Exhibit 10.1
Execution
Copy
STOCKHOLDERS
AGREEMENT
This STOCKHOLDERS AGREEMENT (this
“ Agreement ”) is made and entered into on March
12, 2007, by and between Pogo Producing Company, a Delaware
corporation (the “ Company ”), and Third Point
LLC, a Delaware limited liability company (“ Third
Point ”), Mr. Daniel S. Loeb, Mr. Bradley L. Radoff,
Third Point Offshore Fund, Ltd., a Cayman Islands limited liability
exempted company, Third Point Ultra Ltd., a British Virgin Islands
limited liability company, Third Point Partners LP, a Delaware
limited partnership, Third Point Partners Qualified LP, a Delaware
limited partnership and Lyxor/Third Point Fund Limited, a Jersey
public company with limited liability (each, including Third Point,
a “ Holder ” and, collectively, the “
Holders ”).
RECITALS
WHEREAS, certain Holders have filed
with the Commission a Schedule 13D and amendments thereto
reporting, among other things, their beneficial ownership of common
stock and other securities of the Company (as amended as of
February 23, 2007, the “ Third Point Schedule 13D
”);
WHEREAS, in the Third Point Schedule
13D, the Holders stated that they intend, at the Company’s
2007 annual meeting of stockholders (the “ 2007 Annual
Meeting ”), to propose nominees to be elected to seats on
the Company’s board of directors (the “ Board
”) and certain amendments to the Bylaws (collectively, the
“ Proposed Solicitation ”);
WHEREAS, the Company and the Holders
have each determined that it is in their respective best interests
and in the best interests of their stockholders and/or investors to
enter into this Agreement whereby (i) the Company will expand the
Board to add new members and (ii) the Holders will abandon the
Proposed Solicitation, in each case as more fully provided
herein;
NOW, THEREFORE, in consideration of
the premises, the mutual covenants and agreements contained herein
and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
a) Except as
otherwise specifically indicated, the following terms have the
following meanings for all purposes of this Agreement:
“ 2008 Annual Meeting
” means the Company’s 2008 annual meeting of
stockholders.
“ Affiliate ” has
the meaning assigned thereto in Rule 12b-2 promulgated under the
Exchange Act.
“ beneficially owns
” (or comparable variations thereof) has the meaning set
forth in Rule 13d-3 promulgated under the Exchange Act.
“ Board Designees
” means the Third Point Designees and the TRT
Designee.
“ Bylaws ” means
the Amended and Restated Bylaws of the Company.
“ Certificate of
Incorporation ” means the Restated Certificate of
Incorporation of the Company.
“Confidential
Information ” means
all information, data, knowledge, documents, reports,
interpretations, forecasts, records, know-how (in whatever form and
however communicated) and other written or oral information and
documents that are furnished to or otherwise disclosed to or
received by any of the Holders, any member of the Third Point Group
or their representatives, directly or indirectly from or on behalf
of the Company, whether furnished or otherwise disclosed or
received before or after the date of this Agreement, together with
all analyses, compilations, studies, memoranda, notes, evaluations
or other documents, records or data (in whatever form maintained)
prepared or formed by any of the Holders, any member of the Third
Point Group or their representatives that contain or otherwise
reflect or are generated from, whether in whole or in part, such
information or documents; provided, however, that the term
“Confidential Information” does not include any
information that, as demonstrated by the Holders, (a) is or becomes
generally available to and known by the public (other than as a
result of a disclosure directly or indirectly by any of the
Holders, any member of the Third Point Group or their
representatives in breach of this Agreement), (b) is or becomes
available to any of the Holders, any member of the Third Point
Group or their representatives on a non-confidential basis from a
source other than the Company or a Person acting on behalf of the
Company, provided that such source is not and was not prohibited
from communicating the information by a contractual, legal,
fiduciary or other obligation known to any of the Holders, any
member of the Third Point Group or their representatives or (c) was
in the possession of any of the Holders, any member of the Third
Point Group or their representatives prior to being furnished or
disclosed by or on behalf of the Company or was independently
developed by any such Persons without violation of this
Agreement.
“ Commission ”
means the Securities and Exchange Commission.
“ Equity Securities
” means Voting Securities and options and rights (whether
presently exercisable or not) to purchase Voting
Securities.
“ Exchange Act “
means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
“ Holder
Representative” has the meaning given such term in
Section 7.15.
“ Governmental or
Regulatory Authority ” means any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political
subdivision, or any stock exchange or market in which Voting
Securities are listed for trading or traded.
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“ Person ” means
any individual, corporation, limited liability company,
partnership, trust, other entity or group (within the meaning of
Section 13(d)(3) of the Exchange Act).
“ representatives
” of any Person means such Person’s directors,
officers, employees, legal, investment banking and financial
advisors, accountants and any other agents and representatives of
such Person.
“ Resignation Date
” means the earliest of:
(a) the first date on which any
member of the Third Point Group engages in any of the activities
prohibited by Article IV, if such violation is not wholly cured
within three business days following written notice thereof by the
Company,
(b) the first date on which any
member of the Third Point Group sells, transfers or otherwise
disposes of Equity Securities such that the Third Point
Group’s aggregate beneficial ownership of Equity Securities
is reduced to less than 5% (calculated in accordance with Rule
13d-3(d)(1)(i) promulgated under the Exchange Act),
(c) the first date after the
Standstill Termination Date on which any member of the Third Point
Group engages in any activity that was, prior to the Standstill
Termination Date, prohibited by Section 4.01, and
(d) the date on which this Agreement
is terminated.
“Standstill Termination
Date” means
December 31, 2007.
“ Strategic Advisor
” means Goldman, Sachs & Co., in its capacity as
financial advisor to the Company in connection with the Strategic
Alternatives Process, together with any successors to such firm in
such capacity.
“Strategic Alternatives
Process” means the
evaluation of strategic alternatives by the Board publicly
announced by press release on February 15, 2007 or any similar
process.
“ Third Point Designees
” means Daniel S. Loeb, Bradley L. Radoff and any subsequent
designee elected to the Board pursuant to Section 2.03.
“ Third Point Group
” means (a) the Holders, (b) any and all Affiliates of any
Holder and any Person as to which beneficial ownership of Equity
Securities, directly or indirectly, is controlled or shared by a
Holder, (c) the then-current officers, directors or managing
members (or Persons serving in equivalent capacities) of any Person
described in clauses (a) or (b) above, (d) with respect to any
Person described in clauses (a) or (b) above who is an individual,
(i) any and all immediate family members of such Person, (ii) the
heirs, executors, personal representatives and administrators of
such Person, (iii) any and all trusts established for the benefit
of such Person and (iv) any and all charitable foundations the
investment decisions of which are controlled by such Person and (e)
the other members of any and all groups (within the meaning of
Section 13(d)(3) of the Exchange Act) of which any Holder or any
Person described above is a member.
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“ Termination
Event” means the first date on which a Third Point
Designee is neither employed by nor affiliated with any of the
other Holders.
“ TRT Designee ”
means Robert B. Rowling.
“TRT Vacancy
Proposal” means a
stockholder proposal for the 2008 Annual Meeting by any of the
Holders to expand the Board by one directorship (including a
proposal to expand the Board by one directorship in excess of the
number proposed in any prior proposal made in accordance with the
Bylaws by any of the Holders to expand the size of the Board) and
nominate an individual to fill such directorship in order to
replace the directorship terminated as a result of the occurrence
of events specified in the second and third sentences of Section
2.05(b).
“ Voting Securities
” means the common stock, par value $1.00 per share, of the
Company and any other securities of the Company of any kind or
class having the power generally to vote for the election of
directors.
b) Unless the
context of this Agreement otherwise requires, (i) words of any
gender include the other gender; (ii) words using the singular or
plural number also include the plural or singular number,
respectively; (iii) the terms “hereof,”
“herein,” “hereby” and derivative or
similar words refer to this entire Agreement; (iv) the terms
“Article” or “Section” refer to the
specified Article or Section of this Agreement; and (v) all
references to statutes, rules and regulations are to the enumerated
statutes, rules and regulations and any successor statute, rule or
regulation. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless business or trading
days are specified.
ARTICLE II
BOARD MATTERS AND RELATED
AGREEMENTS
Section 2.01.
Board
Matters
a) Promptly
after the execution and delivery of this Agreement by all parties
(and in no event later than March 15, 2007), pursuant to the powers
granted to it under the Bylaws, the Board shall create two
additional directorships, thereby increasing the size of the Board
from eight to ten directorships, and appoint the Third Point
Designees to fill such new directorships. Upon such
appointment, one of such designees (the “ First TP
Designee ”) shall be a member of the class of directors
designated as Class I in the Certificate of Incorporation, with a
term expiring at the 2008 Annual Meeting, and the other designee
(the “ Second TP Designee ”) shall be a member
of the class of directors designated as Class III in the
Certificate of Incorporation, with a term expiring at the 2007
Annual Meeting. Each Third Point Designee agrees to serve as
a director of the Company, subject to and in accordance with the
provisions of this Agreement and the written policies of the Board,
any committees thereof or the Company applicable to Board
members. Each Third Point Designee acknowledges that his
obligations under this Agreement are in addition to the fiduciary
and common law duties of any director of a Delaware
corporation.
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b) On or at any
time prior to the twentieth day after the 2007 Annual Meeting,
pursuant to the powers granted to it under the Bylaws, the Board
shall be entitled to create a third additional directorship,
thereby increasing the size of the Board from ten to 11
directorships, and to offer to appoint the TRT Designee to fill
such new directorship. If the TRT Designee accepts such
offer, the Board may appoint him to fill such directorship.
Upon such appointment, the TRT Designee shall be a member of the
class of directors designated as Class II in the Certificate of
Incorporation, with a term expiring at the annual meeting of the
Company’s stockholders in 2009. If the TRT Designee
declines to accept any such offer, the Board shall not appoint any
person to fill such directorship, as more fully provided in Section
2.05.
c) The Board
shall (i) nominate the Second TP Designee to stand for election as
a director of the Company at the 2007 Annual Meeting, (ii)
recommend such election and solicit proxies in respect thereof in
accordance with its past practice and (iii) vote the Voting
Securities represented by all proxies granted by stockholders in
connection with the solicitation of proxies by the Board for such
meeting in favor of the Second TP Designee, except to the extent
that the Board or its proxy holder(s) determine such proxies
indicate a vote to withhold authority or abstain with respect to
the Second TP Designee.
d) Except as
otherwise provided in this Agreement, while serving on the Board
and any committee thereof, each Board Designee shall be entitled to
all the rights and privileges, and subject to all the duties and
obligations, of the other directors and committee members of the
Board, in their capacities as such. The Company acknowledges
that the Board Designees, in their capacity as directors, shall
have the right to have direct access to the Strategic Advisor for
informational purposes regarding its work in its capacity as such;
provided that such access shall be at such times as such
directors and the Strategic Advisor determine to be mutually
convenient. It is understood and agreed that the Strategic
Advisor’s work shall continue to be directed by the full
Board, acting through the management of the Company, and that such
directors individually shall not be entitled to direct the
Strategic Advisor’s work.
e) Upon the
Board Designees’ becoming members of the Board as provided
above in this Section 2.01, the Board shall appoint each Board
Designee to the Management Committee. Promptly after the
Third Point Designees have become members of the Board, the Board
shall appoint Mr. Loeb to the Executive Committee and Mr. Radoff to
both the Compensation Committee and the Nominating & Corporate
Governance Committee. Neither of Messrs. Loeb and Radoff
shall be removed from such committee assignments without their
consent so long as they remain members of the Board. Any
replacement for either Mr. Loeb or Mr. Radoff on the Board pursuant
to Section 2.03 shall be appointed to the Board committees on which
the Third Point Designee being replaced served, and no such
replacement shall be removed from such committee assignments
without their consent so long as they remain members of the
Board. The two preceding sentences shall not affect the
Board’s ability to remove any such person from any such
committee for an intentional violation of law committed by such
person that relates to such person’s service on such
committee.
f) Each
Third Point Designee acknowledges that the Board, in the exercise
of its fiduciary duties, may recuse either or both of them from any
Board or committee meeting or portion thereof at which the Board or
any such committee is evaluating and/or taking action with respect
to (i) the ownership of Equity Securities by any member of the
Third Point Group, (ii) the
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exercise of any of the
Company’s rights or enforcement of any of the obligations
under this Agreement, (iii) any transaction with any member of
the Third Point Group or (iv) any other matter in which the
interests of a member of the Third Point Group are adverse to those
of the Company, except for such matters that are applicable to
directors on the Board generally.
Section 2.02.
Third Point Designee
Resignations.
a)
Notwithstanding any other provision of this Agreement to the
contrary, each Third Point Designee hereby irrevocably resigns as a
director of the Company, effective immediately upon the Resignation
Date. The parties agree and acknowledge that the preceding
sentence shall serve as each Third Point Designee’s formal
resignation delivered to the Company and that no additional
agreement, notice or action shall be necessary to immediately
effectuate such resignations in accordance therewith. The
Holders agree that they shall not contest or seek to contest the
validity or effectiveness of such resignations.
b)
Notwithstanding any other provision of this Agreement to the
contrary, each Third Point Designee hereby irrevocably resigns as a
director of the Company, effective immediately upon the occurrence
of a Termination Event applicable to such Third Point
Designee. The parties agree and acknowledge that the
preceding sentence shall serve as each Third Point Designee’s
formal resignation delivered to the Company and that no additional
agreement, notice or action shall be necessary to immediately
effectuate such resignations in accordance therewith. The
Holders agree that they shall not contest or seek to contest the
validity or effectiveness of such Third Point Designee’s
resignation.
Section 2.03 Certain Third
Point Designee Replacements.
a)
If a Third Point Designee dies or is disabled such that he is
rendered unable to serve on the Board, or following the resignation
of a Third Point Designee resulting from a Termination Event, the
Holders shall be entitled to nominate a replacement for the vacancy
left by such death, disability or resignation of such Third Point
Designee.
b)
In the event that a Third Point Designee resigns from the Board
after the 2007 Annual Meeting and prior to the tenth day preceding
the 2008 Annual Meeting, other than as a result of the events
specified in paragraph (a) of this Section, the Holders shall be
entitled to nominate
