EXHIBIT 10.1
EMPLOYMENT
AGREEMENT
AGREEMENT, dated
as of December 26, 2007 (together with any Exhibits hereto,
the “ Agreement ”), is entered into by and
between BreitBurn Management Company, LLC (“ BMC
”), Pro GP Corp. (“ PROGP ”), BreitBurn
GP, LLC ( “ BBGP ”), and Mark Pease (the “
Executive ”). As used herein, the term “
Employer ” shall be deemed to refer to BMC, PROGP,
and/or BBGP, as the context requires.
WHEREAS, the
Executive and the Employer wish to enter into an employment
relationship; and
WHEREAS, the
Employer and the Executive wish to enter into an Employment
Agreement, in the capacities and on the terms set forth in this
Agreement.
NOW, THEREFORE, IT
IS HEREBY AGREED AS FOLLOWS:
1.
Definitions . All capitalized terms not defined herein
shall have the meanings set forth in Exhibit A
hereto.
2.
Employment Period . The Employer hereby agrees to
employ the Executive, and the Executive hereby agrees to accept
such employment, subject to the terms and conditions of this
Agreement, during the period (the “ Employment Period
”) beginning on December 17, 2007 (the “
Commencement Date ”) and ending on January 1,
2011 or such earlier date upon which Executive’s employment
is terminated as provided herein. Provided that the
Employment Period has not already terminated, commencing on
January 1, 2011 (and each January 1 thereafter), the term
of this Agreement shall automatically be extended for one
additional year, unless at least ninety days prior to any such
January 1, the Employer or the Executive gives written notice
to the other party that it or he, as the case may be, does not wish
to so extend the term of this Agreement. Notwithstanding the
foregoing, the Employment Period shall end on the Date of
Termination.
3.
Terms of Employment .
(a)
Position and Duties .
(i)
Position . During the Employment Period, the Executive
shall be employed as the Chief Operating Officer of the Employer,
with the usual and customary duties of such office in entities of a
similar nature and size. The Executive shall also serve
subsidiaries and affiliates of the Employer in such other
capacities, in roles consistent with his position as Chief
Operating Officer, in addition to the foregoing as the Employer
shall designate, and the Executive shall have such other duties,
responsibilities and authority as the Boards of Directors of BMC,
BBGP or PROGP, as applicable,(the “ Board ” or
“ Boards ” as the context requires) may specify
from time to time, in each case, in roles consistent with his
position as Chief Operating Officer. In no event shall the
Executive be entitled to any additional compensation (from the
Employer or otherwise) for services rendered to any other affiliate
of the Employer
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(any other
affiliated entity for which the Executive provides such services,
the “ BreitBurn Entities ”). The Executive
shall report directly to the Co-Chief Executive Officers of the
Employer.
(ii)
Exclusivity . During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled under this Agreement, the Executive shall
devote substantially full-time attention and time during normal
business hours to the business and affairs of th e BreitBurn Entities consistent with Section 3
hereof. During the Employment Period it shall not be a
violation of this Agreement for the Executive to (A) carry on
other non-competitive business ventures with the consent of the
Employer or its nominee (not to be unreasonably withheld),
(B) serve on the boards or committees of such ventures or
trade associations or civic or charitable organizations or to
engage in activities with such entities, (C) deliver lectures,
fulfill speaking engagements or teach at educational institutions
and (D) manage personal investments, so long as such
activities do not significantly interfere with the performance of
the Executive’s responsibilities as an employee of
th e Employer in accordance with this Agreement. The
Executive shall be entitled to retain all compensation attributable
to activities permitted under this
Section 3(a)(ii).
(iii)
Allocation of Costs . The respective Boards shall use
their best efforts to resolve any ambiguities or conflicts as to
their respective obligations to the Executive under this
Agreement. The cost of the Executive’s compensation and
benefits shall be paid by BMC with the other Employer entities
reimbursing BMC for their portion of such costs that are allocable
to them on the basis of the Executive’s estimated time
devoted to their respective businesses or on such other basis as
the Employer entities may mutually agree, provided , that
costs associated with the RPUs and CPUs shall be borne by
BBGP. Notwithstanding the foregoing, each of BMC, PROGP,
and/or BBGP shall be jointly and severally liable for the
performance of the obligations of the Employer
hereunder.
(iv)
Location . The Executive’s services shall be
performed primarily at the greater Houston metropolitan area office
of th
e Employer
. Notwithstanding
the foregoing, the Employer may from time to time require the
Executive to travel temporarily to other locations on the business
of the Employer (and/or other BreitBurn Entities), including
without limitation, to the Employer’s Los Angeles
headquarters.
(v)
Operation of the Business. It is the Employer’s
current intent to continue conducting its business in a manner that
would not impede the attainment of the Performance Objectives
applicable to the CPUs, provided that the parties acknowledge that
any action or inaction by the Board (or any other person owing a
fiduciary duty to the Employer) with respect to the conduct of the
Employer’s business must be consistent with the Board’s
or such person’s view of applicable fiduciary duties and
law. Accordingly, the Employer agrees that, provided that its
actions and inactions are consistent with applicable fiduciary
duties and law, the Employer shall not take any action (or permit
any inaction) that materially impedes the attainment of the
Performance Objectives applicable to the CPUs.
Notwithstanding the foregoing, nothing contained in this
Section 3(a)(v) nor any breach thereof shall create any
right in the Executive (or any successor in interest to the
Executive) to enjoin, preclude, constrain or otherwise interfere
with any lawful action taken by or on behalf of the Employer,
whether by injunction, restraining order, other equitable relief or
otherwise or shall serve as the basis for any
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claim by the Executive
for any punitive, consequential or incidental damages, and the
Executive hereby agrees that his sole remedy for a breach of this
Section 3(a)(v) shall be limited to the payments and
benefits to which he may be entitled under the terms of this
Agreement in the event that he terminates his employment for Good
Reason.
(b)
Compensation .
(i)
Base Salary . During the Employment Period, the
Executive shall receive a base salary (the “ Base
Salary ”) at an annual rate of $350,000, as the same may
be increased (but not decreased) thereafter in the discretion
of th
e Employer
. The Base Salary
shall be paid at such regular intervals as th e Employer pays executive salaries generally, but in no
event less frequently than monthly. During the Employment Period,
the Base Salary shall be reviewed at least annually by
th e Employer for possible increase in the discretion of the
Employer. Any increase in the Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this
Agreement. The Base Salary shall not be reduced after any
such increase, and the term Base Salary as utilized in this
Agreement shall refer to the Base Salary as so
increased.
(ii)
Short-Term Incentives . For each calendar year ending
during the Employment Period (after December 31, 2007), the
Executive shall be eligible to participate in th e Employer’s short-term incentive
plan at the
Executive Vice President level and to earn an annual cash bonus
based on the achievement of performance criteria established by the
Board as soon as administratively practicable following the
beginning of each such year (the “ Annual Bonus
”). For each calendar year during the Employment
Period, (A) the target Annual Bonus shall be an amount equal
to 75% of the Executive’s Base Salary, and (B) the
maximum Annual Bonus shall be an amount equal to 150% of the
Executive’s Base Salary. The Employer shall pay the
Annual Bonus (if any) for each such calendar year in a single,
cash, lump sum after the end of the applicable calendar year in
accordance with procedures established by the Board, but in no
event later than the fifteenth day of the third month following the
end of such calendar year, subject to and conditioned upon the
Executive’s continued employment with the Employer through
the date of payment of such Annual Bonus. For the calendar
year ending December 31, 2008, the Executive shall be
guaranteed an Annual Bonus in an amount equal to no less than 75%
of the Executive’s Base Salary; subject to and conditioned
upon the Executive’s continued employment with the Employer
through the date of payment of such Annual Bonus, except as
otherwise provided in Section 5 below. No Annual Bonus
shall be payable in respect of the year ending December 31,
2007.
(iii)
Long Term Incentives . As soon as practicable
following the Commencement Date, BBGP shall grant to the Executive,
under the BreitBurn Energy Partners L.P. 2006 Long-Term Incentive
Plan (the “ Plan ”), (i) an aggregate of
54,320 Restricted Partnership Units (consisting of an initial grant
of 45,370 Restricted Partnership Units and a grant with respect to
calendar year 2008 of 8,950 Restricted Partnership Units)
(together, the “ RPUs ”) which shall vest and
convert into Units, subject to Section 5 below, as to
one-third of the RPUs on each of January 1, 2009,
January 1, 2010 and January 1, 2011, subject in each case
to the Executive’s continued employment with the Employer
through each such date; and (ii) 89,500 Convertible
Performance Units (the “ CPUs ”) which shall
convert into Units, subject to the attainment of applicable
performance objectives and Section 5 below, on the earlier to
occur
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of
(A) the attainment of the specified performance metrics
adopted by the Board in resolutions dated December 26, 2007
(the “ Performance Objectives ”), or
(B) January 1, 2013, subject to the Executive’s
continued employment with the Employer through any such date
(except as provided in Section 5 below). Outstanding
RPUs and CPUs shall generally entitle the Executive to receive
distributions made in respect of the Units underlying such awards
at such time and in such amounts as are received by the holders of
Units generally (and, in the case of the CPUs, such distributions
shall be subject to recoupment by BBGP in the event that such
distributions exceed the level of distributions to which the
Executive is ultimately entitled in respect of the CPUs, based on
the level at which the Performance Objectives are attained).
Except as expressly provided in Section 5(d)(ii) below,
conversion to, and payment to the Executive of, the Units
underlying CPUs shall occur as soon as practicable following the
vesting of any such CPUs (whether pursuant to this
Section 3(b)(iii) or Section 5 below), but in no
event later than the applicable “short-term deferral
period” (within the meaning of Code Section 409A).
The terms and conditions of the RPUs and the CPUs, including
without limitation, any provisions relating to cash distributions,
performance or other vesting conditions and restrictions thereon,
shall, consistent with the terms provided in this Agreement, be set
forth in RPU and CPU award agreements, as applicable, in forms
prescribed by the Employer or BBGP (together, the “ LTIP
Award Agreements ”). The RPUs and the CPUs shall be
governed by the terms of the Plan and the applicable LTIP Award
Agreements. The Executive shall be eligible to receive
additional awards under the Plan and to participate in any future
long-term incentive programs available generally to the Peer
Executives in the future, both as determined in the sole discretion
of the Board of Directors of BBGP.
(iv)
Benefit Plans and Policies . During the Employment
Period, the Executive and the Executive’s eligible dependents
shall be eligible to participate in the savings and retirement
plans and policies, welfare plans and policies (including, without
limitation, medical and dental) and fringe benefit plans and
policies of the Employer, in each case, that are made generally
available to the Peer Executives on a basis no less favorable than
that provided generally to the Peer Executives.
Notwithstanding the foregoing, nothing herein shall, or shall be
construed so as to, require the Employer to adopt or continue any
plan or policy or to limit the Employer’s right to amend or
terminate any such plan or policy at any time.
(v)
Automobile . During the Employment Period, the
Employer shall pay directly, or the Executive shall be entitled to
receive prompt reimbursement of, actual expenses of up to $1,000
per month associated with the lease or purchase of an automobile,
in addition to which the Employer shall pay or reimburse expenses
related to the maintenance and operation of such automobile in
accordance with the Employer’s automobile reimbursement
policy applicable to the Peer Executives, as in effect from time to
time.
(vi)
Expenses
. During the
Employment Period, the Executive shall be entitled to receive
prompt reimbursement for reasonable expenses incurred by the
Executive on behalf of or in furtherance of the business of any
BreitBurn Entity pursuant to the terms and conditions of the
Employer’s applicable expense reimbursement policies. To the
extent that any such expenses or any other reimbursements or fringe
benefits provided to the Executive during the Employment Period are
deemed to constitute compensation to the Executive, including
without limitation any automobile expenses and/or club memberships
reimbursed in accordance with Section 3(b)(v) above and
3(b)(viii) below, respectively, such expenses shall be
reimbursed
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no later than
December 31 of the year following the year in which the
expense was incurred. The amount of any such compensatory
expenses so reimbursed in one year shall not affect the amount
eligible for reimbursement in any subsequent year and the
Executive’s right to reimbursement of any such expenses shall
not be subject to liquidation or exchange for any other
benefit.
(vii)
Vacation
. During the
Employment Period, the Executive shall be entitled to paid vacation
in accordance with the Employer’s applicable vacation policy,
but in no event less than four (4) weeks per year.
Executive shall immediately vest in two (2) weeks of vacation
upon the Commencement Date.
(viii)
City Club Membership . During the Employment Period,
the Employer shall pay all initiation fees, monthly dues, and reasonable expenses
incurred for business-related use of one city, athletic or dining
club . The
Executive’s membership shall be the property of the
Executive.
4.
Termination of Employment .
(a)
Death or Disability . The Executive’s employment
with the Employer shall terminate automatically upon the
Executive’s death. In addition, if the Board determines
in good faith that the Executive has incurred a Disability, it may
terminate the Executive’s employment upon thirty days’
written notice provided in accordance with
Section 13(b) hereof if the Executive shall not have
returned to full-time performance of the Executive’s duties
hereunder prior to the expiration of such thirty-day notice
period.
(b)
Cause . The Employer may terminate the
Executive’s employment for Cause or without Cause at any
time, provided , that the Employer may not terminate the
Executive’s employment for Cause prior to obtaining the
requisite approval of the Board as required by the definition of
“Cause.”
(c)
Good Reason . The Executive may terminate his
employment for Good Reason or without Good Reason.
(d)
Notice of Termination . Any termination by the
Employer or the Executive shall be communicated by a Notice of
Termination to the other parties hereto given in accordance with
Section 13(b) hereof. The failure by the Executive
or the Employer to set forth in the Notice of Termination any fact
or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Employer,
respectively, hereunder or preclude the Executive or the Employer,
respectively, from asserting such fact or circumstance in enforcing
the Executive’s or the Employer’s rights
hereunder.
5.
Obligations of the Employer upon Termination; Change of
Control . For the avoidance of doubt, for purposes of
this Section 5, a termination of the Executive’s
employment with the Employer shall only occur if the
Executive’s employment is terminated with all Employer
entities (and any other BreitBurn Entities with whom the Executive
may be or become employed). Notwithstanding the foregoing,
the parties hereby acknowledge that changes in the
Executive’s status as an employee of the various Employer
entities and BreitBurn Entities (including any transfer of the
Executive’s employment between such entities and
any
5
termination of
the Executive’s employment relationship with one or more, but
fewer than all, such entities) may, but shall not necessarily,
constitute Good Reason hereunder, and that the effect of such
changes on the Executive’s employment relationship shall be
considered in determining whether Good Reason exists
hereunder.
(a)
Good Reason; Other Than for Cause, Death or Disability
. If, during the Employment Period, the Employer terminates
the Executive’s employment without Cause (other than as a
consequence of the Executive’s death or Disability, which
terminations shall be governed by Section 5(c) below), or
the Executive terminates his employment with the Employer for Good
Reason, in either case, in a manner that constitutes a Separation
from Service, then the Executive shall be entitled to receive the
payments and benefits described below in this
Section 5(a).
(i)
(A) The Executive shall be paid, in a single lump-sum payment
within thirty (30) days after the Executive’s Separation from
Service (or any shorter period prescribed by law), the aggregate
amount of (1) the Executive’s earned but unpaid Base
Salary and accrued but unpaid vacation pay, if any, through the
Date of Termination, and (2) any unreimbursed business
expenses incurred by the Executive through the Date of Termination
that are reimbursable under Section 3(b)(vi) above; and
(B) to the extent not theretofore paid or provided, the
Employer shall timely pay or provide to the Executive any accrued
benefits and other amounts or benefits required to be paid or
provided prior to the Date of Termination under any other plan,
program, policy, practice, contract or agreement of the Employer
and its affiliates according to their terms (the payments and
benefits described in this Section 5(a)(i), the “
Accrued Obligations ”).
(ii)
In addition to the Accrued Obligations, provided that the Executive
executes a general release and waiver of claims substantially in
the form attached hereto as Exhibit B (as such form may
be updated to reflect changes in law, the “ Release
”) within forty-five (45) days after the Executive’s
Separation from Service and does not revoke such Release, and
further subject to Section 12 below, the Executive shall be
entitled to receive the following payments and benefits (the
“ Severance ”):
(A)
A payment equal to 1.5 times the sum of (1) the
Executive’s Base Salary as in effect immediately prior to the
Date of Termination, plus (2) the average of the
Executive’s Annual Bonuses earned (including any amounts
deferred) during the two years immediately preceding the Date of
Termination (or in the event that the Executive has not been
employed for two years, then the average of the Annual Bonus earned
for the first year (if completed) and the forecasted bonus for the
current year based on performance parameters as described in
Section 3(b)(ii) hereof through the Date of Termination,
extrapolated through the end of such year) (in either case, the
“ Bonus Amount ”), payable no later than sixty
days after the date on which the Executive incurs a Separation from
Service;
(B)
For a period of eighteen months following the date on which the
Executive incurs a Separation from Service, but in no event longer
than the period of time during which the Executive would be
entitled to continuation coverage under Code Section 4980B
absent this provision (the “ COBRA Period ”),
the Executive and the Executive’s eligible dependents shall
continue to be provided with medical,
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prescription and dental benefits at the levels
in effect immediately prior to the Date of Termination at the same
cost to the Executive as immediately prior to the Date of
Termination, provided that the Executive properly elects
continuation healthcare coverage under Code Section 4980B;
following such continuation period, any further continuation of
such coverage under applicable law shall be at the
Executive’s sole expense. Notwithstanding the
foregoing, the Executive and his dependents shall cease to receive
such medical, prescription and dental benefits on the date that the
Executive becomes eligible to receive benefits under another
employer-provided group health plan;
(C)
Any unpaid Annual Bonus that would have become payable to the
Executive pursuant to Section 3(b)(ii) hereof in respect
of any calendar year that ends on or before the Date of
Termination, had the Executive remained employed through the
payment date of such Annual Bonus, payable in the calendar year in
which the Separation from Service occurs, but in no event later
than the date in such calendar year on which annual bonuses are
paid to the Peer Executives generally; and
(D)
To the extent not previously vested and converted into Units or
forfeited, (1) the RPUs shall vest and convert into Units in
full upon the Executive’s Separation from Service; and
(2) the CPUs shall vest and convert into Units on a pro rata
basis as follows: the number of CPUs that vest and convert into
Units shall be equal to the total number of CPUs that would
otherwise vest and convert into units based on the extent to which
the applicable Performance Objectives have been satisfied as of the
Date of Termination multiplied by the applicable percentage set
forth in the following schedule (the “ CPU Acceleration
Percentage ”) (and any CPUs that do not vest and convert
into Units in accordance with this
Section 5(a)(ii)(D) (and which have not otherwise vested
and converted into Units prior to the Date of Termination) shall be
forfeited as of the Date of Termination):
(a) if such termination occurs on or
before December 31, 2008, such percentage shall be equal to
40%;
(b) if such termination occurs on or
before December 31, 2009, such percentage shall be equal to
60%;
(c) if such termination occurs on or
before December 31, 2010, such percentage shall be equal to
80%; and
(d) if such termination occurs on or
after January 1, 2011, such percentage shall be equal to
100%.
(b)
Cause; Resignation Other than for Good Reason . If the
Executive incurs a Separation from Service because the Employer
terminates the Executive’s employment for Cause or the
Executive terminates his employment other than for Good Reason, the
Employer shall pay to the Executive the Accrued Obligations within
thirty days after the Executive’s Separation from Service (or
any shorter period prescribed by law) or, in the case of payments
or benefits described in Section 5(a)(i)(B) above, as
such payments or benefits become due. Any
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outstanding
equity awards, including, without limitation, the RPUs and CPUs
granted in accordance with Section 3(b)(iii) above, shall
be treated in accordance with the terms of the governing plan and
award agreement.
(c)
Death or Disability . If the Executive incurs a
Separation from Service by reason of the Executive’s death or
Disability during the Employment Period:
(i)
The Accrued Obligations shall be paid to the Executive’s
estate or beneficiaries or to the Executive, as applicable, within
thirty days after the Executive’s Separation from Service (or
any shorter period prescribed by law) or, in the case of payments
or benefits described in Section 5(a)(i)(B) above, as
such payments or benefits become due;
(ii)
In addition to the Accrued Obligations, subject to the
Executive’s (or his estate’s) execution and
non-revocation of a Release, the Executive shall be entitled to
receive the following payments and benefits (the “
Death/Disability Payments ”):
(A)
(1) the RPUs shall vest and convert into Units in full upon
the Executive’s Separation from Service; and (2) the
CPUs shall vest and convert into Units on a pro rata basis as
follows: the number of CPUs that vest and convert into Units shall
be equal to the total number of CPUs that would otherwise vest and
convert into Units based on the extent to which the applicable
Performance Objectives have been satisfied as of the Date of
Termination multiplied by the applicable CPU Acceleration
Percentage (and any CPUs that do not vest and convert into Units in
accordance with this Section 5(c)(ii)(A) (and which have
not otherwise vested and converted into Units prior to the Date of
Termination) shall be forfeited as of the Date of
Termination);
(B)
For the period commencing on the Executive’s Separation from
Service and ending on the earlier to occur of (1) the date on
which the Employment Period would have otherwise expired had the
Executive not incurred a Separation from Service (disregarding any
renewals thereof that would occur subsequent to the Date of
Termination), and (2) the date of the expiration of the COBRA
Period, the Executive and the Executive’s eligible dependents
shall continue to be provided with medical, prescription and dental
benefits as if the Executive’s employment had not been
terminated at the same cost to the Executive (or the
Executive’s estate or dependents) as immediately prior to the
Date of Termination provided that the Executive or his dependents,
if applicable, properly elect continuation healthcare coverage
under Code Section 4980B; following such continuation period,
any further continuation of such coverage under applicable law
shall be at the Executive’s (or his estate’s or
dependents’) sole expense; and
(C)
Any unpaid Annual Bonus that would have become payable to the
Executive pursuant to Section 3(b)(ii) hereof in respect
of any calendar year that ends on or before the Date of
Termination, had the Executive remained employed through the
payment date of such Annual Bonus, payable in the calendar year in
which the Separation from Service occurs, but in no event later
than the date in such calendar year on which annual bonuses are
paid to the Peer Executives generally.
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(d)
Non-renewal .
(i)
Employer Non-Renewal .
(A) If the
Employer provides a notice of non-renewal of the
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