EXHIBIT 10.16
PIONEER NATURAL RESOURCES COMPANY
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement") is entered into, effective
January 1, 2005, between Pioneer Natural Resources Company ("Parent"), a
Delaware corporation, and [See Exhibit A] (the "Officer"). As used in this
Agreement, the term "Company" shall be deemed to include Parent and its direct
or indirect wholly-owned subsidiaries.
Recitals
A. Company acknowledges that Officer is a significant employee of the
Company, possessing skills and knowledge instrumental to the successful conduct
of the Company's business. Company is willing to enter into a severance
arrangement with Officer in order to better ensure itself of the continued
management services of Officer for itself and its subsidiaries and, in part, to
induce Officer to continue to provide those services and subject himself to
certain restrictions regarding the use of Company information.
B. Officer is willing to subject himself to the restrictions mentioned
above in part to induce Company to enter into a compensation arrangement that
provides for, among other things, the payment of certain benefits upon the
termination of Officer's employment under certain circumstances.
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. Position and Duties. Officer shall initially serve Company as [See
Exhibit A], and, in so doing, shall report to Company's Board of Directors (the
"Board"), Company's Chief Executive Officer (the "Chief Executive Officer") or
such officers of Company as is prescribed by Company's bylaws, by resolutions of
the Board or by direction of the Chief Executive Officer. Officer shall have
supervision and control over, and responsibility for, such management and
operational functions of the Company currently assigned to such position, and
shall have such other or different functions, powers, duties and
responsibilities (including holding officer positions with one or more
subsidiaries of Parent), as may from time to time be prescribed by the Board or
the Chief Executive Officer, or any other Company officer to whom Officer
reports, so long as such functions, powers and duties are reasonable and
customary for a [See Exhibit A] serving an enterprise comparable to Company.
Employee's failure to accept and perform such other or different functions,
powers or duties shall be deemed to be a Termination of Employment by voluntary
action of Employee, and shall not constitute a Termination for Good Reason.
2. Devotion of Efforts. So long as Officer is serving the Company in the
capacities described in Section 1, he/she shall devote his/her full time, skill
and attention and his/her best efforts during normal business hours to the
business and affairs of the Company to the extent necessary to discharge
faithfully and efficiently his/her duties and responsibilities, except for
usual, ordinary and customary periods of vacation and absence due to illness or
other disability or such periods of leave as are approved in writing by the
Board or the Chief Executive Officer. The provisions of this Section shall not
be construed to prevent Officer from making investments in other businesses or
enterprises, so long as such investments do not violate the Company's conflict
of interest policies or require the provision of services by Officer to such
businesses or enterprises to an extent that would interfere in any material
respect with the performance of Officer's duties and responsibilities to the
Company.
3. Compensation.
(a) Base Salary. As compensation for Officer's services, the Company
shall pay Officer an annualized base salary of a specified amount per annum (the
"Base Salary"). The Base Salary shall be payable in substantially equal
semi-monthly installments. The Compensation Committee of the Board (the
"Compensation Committee") may review the Base Salary periodically and may grant
such increases, or effect such reductions, in the Base Salary as the
Compensation Committee considers appropriate in accordance with such
compensation guidelines and policies as it may establish from time to time. The
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Base Salary applicable from time to time for any period of Officer's employment
with the Company, commencing on the effective date of this Agreement, shall be
that as reflected in the records of the Human Resources Department.
(b) Bonuses. Officer shall be entitled to receive (in addition to the
Base Salary) such annual or other periodic bonus as the Compensation Committee
may award in accordance with such compensation guidelines and policies as it may
establish from time to time.
(c) Other Benefits. Officer shall be entitled to participate in, or
receive benefits under, any employee benefit plan or other arrangement made
available now or in the future by the Company to the officers of Company (a
"Benefit Plan"), subject to the terms, conditions and overall administration of
such Benefit Plan. Officer's participation in, or receipt of benefits under, any
Benefit Plan shall be in addition to (and not in lieu of) the Base Salary.
(d) Vacations and Holidays. Officer shall be entitled to the number of
paid vacation days in each calendar year determined by Company from time to time
for its officers and shall be entitled to all paid holidays given by the Company
to its employees in general.
4. Relocation. Officer shall initially be required to perform his/her
duties and responsibilities hereunder at Company's offices located in [See
Exhibit A]. If the Company requires Officer to perform his/her duties and
responsibilities at any location that is more than 50 miles from the nearest
border of [See Exhibit A] (a "New Location") and, within 30 days after receiving
notice thereof, Officer accepts such relocation rather than terminating his/her
employment with the Company pursuant to Section 5(a), the Company shall pay to
Officer, or shall reimburse Officer for (upon submission of reasonably detailed
evidence thereof), such sums as are provided for under the Relocation Policy for
Exempt Employees as established by Company. Officer's failure to accept such
relocation within 30 days after receiving notice thereof, shall be deemed to be
a Termination of Employment by voluntary action of Officer, and shall not
constitute a Termination for Good Reason.
5. Termination of Employment.
(a) Right to Terminate. Officer's employment with the Company (including
his/her officer position with Company) shall be terminated upon the death,
Disability (as defined in subsection (f)(3) of this Section) or Normal
Retirement (as defined in subsection (f)(5) of this Section) of Officer. In
addition, Officer's employment with the Company (including his/her officer
position with Company) may be terminated at any time and for any reason as a
result of a dismissal by the Company or as a result of a voluntary action by
Officer. Any such termination of employment is referred to herein as a
"Termination of Employment."
(b) Notice of Termination.
(1) Any Termination of Employment that is the result of Officer's
Disability shall be communicated by the Company to Officer in a written
notice thereof. Such notice shall state that, in the opinion of the
Board, Officer is suffering from a Disability and such Disability is
the reason for the Termination of Employment.
(2) Any Termination of Employment that is the result of Officer's
Normal Retirement shall be communicated by Officer to Company by a
written notice thereof. Such notice shall state that Officer is
retiring and shall specify the date of such Termination of Employment,
which shall be not less than 30 days following the date such notice is
received by Company.
(3) Any Termination of Employment that is the result of a dismissal
by the Company (but is not the result of Officer's Disability) shall be
communicated by the Company to Officer by a written notice thereof.
Such notice shall state whether or not (in the Company's opinion) the
Termination of Employment constitutes a Termination for Cause (as
defined in subsection (f)(6) of this Section) and, if so, shall set
forth in reasonable detail facts and circumstances constituting a basis
for such Termination for Cause.
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(4) Any Termination of Employment that is the result of a voluntary
action by Officer (but is not the result of Officer's Normal
Retirement) shall be communicated by Officer to Company by written
notice thereof. Such notice shall state whether or not (in Officer's
opinion) the Termination of Employment constitutes a Termination for
Good Reason (as defined in subsection (f)(7) of this Section) and, if
so, shall set forth in reasonable detail the facts and circumstances
claimed as the basis for such Termination for Good Reason. Such notice
shall also specify the date of such Termination of Employment, which
(if the Termination of Employment does not constitute a Termination for
Good Reason) shall be not less than 30 days following the date such
notice is received by Company.
(c) Date of Termination of Employment. For purposes of this Agreement,
the date of a Termination of Employment shall be (1) if the Termination of
Employment is the result of Officer's death, the date of such death, (2) if the
Termination of Employment is the result of Officer's Disability, the date on
which the notice described in subsection (b)(1) of this Section is received by
Officer, (3) if the Termination of Employment is the result of Officer's Normal
Retirement, the date specified in the notice described in subsection (b)(2) of
this Section, (4) if the Termination of Employment is the result of a dismissal
by the Company (but is not the result of Officer's Disability), the date on
which the notice described in subsection (b)(3) of this Section is received by
the Officer, or such later date as may be specified by the Company in such
notice, and (5) if the Termination of Employment is the result of a voluntary
action by Officer (but is not the result of Officer's Normal Retirement), the
date specified in the notice described in subsection (b)(4) of this Section, or
such earlier date as the Company may specify, provided that if such date
specified by Company is less than 30 days following the date Company received
notice from Employee, then Company agrees to pay officer an amount equal to
one-twelfth (1/12) of Officer's Base Salary, which amount shall be paid in cash
on the date of such Termination of Employment.
(d) Payments Due Upon Termination of Employment. The provisions of
subsections (d)(1) and (d)(3) of this Section shall apply to any such
Termination of Employment, whether occurring prior to, at the time of or at any
time following a Change in Control (as defined in subsection (f)(2) of this
Section); and the provisions of subsection (d)(2) of this Section shall apply
only if such Termination of Employment is prior to a Change in Control.
(1) Death, Disability or Normal Retirement. If the Termination of
Employment is the result of Officer's death, Disability or Normal
Retirement, the Company shall pay the following amounts to Officer (or
his/her estate or personal representative):
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as reflected in the records of the Human
Resources Department) pro-rated through and including the date of such
Termination of Employment, to the extent not already paid, which amount
shall be paid in cash on the first normal semi-monthly Base Salary
payment date immediately succeeding the date of such Termination of
Employment;
(B) Any amounts arising from Officer's participation in, or
benefits under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in accordance
with the terms and conditions of such Benefit Plan; and
(C) An amount equal to one full year's Base Salary (at the rate
in effect on the date of such Termination of Employment, as reflected
in the records of the Human Resources Department), which amount shall
be paid in cash within 30 days following the date of such Termination
of Employment.
(2) Termination for Good Reason or Not for Cause. If the Termination
of Employment (i) is the result of a dismissal by the Company (but is
not the result of Officer's Disability) and does not constitute a
Termination for Cause or (ii) is the result of a voluntary action by
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Officer (but is not the result of Officer's Normal Retirement) and
constitutes a Termination for Good Reason, the Company shall pay the
following amounts, and provide the following benefits to Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as reflected in the records of the Human
Resources Department) pro-rated through and including the date of such
Termination of Employment, to the extent not already paid, which amount
shall be paid in cash on the date of such Termination of Employment;
(B) Any amount arising from Officer's participation in, or
benefits under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in accordance
with the terms and conditions of such Benefit Plan;
(C) A lump sum amount equal to one full year's Base Salary (at
the rate in effect on the date of such Termination of Employment, as
reflected in the records of the Human Resources Department), which
amount shall be paid in cash on the date of such Termination of
Employment;
(D) For a period of one year following the date of such
Termination of Employment, a continuation of all health insurance
coverage applicable at the time of such Termination of Employment to
Officer and Officer's immediate family under any Benefit Plan; and
(E) With respect to a Termination of Employment described in
subsection (d)(2)(i) of this Section, if the date of Termination of
Employment is less than thirty (30) days after the date of notice
thereof, an amount equal to one-twelfth (1/12) of the Officer's Base
Salary, which amount shall be paid in cash on the date of such
Termination of Employment.
(3) Termination for Cause or Not for Good Reason. If the Termination
of Employment (i) is the result of a dismissal by the Company (but is
not the result of Officer's Disability) and constitutes a Termination
for Cause or (ii) is the result of a voluntary action by Officer (but
is not the result of Officer's Normal Retirement) and does not
constitute a Termination for Good Reason, the Company shall pay the
following amounts to Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as reflected in the records of the Human
Resources Department) pro-rated through and including the date of such
Termination of Employment, to the extent not already paid, which amount
shall be paid in cash on the first normal semi-monthly Base Salary
payment date immediately succeeding the date of such Termination of
Employment; and
(B) Any amounts arising from Officer's participation in, or
benefits under, any Benefit Plan through and including the date of such
Termination of Employment, which amounts shall be payable in accordance
with the terms and conditions of such Benefit Plan.
(4) Payment Contingent on Release. If Officer's Termination of
Employment is prior to a Change in Control (and only in that event),
and Officer is otherwise entitled to the payment provided in subsection
(d)(2) of this Section, then such payment shall be subject to, and
contingent upon, Officer's execution of a General Release Agreement in
favor of the Company in substantially the form and substance as the one
attached hereto as Schedule A.
(e) Additional Provisions Applicable Upon Termination of Employment
Concurrent with or Following Change in Control. The following provisions shall
apply to any such Termination of Employment occurring at the time of, or at any
time within one year following, a Change in Control.
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(1) Termination for Good Reason or Not for Cause. If the Termination
of Employment (i) is the result of a dismissal by the Company (but is
not the result of Officer's Disability) and does not constitute a
Termination for Cause, or (ii) is the result of a voluntary action by
Officer (but is not the result of Officer's Normal Retirement) and
constitutes a Termination for Good Reason, the Company shall pay the
following amounts, and provide the following benefits, to Officer:
(A) The Base Salary (at the rate in effect on the date of such
Termination of Employment, as reflected in the records of the Human
Resources Department) pro-rated through and including the date of such
Termination of Employment, to the extent not already paid, which amount
shall be paid in cash on the date of such Termination of Employment;
(B) A lump sum in cash equal to 2.99 times the sum of (i)
Officer's Base Salary (at the rate in effect on the date of such
Termination of Employment, as reflected in the records of the Human
Resources Department), plus (ii) the greater of the then current year's
targeted bonus or actual bonus award (if applicable) for Officer, which
amount shall be paid in cash on the date of such Termination of
Employment;
(C) Any amount arising from Officer's participation in, or
benefits under, any employee Benefit Plan or other arrangement made
available now or in the future by the Company to its employees, through
and including the date of such Termination of Employment, which amounts
shall be payable in accordance with the terms and conditions of such
Benefit Plan;
(D) For a period of one year following the date of such
Termination of Employment, a continuation of all health insurance
coverage applicable at the time of such Termination of Employment to
Officer and his/her immediate family under any Benefit Plan; and
(E) With respect to a Termination of Employment described in
subsection (e)(1)(i) of this Section, if the date of Termination of
Employment is less than thirty (30) days after the date of notice
thereof, an amount equal to one-twelfth (1/12) of the Officer's Base
Salary, which amount shall be paid in cash on the date of such
Termination of Employment.
(2) Voluntary Termination Not for Good Reason or for Failure to
Relocate. Notwithstanding any other provision of this subsection (e) to
the contrary, if the Termination of Employment (i) is the result of a
voluntary action by Officer, does not constitute a Termination for Good
Reason, and occurs at least six months, but not more than one year,
following a Change in Control, or (ii) whether voluntary or
involuntary, occurs at the time of, or at any time within one year
following, a Change in Control and following the Company's requiring
the Officer to perform his/her duties and responsibilities hereunder at
a New Location, which relocation is not accepted by Officer within 30
days after receiving notice thereof, then the Company shall pay to
Officer all amounts that would be payable pursuant to subsection (d)(2)
of this Section had such Termination of Employment occurred prior to
the Change in Control and constituted a Termination for Good Reason.
(3) Excise Tax and Gross-Up Payment.
(A) If any portion of such compensation constitutes a parachute
payment (a "Payment") and is subject to the Excise Tax (hereinafter
defined), then Company shall, in addition to providing such
compensation, pay the Gross-Up Payment (hereinafter defined) to Officer
in the manner described below. For purposes of this Agreement, (i)
"Excise Tax" shall mean the tax imposed pursuant to section 4999 of the
Code and any interest or penalties incurred by the Officer with respect
to such Excise Tax, and (ii) "Gross-Up Payment" shall mean, with
respect to any compensation provided to the Officer by Company
(including without limitation the payments provided for under this
Agreement and any payments to the Officer under any employee benefit
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plan, including without limitation the Company's Long-term Incentive
Plan, or other arrangement) that is subject to the Excise Tax, an
amount that, after reduction of the amount of such Gross-Up Payment for
all federal, state, and local tax (including any interest or penalties
imposed with respect to such taxes) to which the Gross-Up Payment is
subject (including the Excise Tax to which the Gross-Up Payment is
subject), is equal to the amount of the Excise Tax to which such
compensation is subject. For purposes of determining the amount of any
Gross-Up Payment, Officer shall be deemed to pay federal income taxes
at the highest marginal rate of taxation and state and local taxes,
if applicable, at the highest marginal rate of taxation in the state
and locality of residence of the Officer on the Date of Termination,
net of the maximum reduction in federal income taxes that could be
obtained from deduction of such state and local taxes, if any.
(B) Subject to the provisions of subsection 5(e)(3)(C), all
determinations required to be made under this subsection 5(e)(3),
including whether and when a Gross-Up Payment is required, the amount
of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by the accounting firm which
performed the audit of the Company for the year preceding the year in
which the Change in Control occurred (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and
the Officer within 15 business days of the receipt of notice from the
Officer that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Officer shall appoint another
nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this subsection 5(e)(3), shall be paid by the
Company to the Officer within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Officer, it shall furnish the Officer
with a written opinion that failure to report the Excise Tax on the
Officer's applicable federal income or excise tax return would not
result in the imposition of a negligence or similar penalty. Any
determination by the Accounting Firm shall be binding upon the Company
and the Officer.
(C) The Officer shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification shall
be given no later than ten business days after the Officer is informed
in writing of such claim. The Officer shall not pay such claim prior to
the expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If
the Company notifies the Officer in writing prior to the expiration of
such period that it desires to contest such claim, (i) the Officer
shall accept legal representation with respect to such claim by an
attorney reasonably selected by the Company, (ii) cooperate with the
Company in good faith in order to effectively contest such claim, and
(iii) permit the Company to participate in any proceedings relating to
such claim; provided, however, the Company shall bear and pay directly
all costs and expenses (including legal and accounting fees and
additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Officer harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. The Company shall
control all proceedings taken in connection with such contest to the
extent relating to issues impacting whether a Gross-Up Payment is
payable hereunder. The Officer shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority in connection with such contest.
(D) If any such claim referred to in subsection 5(e)(3)(C) is
made by the Internal Revenue Service and the Company does not request
the Officer to contest the claim within the 30-day period following
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notice of the claim, the Company shall pay to the Officer the amount of
any Gross-Up Payment owed to the Officer, but not previously paid
pursuant to subsection 5(e)(3)(B), immediately upon the expiration of
such 30-day period. If any such claim is made by the Internal Revenue
Service and the Company requests the Officer to contest such claim, the
Company shall pay to the Officer the amount of any Gross-Up Payment
owed to the Officer, but not previously paid under the provisions of
subsection 5(e)(3)(B), within five days of a Final Determination of the
liability of the Officer for such Excise Tax. For purposes of this
Agreement, a "Final Determination" shall be deemed to occur with
respect to a claim when (i) there is a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision,
judgment, decree or other order has become final, i.e., all allowable
appeals have been exhausted by either party to the action, (ii) there
is a closing agreement made under Section 7121 of the Code, or (iii)
the time for instituting a claim for refund has expired, or if a claim
was filed, the time for instituting suit with respect thereto has
expired.
(4) Letter of Credit. Following a Change in Control, Parent (within
10 days following receipt of Officer's written request therefor), at
its sole cost and expense, shall post an irrevocable letter of credit
with a banking institution reasonably acceptable to Officer in an
amount equal to the maximum amount of the aggregate cash payments that
would be made to Officer pursuant to the provisions of paragraph (1) of
this subsection if the provisions of paragraph (1) of this subsection
were to become applicable. Such letter of credit shall contain
provisions making the funds available thereunder to Officer by
Officer's drafts drawn at sight at any time and from time to time. Such
provisions shall permit Officer to present drafts (including drafts for
partial draws) drawn at sight by presentation by Officer to the
applicable banking institution of a written statement to the effect
that the Company is in default on a payment to be made to Officer
pursuant to the terms of this Agreement (setting forth the amount of
such payment in default) and that Officer is not in default under, and
has not breached the terms of, this Agreement. Parent shall continue to
keep such letter of credit in place until the expiration of at least 60
days following the date of a Termination of Employment occurring after
the Change in Control.
(5) Retirement Benefits Funded. Upon a Change in Control, any
accrued but unfunded retirement benefit obligations to Officer under
any then existing retirement plan shall be fully funded to a Rabbi
Trust for the benefit of such Officer, which amount shall be paid in
cash on the date of such Change in Control.
(f) Certain Definitions. As used in the Section and elsewhere in this
Agreement, the following terms shall have the respective meanings indicated:
(1) "Across-the-Board Salary Reduction" shall mean a reduction in
the Base Salary that is a part of, and is at a rate consistent with, a
reduction in the base salaries paid to substantially all officers of
Company.
(2) "Change in Control" shall mean the occurrence, following the
Effective Date hereof, of either of the following events: (i) an event
that would constitute a Change in control as that term is defined in
the Company's Long-Term Incentive Plan, or any successor plan thereto,
or (ii) consummation of a Business Combination not otherwise
constituting a Change in Control but, pursuant to which the Person
serving as Chief Executive Officer at the time of the execution of the
initial agreement is removed from, or replaced in, such capacity with
respect to the corporation resulting from such Business Combination.
(3) "Disability" shall mean Officer's physical or mental impairment
or incapacity of sufficient severity that, in the opinion of the Board,
either (A) Officer is unable to continue to perform his/her duties and
responsibilities hereunder or (B) Officer's condition entitles him to
disability benefits under any Benefit Plan providing for the payment
thereof.
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(4) "Excessive Salary Reduction" shall mean (A) a reduction in the
Base Salary that is not an Across-the-Board Salary Reduction (as
defined in paragraph (1) of this subsection) and that, when combined
with the net effect of all prior increases and reductions in the Base
Salary (other than prior reductions that were Across-the-Board Salary
Reductions), results in the Base Salary being less than 80% of the
highest Base Salary to which Officer has ever been subject pursuant to
this Agreement (as reflected in the records of the Human Resources
Department) or (B) a reduction in the Base Salary (whether or nor an
Across-the-Board Salary Reduction) that, when combined with the net
effect of all prior increases and reductions in the Base Salary
(whether or not Across-the-Board Salary Reductions), results in the
Base Salary being less than 65% of the highest Base Salary to which
Officer has ever been subject pursuant to this Agreement (as reflected
in the records of the Human Resources Department).
(5) "Normal Retirement" shall have the meaning given to such term
in Section 1.29 of the Long-term Incentive Plan.
(6) "Termination for Cause" shall mean a Termination of Employment
as a result of a dismissal by the Company following (A) Officer's
continued failure to substantially perform his/her duties and
responsibilities (other than any such failure resulting from Officer's
physical or mental impairment or incapacity) after written demand for
substantial performance is delivered by the Company specifically
identifying the manner in which the Company believes Officer has not
substantially performed his/her duties and responsibilities, (B)
Officer's engaging in fraud or other misconduct that is injurious to
the Company, monetarily or otherwise, (C) Officer's engaging in
insubordination, (D) Officer's violation of, or failure to comply with,
any written policy, guideline, rule or regulation of the Company which
specifically provides that Officer may be dismissed (or his/her
employment terminated) as a consequence of any such violation or
failure to comply, (E) Officer'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, or (F) a material
violation by Officer of the provisions of Section 6. For purposes of
clause (B) above, an act, or failure to act, on Officer's part shall be
considered "misconduct" if done, or omitted, by Officer not in good
faith and without reasonable belief that such act, or failure to act,
was in the best interest of the Company.
(7) "Termination for Good Reason" shall mean a Termination of
Employment as a result of voluntary action by Officer within 30 days
after receiving notice of (A) the demotion of the Officer to an officer
position junior to the officer position specified in Section 1 or to a
non-officer position, (B) an Excessive Salary Reduction (as defined in
paragraph (4) of this subsection), or (C) the failure by Parent to
obtain the assumption agreement described in Section 7(h) on or prior
to a succession described in Section 7(h).
6. Nonpublic Information.
(a) Officer hereby acknowledges that, in connection with his/her employment
with the Company, he 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 Officer in violation of this Agreement, is referred to herein as
the "Nonpublic Information."
(b) Officer hereby agrees that, from and after the date hereof and
continuing until three (3) years following a Termination of Employment, he will
keep all Nonpublic Information confidential and will not, without the prior
written consent of the Board or the Chief Executive Officer, disclose any
Nonpublic Information in any manner whatsoever or use any Nonpublic Information
other than in connection with the performance of his/her services to the Company
hereunder; provided, however, that the provisions of this subsection shall not
prevent Officer 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 Officer's judgment) in
connection with the performance by Officer of his/her duties and
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responsibilities hereunder or (2) disclosing any Nonpublic Information as
required by applicable law, rule, regulation or legal process (but only after
compliance with the provisions of subsection (c) of this Section).
(c) If Officer is requested pursuant to, or required by, applicable law,
rule, regulation or legal process to disclose any Nonpublic Information, Officer
will notify Parent promptly so that the Company may seek a protective order or
other appropriate remedy or, in the Company's sole discretion, waive compliance
with the terms of this Section, and Officer 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 the Company waives compliance
with the terms of this Section, Officer 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) Mitigation. Officer 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 Officer as the result of employment by
another employer after the date of any Termination of Employment or otherwise.
(b) Interest. Until paid, all past due amounts required to be paid by the
Company to Officer under any provision of this Agreement shall bear interest at
the per annum rate equal to the higher of (1) twelve percent (12%), or (2) the
prime rate announced from time to time by the Company's primary bank lender,
plus three percent (3%), both subject to the maximum rate allowed by law.
(c) Equitable Relief Available. Officer acknowledges that remedies at law
may be inadequate to protect the Company against any actual or threatened breach
of the provisions of Section 6 by Officer. Accordingly, without prejudice to any
other rights or remedies otherwise available to the Company, Officer agrees that
the Company shall have the right to equitable and injunctive relief to prevent
any breach of the provisions of Section 6, 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.
(d) At-Will Employment. Officer acknowledges that his/her employment with
the Company is strictly "at-will", and that nothing contained in this Agreement
shall confer upon Officer the right to continue in the employ of the Company, or
interfere in any way with the rights of the Company to terminate his/her
employment at any time for any reason. Officer further 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,
(i) the Company's Long-Term Incentive Plan, (ii) any other plan or agreement to
which the Company is a party, or (iii) applicable statutory, common or case law.
(e) Breach Not a Defense. The representations and covenants on the part of
Officer contained in Section 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 Officer 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 Officer contained in Section 6.
(f) Notices. Any notice 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 or the Company, 5205 North O'Connor Boulevard, Suite
900, Irving, Texas 75039, Attention: General Counsel.
(2) If to Officer, the address of Officer set forth below Officer's
signature on the signature page of this Agreement.
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(g) Assumption by Successor of Parent. 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), by a written agreement in form and substance
satisfactory to Officer, to expressly assume and agree to perform the
obligations to be performed by Parent or the Company under this Agreement in the
same manner and to the same extent that Parent or the Company would be required
to perform if no such succession had taken place.
(h) Assignment.
(1) Except pursuant to an assumption by a successor described in
subsection (h) of this Section, the rights and obligations of the Company
pursuant to this Agreement may not be assigned, in whole or in part, by
the Company to any other person or entity without the express written
consent of Officer.
(2) The rights and obligations of Officer pursuant to this Agreement
may not be assigned, in whole or in part, by Officer to any other person
or entity without the express written consent of the Board.
(i) Successors. This Agreement shall be binding on, and shall inure to the
benefit of, the Company, Officer and their respective successors, permitted
assigns, personal and legal representatives, executors, administrators, heirs,
distributees, devisees and legatees, as applicable.
(j) Amendment and Waivers. Except as hereinafter provided, 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 Officer and Parent. Unless a
Change of Control shall have occurred or be pending or under consideration,
Parent may amend, modify, or waive any provision of, or terminate, this
Agreement upon sixty (60) days notice without the consent of Officer; provided
that any such amendment, modification, waiver or termination shall be made to
all severance agreements of Parent covering all officers of Parent similarly
situated to Officer. 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.
(k) Complete Agreement. This Agreement replaces and supersedes all prior
agreements, if any, among the parties with respect to the subject matter hereof,
and the provisions of this Agreement constitute the complete understanding and
agreement among the parties with respect to the subject matter hereof, and no
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
(l) 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.
(m) Attorney Fees. All legal fees and other costs incurred by Officer in
connection with the resolution of any dispute or controversy under or in
connection with this Agreement shall be reimbursed by the Company to Officer, if
such dispute or controversy is resolved in favor of Officer. 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 Officer.
(n) 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.
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initials
(o) Construction. The captions of the Sections, subsections and paragraphs
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 "Section," "subsection," "paragraph," "subparagraph" or
"Schedule" shall be considered to be references to the appropriate Section,
subsection, paragraph, subparagraph or Schedule, respectively, of this
Agreement. Unless the context otherwise requires, all words used in this
Agreement in any gender shall include the masculine, feminine and neuter gender,
all singular words shall include the plural and all plural words shall include
the singular. As used in this Agreement, the term "including" shall mean
"including, but not limited to."
(p) 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.
(q) Execution by Company. The execution of this Agreement by Company shall
constitute an acceptance of, and an agreement to be bound by, the terms and
provisions of this Agreement by Company and each of its direct and indirect
wholly-owned subsidiaries, and Company hereby agrees to cause each of its direct
and indirect wholly-owned subsidiaries, now and in the future, to fully comply
with all obligations applicable to the Company pursuant to the terms of this
Agreement.
(SIGNATURE PAGE ATTACHED)
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initials
In witness whereof, the parties have executed this Agreement effective as
of the date first written above.
PIONEER NATURAL RESOURCES COMPANY
By: /s/ Scott D. Sheffield
--------------------------------------------
Name: Scott D. Sheffield
Title: Chief Executive Officer and Chairman
OFFICER:
-------------------------------------------------
Address:
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[Signature Page - Severance Agreement - Page 1 of 1]
Schedule A
GENERAL RELEASE AGREEMENT
NOTICE: Various state and federal laws and regulations prohibit employment
discrimination based on age, race, color, religion, sex, national origin,
disability, citizenship, and membership or application for membership in a
uniformed service. These laws are enforced through the Equal Employment
Opportunity Commission, U.S. Department of Labor, Texas Commission on Human
Rights, and other federal and state agencies. You are advised to discuss this
release with your attorney. In any event, you should thoroughly review and
understand the effect of this document before signing it. Therefore, please take
this General Release Agreement home and carefully consider it for at least five
days before signing it. In accordance with the requirements of the Older Workers
Benefit Protection Act, you are allowed at least 45 days from the date of your
receipt of this document and the accompanying explanatory letter to consider the
offer made to you and to return an executed copy of this form to the Vice
President Administration. Additionally, after you have executed this form, you
have seven days to reconsider and revoke your agreement.
GENERAL RELEASE: In consideration of my acceptance of the payments and benefits
offered to me under Section 5(d)(2)(C) of the Severance Agreement, I hereby
release and discharge Pioneer Natural Resources Company and its subsidiaries and
affiliates (the "Company"), and the officers, directors, employees, agents,
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 them as a result of
the termination of my employment, including but not limited to claims arising
under federal, state, or local laws prohibiting employment discrimination,
including the Age Discrimination in Employment Act, or claims growing out of any
legal restrictions, contractual or otherwise, on the Company's right to
terminate the employment of its employees, and I do hereby agree not to file a
lawsuit to assert such claims. I further acknowledge and agree that by accepting
the Severance Agreement benefits, I have given up my right to file any
complaint, lawsuit, or other legal action against any of the Released Parties
growing out of, connected with, or relating in any way to my employment or the
termination of my employment with the Company. Further in consideration of the
payments and benefits offered to me under the Severance Agreement, I acknowledge
and agree that the Released Parties may recover from me any loss, including
attorney's fees and costs of defending against any claim brought by me, that
they may suffer arising out of my breach of this General Release Agreement.
I understand that this General Release Agreement is final and binding, and
I agree not to challenge its enforceability. If I do challenge the
enforceability of this General Release Agreement, I agree initially to tender to
the Company all money received pursuant to the Severance Agreement, and invite
the Company to retain such money and agree with me to cancel this General
Release Agreement. In the event the Company accepts this offer, the Company
shall retain such money and this General Release Agreement will be void. In the
event the Company does not accept such offer, the Company shall so notify me,
and shall place such money in an interest-bearing escrow account pending the
resolution of any dispute as to whether this General Release Agreement shall be
set aside and/or otherwise be rendered unenforceable.
I acknowledge and agree that the Company has no legal obligation to provide
the payment offered to me under Section 5(d)(2)(C) of the Severance Agreement,
and my acceptance of the obligations and attendant additional payment as
described therein constitutes my agreement to all terms and conditions set forth
in this General Release Agreement, and are in consideration of the promises and
undertakings of the Company pursuant to the Severance Agreement. I further
acknowledge and agree that for unemployment compensation purposes, the payments
I receive under the Severance Agreement shall be considered additional wages in
lieu of notice; and that, accordingly, I may be ineligible to receive
unemployment compensation benefits for an equivalent period of time.
This General Release Agreement does not have any effect on any claim I may
have against the Released Parties unrelated to the termination of my employment
or with respect to any rights or claims that may arise after the date this
General Release Agreement is executed.
I have carefully read and fully understand all of the provisions of this
General 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 if I so desired.
Date signed:
------------------ --------------------------------
Signature of Officer
Date signed:
------------------ --------------------------------
Signature of Officer
Exhibit A
Name Title Location
- ----------------- ------------------------------------------- ------------------------
Richard P. Dealy Executive Vice President and Chief Financial Irving, Texas
Timothy L. Dove President and Chief Operating Officer Irving, Texas
Marcelo D. Guiscardo Vice President - International Buenos Aires, Argentina
William F. Hannes Vice President - Engineering and
Development Irving, Texas
Darin Holderness Vice President and Chief Accounting Officer Irving, Texas
Frank E. Hopkins Vice President - Investor Relations Irving, Texas
David McManus Vice President - International Operations London, England
Susan A. Spratlen Vice President - Corporate Communications Irving, Texas
Jay P. Still Vice President - Western Division Denver, Colorado