Control Date, and if Employee elects to relocate to Employee’s original location following Employee’s Date of Termination, relocation benefits under the same relocation policy as applied to Employee’s initial relocation; provided that the benefits provided hereunder shall (i) be paid to Employee not later than the end of the calendar year following the year in which such the corresponding reimbursable relocation expenses are incurred and (ii) not be duplicative of any relocation benefits to which Employee is entitled in connection with the plan, policy, program or practice of any subsequent employer;

 

(5)    To the extent that any award granted to Employee under Parent’s LTIP and outstanding on the Change in Control Date shall not have previously become fully vested and, as applicable, exercisable, payable, distributable and free of any transfer restrictions, such award shall be and become fully vested and, as applicable, exercisable, payable or distributable to, and transferable by, Employee on Employee’s Date of Termination, without any further action by the Company or any other person(s); provided, however, that (i) in the case of any award that vests upon the attainment of specified performance conditions, the extent to which such award becomes vested and payable will be contingent (to the extent specified in the applicable award agreement) upon the achievement of such criteria, as measured at the time of the Change in Control and (ii) if the award is deferred compensation subject to Section 409A that does not qualify for an otherwise available exemption from such Section 409A, payment thereof shall be made to the Employee at the same time as the Separation Payment referenced in subparagraph 5(d)(6) and, if such payment is delayed for six months and one day following the Date of Termination, the Employer shall be required to contribute the amount payable in respect of such award to the grantor trust referenced in the paragraph following such subparagraph 5(d)(6) at the same time, and subject to the same conditions, as apply with respect to such Separation Payment;

 

(6)    A Separation Payment in an amount equal to the sum of

(i)    the sum of 1.99 times Employee’s Protected Base Salary and 2.99 times the Employee’s Target Bonus;

(ii)    Employee shall also receive the Separation Payment payable under Section 5(c), on the same basis as though Employee had attained Normal Retirement Date immediately prior to the Date of Termination, regardless of whether Employee shall have attained Normal Retirement Date on or prior to the Date of Termination;

(iii)    the product of (A) the amount of the Target Bonus and (B) a fraction, the numerator of which is the number of days in the then current calendar year which have elapsed as of the Date of Termination, and the denominator of which is 365;

 

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(iv)    if Employee’s employment was terminated prior to the Change in Control Date, but Employee is deemed to have continued in the Company’s employment for purposes of this Agreement until the Change in Control Date pursuant to paragraph 2 hereof, an amount equal to the value (as determined based on the fair market value of the Parent’s common stock on the Change in Control Date, but debiting therefrom any amount Employee would be required to pay to receive the benefit of such award) of any equity awards (including, without limitation, stock options, restricted stock units and restricted stock) granted to Employee under Parent’s LTIP that were outstanding but unvested (after taking into account any accelerated vesting thereof in connection with such termination of employment) on Employee’s Date of Termination; and

(v)    if the termination of employment is by the Company and if the Date of Termination is less than thirty (30) days after the date Notice of Termination is given, an amount equal to one-twelfth (1/12) of the Protected Base Salary.

Payment of the Separation Payment shall be made within 10 business days after the Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a Specified Employee, the portion of the Separation Payment described in subclauses (i), (ii) (iv) and (v) above shall be made six months and one day after Employee’s Date of Termination. Any such deferred portion of the Separation Payment payable to Employee shall be contributed by the Company or Employer within five (5) business days following the Date of Termination to a Grantor Trust, with such amount to be invested through the trust in Fixed Income Securities. When payment of any such deferred portion of the Separation Payment is made in accordance with the second preceding sentence, it shall be increased by an amount equal to the earnings on the amounts contributed to such Grantor Trust in respect of such deferred Separation Payment.

 

(e)     Benefits Payable Due to Forced Relocation. If Employee is not otherwise entitled to terminate Employee’s employment in a Termination for Good Reason and terminates employment voluntarily because Parent or Parent Successor requires (or notifies Employee in writing that it will require) Employee to be based at any office or location more than 50 miles from that location at which Employee principally performed services for the Company immediately prior to the Change in Control Date, except for travel reasonably required in the performance of Employee’s responsibilities, Parent or Employer shall pay or shall provide to Employee the following benefits and compensation:

 

(1)    The Earned Salary, as soon as practicable (but not more than 10 days) following Employee’s Date of Termination;

 

(2)    The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice;

 

(3)    Continued coverage, at the same costs that apply to similarly situated active employees, for Employee and Employee’s eligible dependents under Employer’s group health plan(s) (within the meaning of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)) in which Employee was participating prior to the Date of Termination for a period of 12 months following Employee’s Date of Termination (or, if earlier, until

 

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Employee is eligible for comparable coverage under the group health plan(s) of a subsequent employer); and

 

(4)    A Separation Payment in an amount equal to Employee’s Protected Base Salary, which shall be payable within 10 business days after the Employee’s Date of Termination, provided that, if, at the Date of Termination, Employee is a Specified Employee, the portion of the Separation Payment due pursuant to this subparagraph 5(e)(4) shall be made six months and one day after Employee’s Date of Termination. Any such deferred portion of the Separation Payment payable to Employee shall be contributed by the Company or Employer within five (5) business days following the Date of Termination to a Grantor Trust, with such amount to be invested through the trust in Fixed Income Securities. When payment of any such deferred portion of the Separation Payment is made in accordance with the second preceding sentence, it shall be increased by an amount equal to the earnings on the amounts contributed to such Grantor Trust in respect of such deferred Separation Payment.

 

(f)    Limit on Payments by Parent and Employer.

 

(1)    Application of this Paragraph 5(f). In the event that

 

(i)     Any amount or benefit paid or distributed to Employee pursuant to this Agreement, taken together with any amounts or benefits otherwise paid or distributed to Employee by the Company or any affiliated company in connection with the Change in Control that are treated as parachute payments under Section 280G of the Code and such payments (collectively, the “Covered Payments”) would be or become subject to the tax (the “Excise Tax”) imposed under Section 4999 of the Code or any similar tax that may hereafter be imposed, and

 

(ii)    Employee would receive a greater net-after tax benefit by limiting the Covered Payments, so that the portion thereof that are parachute payments do not exceed the maximum amount of such parachute payments that could be paid to Employee without Employee’s being subject to any Excise Tax (the “Safe Harbor Amount”),

 

(iii)    then the amounts payable to Employee under this paragraph 5 shall be reduced (but not below zero) so that the aggregate amount of parachute payments that Employee receives does not exceed the Safe Harbor Amount. In the event that Employee receives reduced payments and benefits hereunder, such payments and benefits shall be reduced in connection with the application of the Safe Harbor Amount in the following manner: first, any portion of the Employee’s Separation Payment payable other than on account of Employee’s having attained Normal Retirement Date shall be reduced, followed by, to the extent necessary and in order, any relocation reimbursement payable, the continuation of welfare benefits, any awards under the LTIP in which Employee becomes vested under this Agreement and finally, the Accrued Obligations.

 

 

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(2)    Assumptions for Calculation. For purposes of determining whether any of the Covered Payments will be subject to the Excise Tax,

 

(i)    such Covered Payments will be treated as “parachute payments” within the meaning of Section 280G of the Code, and all “parachute payments” in excess of the “base amount” (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless, and except to the extent that, in the good faith judgment of a public accounting firm appointed by Parent prior to the Change in Control Date or tax counsel selected by such accounting firm (the “Accountants”), the Company has a reasonable basis to conclude that such Covered Payments (in whole or in part) either do not constitute “parachute payments” or represent reasonable compensation for personal services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the “base amount,” or such “parachute payments” are otherwise not subject to such Excise Tax, and

 

(ii)    the value of any non cash benefits or any deferred payment or benefit shall be determined by the Accountants in accordance with the principles of Section 280G of the Code.

 

(3)    Adjustments in Respect of the Safe Harbor Amount. If Employee receives reduced payments and benefits under this subparagraph 5(f) (or this subparagraph 5(f) is determined not to be applicable to Employee because the Accountants conclude that Employee is not subject to any Excise Tax) and it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding (a “Final Determination”) that, notwithstanding the good faith of Employee and the Company in applying the terms of this Agreement, the aggregate “parachute payments” within the meaning of Section 280G of the Code paid to Employee or for Employee’s benefit exceed the Safe Harbor Amount and the provisions of this subparagraph 5(f) would otherwise have applied, then the amount of such parachute payment in excess of such Safe Harbor Amount shall be deemed for all purposes to be a loan to Employee made on the date of receipt of such excess payments, which Employee shall have an obligation to repay to the Company on demand, together with interest on such amount at the applicable Federal rate (as defined in Section 1274(d) of the Code) from the date of the payment hereunder to the date of repayment by Employee.

 

6.     Nonpublic Information.

 

(a)    Acknowledgement of AccessEmployee hereby acknowledges that, in connection with Employee’s employment with the Company, Employee has received, and will continue to receive, various information regarding the Company and its business, operations and affairs. All such information, to the extent not publicly available other than as a result of a disclosure by Employee in violation of this Agreement, is referred to herein as the“Nonpublic Information.

 

(b)    Agreement to Keep Confidential. Employee hereby agrees that, from and after the Effective Date and continuing until 3 years following Employee’s Date of Termination, Employee will keep all Nonpublic Information confidential and will not, without

 

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the prior written consent of the Board, Chief Executive Officer or the President of Parent, disclose any Nonpublic Information in any manner whatsoever or use any Nonpublic Information other than in connection with the performance of Employee’s services to the Company; provided, however, that the provisions of this subparagraph shall not prevent Employee from

 

(1)    Disclosing any Nonpublic Information to any other employee of the Company or to any representative or agent of the Company (such as an independent accountant, engineer, attorney or financial advisor) when such disclosure is reasonably necessary or appropriate (in Employee’s judgment) in connection with the performance by Employee of Employee’s duties and responsibilities;

 

(2)    Disclosing any Nonpublic Information as required by applicable law, rule, regulation or legal process (but only after compliance with the provisions of subparagraph (c) of this paragraph); and

 

(3)    Disclosing any information about this Agreement and Employee’s other compensation arrangement to Employee’s spouse, financial advisors or attorneys, or to enforce any of Employee’s rights under this Agreement.

 

(c)    Commitment to Seek Protective Order. If Employee is requested pursuant to, or required by, applicable law, rule, regulation or legal process to disclose any Nonpublic Information, Employee will notify Parent promptly so that the Company may seek a protective order or other appropriate remedy or, in Parent’s sole discretion, waive compliance with the terms of this subparagraph, and Employee will fully cooperate in any attempt by the Company to obtain any such protective order or other remedy. If no such protective order or other remedy is obtained, or Parent waives compliance with the terms of this paragraph, Employee will furnish or disclose only that portion of the Nonpublic Information as is legally required and will exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Nonpublic Information that is so disclosed.

 

7.    Miscellaneous Provisions.

 

(a)    No Mitigation, No Offset. Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by Employee as the result of employment by another employer after the Date of Termination. Except as provided in subparagraph 5(d)(3), Parent’s or Employer’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against Employee or others whether by reason of the subsequent employment of Employee or otherwise.

 

(b)    Arbitration. Except to the extent provided in paragraph 7(d), any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held in Dallas, Texas and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the

 

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time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both Parent and Employee. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators.

 

(c)    Interest. Until paid, all past due amounts required to be paid by the Company to Employee under any provision of this Agreement shall bear interest at the per annum rate equal to the higher of (1) 12% or (2) the prime rate announced from time to time by the Company’s primary bank lender, plus 3%, in either case subject to the maximum rate allowed by law.

 

(d)    Equitable Relief Available. Employee acknowledges that remedies at law may be inadequate to protect the Company against any actual or threatened breach of the provisions of paragraph 6 by Employee. Accordingly, without prejudice to any other rights or remedies otherwise available to the Company, Employee agrees that the Company shall have the right to equitable and injunctive relief to prevent any breach of the provisions of paragraph 6 (without the requirement to post any bond), as well as to such damages or other relief as may be available to the Company by reason of any such breach as does occur.

 

(e)    Not A Contract of Employment. Employee acknowledges that this Agreement is not an “employment agreement” or “employment contract” (written or otherwise), as either term is used or defined in, or contemplated by or under

 

(1)    Parent's LTIP;

 

(2)    Any other plan or agreement to which the Company is a party; or

 

(3)    Applicable statutory, common or case law.

 

(f)    Breach Not a Defense. The representations and covenants on the part of Employee contained in paragraph 6 shall be construed as ancillary to and independent of any other provision of this Agreement, and the existence of any claim or cause of action of Employee against the Company or any officer, director, stockholder or representative of the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants on the part of Employee contained in paragraph 6.

 

(g)    Notices. Any Notice of Termination or other communication called for by the terms of this Agreement shall be in writing and either delivered personally or by registered or certified mail (postage prepaid and return receipt requested) and shall be deemed given when received at the following addresses (or at such other address for a party as shall be specified by like notice):

 

(1)    If to Parent, Employer or the Company, 5205 North O’Connor Boulevard, Suite 200, Irving, Texas 75039, Attention: General Counsel.

 

(2)    If to Employee, the address of Employee set forth below Employee’s signature on the signature page of this Agreement.

 

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(h)    Assumption by Parent Successor. Parent shall require any Parent Successor (regardless of whether the Parent Successor is the direct or indirect successor to all or substantially all of the business or assets of Parent and regardless of whether it became the Parent Successor by purchase of securities, merger, consolidation, sale of assets or otherwise), to expressly assume and agree to perform the obligations to be performed by the Company under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(i)    Assignment. Employer may assign its duties and obligations hereunder to any other direct or indirect majority-owned subsidiary of Parent, but shall remain secondarily liable for the performance of this Agreement by Parent and/or any such assignee. Except pursuant to either the immediately preceding sentence or an assumption by a Parent Successor, the rights and obligations of Parent and Employer pursuant to this Agreement may not be assigned, in whole or in part, by Parent or Employer to any other person or entity without the express written consent of Employee. The rights and obligations of Employee pursuant to this Agreement may not be assigned, in whole or in part, by Employee to any other person or entity without the express written consent of the Board.

 

(j)    Successors. This Agreement shall be binding on, and shall inure to the benefit of, Parent, Employer, the Company, Employee and their respective successors, permitted assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees and legatees, as applicable.

 

(k)    Amendments and Waivers. No provision of this Agreement may be amended or otherwise modified, and no right of any party to this Agreement may be waived, unless such amendment, modification or waiver is agreed to in a written instrument signed by Employee, Parent and Company. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

(l)    Complete Agreement. This Agreement replaces and supersedes all prior agreements, if any, among the parties with respect to the payments to be made to Employee upon termination of employment following a Change in Control, including, but not limited to, the Change in Control Agreement between Parent, Employer and Employee, as in effect immediately prior to the date hereof, and the provisions of this Agreement constitute the complete understanding and agreement among the parties with respect to the subject matter hereof. Nothing in this subparagraph (l) is intended to, or shall be construed to, (1) supercede the Severance Agreement at any time prior to the time expressly provided in paragraph 2 hereof or (2) limit Employee’s rights upon the occurrence of a Change in Control under Parent’s LTIP or any other Company plan, policy, program or practice (other than any plan, policy, program or practice primarily providing severance or other termination benefits) generally applicable to similarly situated employees.

 

(m)    Governing Law. THIS AGREEMENT IS BEING MADE AND EXECUTED IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF TEXAS AND SHALL BE GOVERNED, CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS.

 

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(n)    Attorney Fees. All legal fees and other costs incurred by Employee in connection with the resolution of any dispute or controversy under or in connection with this Agreement shall be reimbursed by Parent and Employer to Employee, on a quarterly basis, upon presentation of proof of such expenses, but in no event later than the end of the calendar year following the calendar year in which such legal fees and expenses are incurred; provided, however, that if Employee asserts any claim in any contest and Employee shall not prevail, in whole or in part, as to at least one material issue as to the validity, enforceability or interpretation of any provision of this Agreement, Employee shall reimburse Parent and Employer for such amounts, plus simple interest thereon at the 90-day United States Treasury Bill rate as in effect from time to time, compounded annually. The Company shall be responsible for, and shall pay, all legal fees and other costs incurred by the Company in connection with the resolution of any dispute or controversy under or in connection with this Agreement, regardless of whether such dispute or controversy is resolved in favor of the Company or Employee.

 

(o)    Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement.

 

(p)    Construction. The captions of the paragraphs, subparagraphs and sections of this Agreement have been inserted as a matter of convenience of reference only and shall not affect the meaning or construction of any of the terms or provisions of this Agreement. Unless otherwise specified, references in this Agreement to a “paragraph,” “subparagraph,” “section,” “subsection,” or “schedule” shall be considered to be references to the appropriate paragraph, subparagraph, section, subsection, or schedule, respectively, of this Agreement. As used in this Agreement, the term “including” shall mean “including, but not limited to.”

 

(q)    Validity and Severability. If any term or provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, (1) such term or provision shall be fully severable, (2) this Agreement shall be construed and enforced as if such term or provision had never comprised a part of this Agreement and (3) the remaining terms and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable term or provision, there shall be added automatically as a part of this Agreement, a term or provision as similar to such illegal, invalid or unenforceable term or provision as may be possible and be legal, valid and enforceable.

 

(r)    Survival. Notwithstanding anything else in this Agreement to the contrary (including, without limitation, the termination of this Agreement in accordance with paragraph 1), paragraphs 6 and 7, and, to the extent that any of Parent’s and Employer’s obligations thereunder have not theretofore been satisfied, paragraph 5 of this Agreement shall survive the termination hereof.

 

 

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(s)    Joint and Several Liability. Parent and Employer (or any assignee of Employer pursuant to paragraph 7(i)) shall each be jointly and severally liable to Employee hereunder with regard to any obligation imposed by the terms hereof on Parent or Employer.

 

(SIGNATURE PAGE ATTACHED)

 

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In witness whereof, the parties have executed this Agreement effective as of the date first written above.

PIONEER NATURAL RESOURCES COMPANY

 

 

By:     /s/ Mark S. Berg

Name:    Mark S. Berg

Title:

Executive Vice President and General Counsel

 

 

PIONEER NATURAL RESOURCES USA, INC.

 

 

By:     /s/ Mark S. Berg

Name:    Mark S. Berg

Title:

Executive Vice President and General Counsel

 

 

EMPLOYEE: 

/s/ Scott D. Sheffield

 

 

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Schedule I

 

1. The Company entered into a Change in Control Agreement with Timothy L. Dove which is otherwise identical to the one entered into with Scott D. Sheffield.

 

2. The Company entered into a Change in Control Agreement with each of Mark S. Berg, Chris J. Cheatwood, Richard P. Dealy, Frank W. Hall, William F. Hannes, Danny L. Kellum and Jay P. Still, which varied from Mr. Sheffield’s agreement by modifying Section 5(d)(3) to provide, in its entirety, the following:

 

(3)    Continued coverage following Employee’s Date of Termination, at the same costs that apply to similarly situated active employees, for Employee and Employee’s eligible dependents under whichever of the Company’s group medical plans in which Employee was participating prior to the Date of Termination or, to the extent such continued coverage cannot be provided under such plan without adverse consequences for the Company or Employee due to non-discrimination requirements, then under an individual or group insurance policy that is substantially similar in all material respects to the coverage made available under such group health plan(s), for each of the following two periods (i) from the Employee’s Date of Termination until and including the 18 month anniversary of such termination; and (ii) from the day after the 18 month anniversary of the Employee’s Date of Termination and continuing until the end of the period over which the Protected Base Salary payable as part of the Separation Payment under subparagraph 5(c)(6) would have been payable if it had been paid over time in accordance with the Employer’s payroll practices as in effect at the Change in Control Date; provided, however, that such continued coverage shall cease if and when Employee becomes eligible for comparable coverage under the group health plan(s) of a subsequent employer; and

 

 

 

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