-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VhtDPolXigGucMfDehgcDfX85ks39Ijjgi8dpAsQKVP8IQGFr2Di6sssdL33yC1F The0dE5O6AoXZLtDlNEOOw== 0001038357-05-000229.txt : 20051214 0001038357-05-000229.hdr.sgml : 20051214 20051214140433 ACCESSION NUMBER: 0001038357-05-000229 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051209 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051214 DATE AS OF CHANGE: 20051214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PIONEER NATURAL RESOURCES CO CENTRAL INDEX KEY: 0001038357 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 752702753 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13245 FILM NUMBER: 051263428 BUSINESS ADDRESS: STREET 1: 900 WILLIAMS SQUARE WEST STREET 2: 5205 N OCONNOR BLVD CITY: IRVING STATE: TX ZIP: 75039 BUSINESS PHONE: 9724449001 MAIL ADDRESS: STREET 1: 900 WILLIAMS SQUARE WEST STREET 2: 5205 N OCONNOR BLVD CITY: IRVING STATE: TX ZIP: 75039 8-K 1 dec98k.txt PIONEER 12/9/05 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 9, 2005 Pioneer Natural Resources Company ------------------------------------------------------ (Exact name of Registrant as specified in its charter) Delaware 1-13245 75-2702753 - ---------------------------- ------------ ------------------- (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification No.) 5205 N. O'Connor Blvd., Suite 900, Irving, Texas 75039 - ------------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) (972) 444-9001 --------------------------------------------------- Registrant's telephone number, including area code) Not applicable ----------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) PIONEER NATURAL RESOURCES COMPANY TABLE OF CONTENTS Page Item 1.01. Entry into a Material Definitive Agreement................ 3 Item 9.01. Financial Statements and Exhibits......................... 4 (d) Exhibits............................................ 4 Signature............................................................. 5 Exhibit Index......................................................... 6 2 PIONEER NATURAL RESOURCES COMPANY Item 1.01. Entry into a Material Definitive Agreement Amended and Restated Employee Stock Purchase Plan. On December 9, 2005, Pioneer Natural Resources Company (the "Company") executed an amended and restated Employee Stock Purchase Plan (the "ESPP") to incorporate prior amendments to the ESPP and make certain other changes to the Plan, including the shortening of the offering period from nine months to eight months. The number of shares of the Company's common stock that are subject to the ESPP and the ESPP termination date were unchanged by its amendment and restatement. The ESPP allows eligible employees to annually purchase the Company's common stock at a discounted price. Officers of the Company and its subsidiaries are not eligible to participate in the ESPP. Contributions to the ESPP are limited to 15 percent of an employee's pay (subject to certain ESPP limits) during the eight-month offering period. Participants in the ESPP purchase the Company's common stock at a price that is 15 percent below the fair market value (as defined in the ESPP) of the Company's common stock on either the first day or the last day of each offering period, whichever is lower. The ESPP is intended to qualify as an employee stock purchase plan under the provisions of section 423 of the Internal Revenue Code. The description of the ESPP set forth in this report is qualified in its entirety by reference to the ESPP document that is filed as an exhibit to this report and that is incorporated herein by reference. Severance Agreement with William F. Hannes. On December 12, 2005, the Company entered into a severance agreement with William F. Hannes, the Company's recently elected Executive Vice President, Worldwide Business Development. The Company may terminate the severance agreement annually beginning at the end of the initial term on September 30, 2007, but the severance agreement will continue following a potential change in control that occurs during the term of the agreement. In any event, the severance agreement terminates upon a change in control of the Company. Mr. Hannes is also a party to a change in control agreement executed prior to his election as an executive officer, which is in the same form as that currently in force with other Executive Vice Presidents of the Company. The severance agreement provides that, if the executive terminates employment for good reason or if the Company terminates the employment of the executive officer other than for cause, death, disability or normal retirement, the Company must pay the executive officer a separation payment in addition to earned salary and vested benefits. The separation payment is an amount equal to the sum of (1) one times the executive officer's base salary, (2) 18 times the monthly executive officer's cost of coverage for himself and his eligible dependents under the Company's group medical plans, and (3) one-twelfth of the executive officer's base salary if the date of termination is less than 30 days following the notice of termination and the executive officer's employment is terminated by the Company. The severance agreement also contains non-solicitation and non-interference covenants by the executive in favor of the Company. Good reason for an executive to terminate employment generally includes a demotion or significant pay reduction. Definitions of "good reason," "cause," "potential change in control," "change in control" and certain other terms used in this report are set forth in the form of Severance Agreement filed as an exhibit to this report. The description of the severance agreement set forth in this report is qualified in its entirety by reference to the severance agreement that is filed as an exhibit to this report and that is incorporated herein by reference. 3 PIONEER NATURAL RESOURCES COMPANY Item 9.01. Financial Statements and Exhibits (d) Exhibits 10.1 Pioneer Natural Resources Company Employee Stock Purchase Plan, as amended and restated effective December 9, 2005. 10.2 Severance Agreement dated December 12, 2005, between the Company and William F. Hannes. 4 PIONEER NATURAL RESOURCES COMPANY S I G N A T U R E Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PIONEER NATURAL RESOURCES COMPANY Date: December 14, 2005 By: /s/ Darin G. Holderness ------------------------------------ Darin G. Holderness Vice President and Chief Accounting Officer 5 PIONEER NATURAL RESOURCES COMPANY EXHIBIT INDEX Exhibit No. Description 10.1(a) Pioneer Natural Resources Company Employee Stock Purchase Plan, as amended and restated effective December 9, 2005. 10.2(a) Severance Agreement dated December 12, 2005, between the Company and William F. Hannes. - ------------- (a) filed herewith 6 EX-10 2 dec98kx101.txt PIONEER 12/9/05 FORM 8-K EXH. 10.1 EXHIBIT 10.1 PIONEER NATURAL RESOURCES COMPANY EMPLOYEE STOCK PURCHASE PLAN (Amended and Restated Effective as of December 9, 2005) PIONEER NATURAL RESOURCES COMPANY EMPLOYEE STOCK PURCHASE PLAN (Amended and Restated Effective as of December 9, 2005) This Amended and Restated PIONEER NATURAL RESOURCES COMPANY EMPLOYEE STOCK PURCHASE PLAN (this "Plan") is made and executed by Pioneer Natural Resources Company, a Delaware Corporation (the "Company"). W I T N E S S E T H T H A T: WHEREAS the Pioneer Natural Resources Company Employee Stock Purchase Plan was Adopted by the Board of Directors of the Company (the "Board') and approved by the stockholders of the Company on August 7, 1997; and WHEREAS, the Company now desires to restate the Pioneer Natural Resources Company Employee Stock Purchase Plan to incorporate prior amendments and make certain other changes; NOW, THEREFORE, in consideration of the premises and pursuant to the authority reserved thereunder, the Pioneer Natural Resources Company Employee Stock Purchase Plan is hereby amended by restatement in its entirety, effective as of December 9, 2005, to read as follows: 1. Purpose. The purpose of the Plan is to provide eligible employees with an incentive to advance the interests of the Company by affording an opportunity to purchase stock of the Company at a favorable price. 2. Administration Of The Plan. The Plan shall be administered by a committee of, and appointed by, the Board (the "Committee"). Subject to the provisions of the Plan, the Committee shall interpret and construe the Plan and all options granted under the Plan; shall make such rules as it deems necessary for the proper administration of the Plan; shall make all other determinations necessary or advisable for the administration of the Plan, including the determination of eligibility to participate in the Plan and the amount of a Participant's (as defined in subparagraph 6(b)) option under the Plan; and shall correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any option granted under the Plan in the manner and to the extent that the Committee deems desirable to carry the Plan or any option into effect. The Committee shall, in its sole discretion exercised in good faith, make such decisions or determinations and take such actions as it deems appropriate; and all such decisions, determinations and actions taken or made by the Committee pursuant to this and the other paragraphs of the Plan shall be conclusive on all parties. The Committee shall not be liable for any decision, determination or action taken in good faith in connection with the administration of the Plan. -2- 3. Participating Companies. Each present and future parent or subsidiary corporation of the Company (within the meaning of Sections 424(e) and (f) of the Internal Revenue Code of 1986, as amended (the "Code")) that is eligible by law to participate in the Plan shall be a "Participating Company" during the period that such corporation is such a parent or subsidiary corporation; provided, however, that the Committee may at any time and from time to time, in its sole discretion, terminate a Participating Company's Plan participation; provided, further however, that any foreign parent or subsidiary corporation of the Company shall be eligible to participate in the Plan only upon approval of the Board or the Committee. Any Participating Company may, by appropriate action of its board of directors, terminate its participation in the Plan. Transfer of employment among the Company and Participating Companies (and among any other parent or subsidiary corporation of the Company) shall not be considered a termination of employment hereunder. 4. Eligibility. All employees, other than officers, of the Company and the Participating Companies who have been employed by the Company or any Participating Company (including any predecessor company) for at least six (6) months (including any authorized leave of absence meeting the requirements of Treasury Regulation ss. 1.421 -7(h)(2)) as of the applicable date of grant (defined below) and who are customarily employed at least 20 hours per week and at least five (5) months per year shall be eligible to participate in the Plan; provided, however, that no option shall be granted to an employee if such employee, immediately after the option is granted, owns stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Company or of its parent or subsidiary corporation (within the meaning of Sections 423(b)(3) and 424(d) of the Code) ("Eligible Employee"). 5. Stock Subject To the Plan. Subject to the provisions of paragraph 12 (relating to adjustment upon changes in stock), the aggregate number of shares which may be sold pursuant to options granted under the Plan shall not exceed 750,000 shares of the authorized common stock, par value $.01 per share, of the Company (the "Stock"), which shares may be unissued shares, reacquired shares, or shares bought on the market for purposes of the Plan. Should any option granted under the Plan expire or terminate prior to its exercise in full, the shares theretofore subject to such option may again be subject to an option granted under the Plan. Any shares which are not subject to outstanding options upon the termination of the Plan shall cease to be subject to the Plan. 6. Grant of Options. (a) General Statement; "Date of Grant;" "Option Period;" "Date Of Exercise." Upon the effective date of the Plan and continuing while the Plan remains in force, the Company shall offer options under the Plan to all Eligible Employees to purchase shares of Stock. Except as otherwise determined by the Committee, these options shall be granted on January 1, 1998, and, thereafter, on the first day of January of each subsequent year (each of which dates is herein referred to as a "date of grant"). The term of each option granted shall be for a period of eight (8) months beginning on date of grant and ending on August 31 (each such 8-month period is herein referred to as an "option period"). The last day of each option -3- period is herein referred to as a "date of exercise." The number of shares subject to each option shall be the quotient of the sum of the payroll deductions withheld on behalf of each Participant in accordance with subparagraph 6(b), the payments made by such Participant pursuant to subparagraph 6(f) during the option period and any amount carried forward from the preceding option period pursuant to subparagraph 7(a), divided by the "option price" (defined in subparagraph 7(b) of the Stock, excluding all fractions; provided, however, that the maximum number of shares that may be subject to any option may not exceed one thousand (1000) (subject to adjustment as provided in paragraph 12). (b) Election to Participate; Payroll Deduction Authorization. Except as provided in subparagraph 6(f), an Eligible Employee may participate in the Plan only by means of payroll deduction. Except as provided in' subparagraph 6(g), each Eligible Employee who elects to participate in the Plan (each such participating Eligible Employee being a "Participant") shall deliver to the Company, within the time period prescribed by the Committee, a written payroll deduction authorization on a form prepared by the Committee whereby he gives notice of his election to participate in the Plan as of the next following date of grant, and whereby he designates an integral percentage or specific amount of his "eligible compensation" (as defined in subparagraph 6(d)) to be deducted from his compensation for each pay period and credited to a book entry account established in his name. The designated percentage or specific amount may not result in a deduction during any payroll period of an amount less than $20.00. The designated percentage or specific amount may not exceed either of the following: (i) 15% of the amount of eligible compensation from which the deduction is made; or (ii) an amount which will result in noncompliance with the $25,000 limitation stated in subparagraph 6(e). (c) Changes in Payroll Authorization. Except as provided in subparagraph 8(a), the payroll deduction authorization referred to in subparagraph 6(b) may not be changed during the option period. (d) "Eligible Compensation" Defined. The term "eligible compensation" means the gross (before taxes are withheld) total of all wages, salaries, commissions and bonuses received during the option period, except that such term shall include elective contributions made on an employee's behalf by the Company or a Participating Company that are not includable in income under Section 125 or Section 402(e)(3) of the Code. Notwithstanding the foregoing, "eligible compensation" shall not include (i) employer contributions to or payments from any deferred compensation program, whether such program is qualified under Section 401(a) of the Code (other than amounts considered as employer contributions under Section 402(e)(3) of the Code) or nonqualified, (ii) amounts realized from the receipt or exercise of a stock option that is not an incentive stock option within the meaning of Section 422 of the Code, (iii) amounts realized at the time property described in Section 83 of the Code is freely transferable or no longer subject to a substantial risk of forfeiture, (iv) amounts realized as a result of an election described in Section 83(b) of the Code, and (v) any amount realized as a result of a disqualifying disposition within the meaning of Section 421(a) of the Code. -4- (e) $25,000 Limitation. No Eligible Employee shall be granted an option under the Plan to the extent such grant would permit him to purchase Stock under the Plan and under all other employee stock purchase plans of the Company and its parent and subsidiary corporations (as such terms are defined in Section 424(e) and (f) of the Code) to accrue at a rate which exceeds $25,000 of the Fair Market Value of Stock (determined at the time the option is granted) for each calendar year in which any such option granted to such employee is outstanding at any time (within the meaning of Section 423(b)(8) of the Code). (f) Leaves of Absence. During a paid leave of absence approved by the Company and meeting the requirements of Treasury Regulation ss. 1.421-7(h)(2), a Participant's elected payroll deductions shall continue. If a Participant takes an unpaid leave of absence that is approved by the Company or a Participating Company and meets the requirements of Treasury Regulation ss. 1.421-7(h)(2), then such Participant may continue participation in the Plan by cash payments to the Company on his normal pay days equal to the reduction in his payroll deductions caused by his leave. If a Participant on such leave fails to make such payments, or if a Participant takes a leave of absence that is not described in the preceding provisions of this subparagraph 6(f), then the Committee shall determine whether the Participant shall be considered to have withdrawn from the Plan pursuant to the provisions of paragraph 8 hereof or whether the Participant's payroll deductions shall remain subject to the Plan and used to exercise options on the next following date of exercise. (g) Continuing Election. Unless a Participant is notified to the contrary, a Participant (i) who has elected to participate in the Plan pursuant to subparagraph 6(b) as of a date of grant and (ii) who takes no action to change or revoke such election as of the next following date of grant and/or as of any subsequent date of grant prior to any such respective date of grant, shall be deemed to have made the same election, including the same attendant payroll deduction authorization, for such next following and/or subsequent date(s) of grant as was in effect for the date of grant for which he made such election to participate. A Participant who wants to discontinue participation in the Plan for a subsequent option period shall deliver to the Company a notice of withdrawal pursuant to paragraph 8, at least thirty (30) days prior to the beginning of the option period. 7. Exercise of Options. (a) General Statement. Each Eligible Employee who is a Participant in the Plan, automatically and without any act on his part, shall be deemed to have exercised his option on each date of exercise to the extent that the cash balance then in his account under the Plan is sufficient to purchase at the "option price" (as defined in subparagraph 7(b)) whole shares of Stock. Any balance remaining in his account after payment of the purchase price of those whole shares may, at the discretion of the Company, either be refunded to him as soon as practicable after each date of exercise, or carried forward and used towards the purchase of whole shares in the next following option period. -5- (b) "Option Price" Defined. The option price per share of Stock to be paid by each Eligible Employee on each exercise of his option shall be an amount equal to the lesser of 85% of the Fair Market Value of the Stock on the date of exercise or on the date of grant. For all purposes under the Plan, the "Fair Market Value" of a share of Stock means, for a particular day: (i) If shares of Stock of the same class are listed or admitted to unlisted trading privileges on any national or regional securities exchange at the date of determining the Fair Market Value, then the last reported sale price, regular way, on the composite tape of that exchange on that business day or, if no such sale takes place on that business day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to unlisted trading privileges on that securities exchange or, if no such closing prices are available for that day, the last reported sale price, regular way, on the composite tape of that exchange on the last business day before the date in question; or (ii) If shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and if sales prices for shares of Stock of the same class in the over-the-counter market are reported bythe National Association of Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ") National Market System (or a similar system then in use) at the date of determining the Fair Market Value, then the last reported sales price so reported on that business day or, if no such sale takes place on that business day, the average of the high bid and low asked prices so reported or, if no such prices are available for that day, the last reported sale price so reported on the last business day before the date in question; or (iii) If shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and sales prices for shares of Stock of the same class are not reported by the NASDAQ National Market System (or a similar system then in use) as provided in subparagraph (ii), and if bid and asked prices for shares of Stock of the same class in the over-the-counter market are reported by NASDAQ (or, if not so reported, by the National Quotation Bureau Incorporated) at the date of determining the Fair Market Value, then the average of the high bid and low asked prices on that business day or, if no such prices are available for that day, the average of the high bid and low asked prices on the last business day before the date in question; or (iv) If shares of Stock of the same class are not listed or admitted to unlisted trading privileges as provided in subparagraph (i) and sales prices or bid and asked prices therefor are not reported by NASDAQ (or the National Quotation Bureau Incorporated) as provided in subparagraph (ii) or subparagraph (iii) at the date of determining the Fair Market Value, then the value determined in good faith by the Committee, which determination shall be conclusive for all purposes; or -6- (v) If shares of Stock of the same class are listed or admitted to unlisted trading privileges as provided in subparagraph (i) or sales prices or bid and asked prices therefor are reported by NASDAQ (or the National Quotation Bureau Incorporated) as provided in subparagraph (ii) or subparagraph (iii) at the date of determining the Fair Market Value, but the volume of trading is so low that the Board of Directors determines in good faith that such prices are not indicative of the fair value of the Stock, then the value determined in good faith by the Committee, which determination shall be conclusive for all purposes notwithstanding the provisions of subparagraphs (i), (ii) or (iii). (c) Delivery of Stock. As soon as practicable after each date of exercise, the Company shall deposit into each Participant's brokerage account maintained for the purposes of holding Stock under this Plan and other employee benefit plans of the Company, the number of whole shares of Stock purchased by such Participant upon exercise of his or her options granted hereunder. Except as provided in the immediately following sentence, shares of Stock purchased upon exercise of options granted hereunder shall be uncertificated and evidenced by book entry into the brokerage accounts described above. Upon written request made by any Participant to the Company, the Company shall arrange, as soon as practicable after receipt of any such request, to deliver to such Participant a certificate representing any or all such uncertificated shares of Stock. In the event the Company is required to obtain from any commission or agency authority to issue any shares of Stock hereunder, the Company shall seek to obtain such authority. Inability of the Company to obtain from any such commission or agency authority which counsel for the Company deems necessary for the lawful issuance of any shares of Stock shall relieve the Company from liability to any Participant in the Plan except to return to the Participant the amount of the balance in the Participant's account. The Company may cause any Stock certificates issued in connection with the exercise of options under the Plan to bear such legend or legends, and the Company may take such other actions, as it deems appropriate in order to reflect the provisions of this subparagraph 7(c) and to assure compliance with applicable securities laws. Neither the Company nor the Committee shall have any liability with respect to a delay in the delivery of Stock or a certificate pursuant to this subparagraph 7(c). 8. Withdrawal from the Plan. (a) General Statement. Any Participant may withdraw in whole from the Plan at any time prior to 30 days before the exercise date relating to a particular option period. Partial withdrawals shall not be permitted. A Participant who wishes to withdraw from the Plan must timely deliver to the Company a notice of withdrawal on a form prepared by the Committee. The Company, promptly following the time when the notice of withdrawal is delivered, shall refund to the Participant the amount of the cash balance in his account under the Plan; and thereupon, automatically and without any further act on his part, his payroll deduction authorization and his interest in unexercised options under the Plan shall terminate. -7- (b) Eligibility Following Withdrawal. A Participant who withdraws from the Plan shall not be eligible to participate in the Plan during the then current option period (if any), but shall be eligible to participate again in the Plan in a subsequent option period (provided that he is otherwise an Eligible Employee at such time). 9. Termination of Employment. If the employment of a Participant terminates for any reason whatsoever, his participation in the Plan automatically and without any act on his part shall terminate as of the date of the termination of his employment. The Company shall refund to him the amount of the cash balance in his account under the Plan, and thereupon his interest in unexercised options under the Plan shall terminate. 10. Restriction Upon Assignment of Option. An option granted under the Plan shall not be pledged, assigned or transferred otherwise than by will or the laws of descent and distribution. Each option shall be exercisable, only by the Participant to whom granted during such Participant's lifetime. The Company shall not recognize and shall be under no duty to recognize any assignment or purported assignment by a Participant of his option or of any rights under his option, and any such attempt may be treated by the Company as an election to withdraw from the Plan the notice for which has been delivered to the Company. 11. No Rights of Stockholder Until Stock Issued. With respect to shares of Stock subject to an option, a Participant shall not be deemed to be a stockholder, and he shall not have any of the rights or privileges of a stockholder, until, (a) shares of Stock are deposited into his brokerage account, as described in subparagraph 7(c) hereof, or (b) a certificate for shares of Stock is issued on his behalf, whichever occurs first." 12. Adjustments Upon Changes in Stock. (a) Adjustments Upon Changes in Capitalization. In the event of any change in the number or kind of outstanding shares of Stock subject to options hereunder effected without receipt of consideration therefor by the Company, by reason of a stock dividend, stock split, combination, exchange of shares or other recapitalization, merger, or otherwise, in which the Company is the surviving corporation, an appropriate and proportionate adjustment shall be made in the number or kind of shares as to which options are or may be granted hereunder. A corresponding adjustment changing the number or kind of shares allocated to unexercised options or portions thereof, which shall have been granted prior to any such change, shall likewise be made. Any such adjustment, however, in the outstanding options shall be made without change in the total price applicable to the unexercised portion of the option but with a corresponding adjustment, if appropriate, in the price for each share of Stock covered by the option. In the event of a dispute concerning such adjustment, the decision of the Committee shall be conclusive. The number of shares subject to any option granted hereunder shall be automatically reduced by any fraction included therein which results from any adjustment made pursuant to this Section 12(a). (b) Adjustments Upon Change of Control. Further, in the event of a Change of Control (as defined below) of the Company, the Committee shall, at -8- its option, (i) substitute for the shares of the Company subject to the unexercised portions of such outstanding options an appropriate number of shares of each class of stock or other securities of the reorganized or merged or consolidated corporation which were distributed to the stockholders of the Company with respect to the same class of shares of the Company (or, as appropriate, in the case of an acquisition of the Company by another corporation, substitute the shares of the acquiring corporation for the shares of the Company); or (ii) cancel all such options as of the effective date of any such transaction by giving notice to each holder thereof or his personal representative of its intention to do so and by permitting the holders thereof to exercise of all such outstanding options, without regard to any other provisions of the Plan, during the 30-day period immediately preceding such effective date; or (iii) allow the options granted under the Plan to remain outstanding without any modifications or amendments. (c) Change of Control Defined. For purposes of subparagraph 12(b) of the Plan, a "Change of Control" shall have occurred if (and only if) a "Change in Control" occurs under the Company's Long-Term Incentive Plan dated August 7, 1997, as amended, or under any successor plan to such Long-Term Incentive Plan, as any such plan may from time to time be amended. 13. Use of Funds; No Interest Paid. All funds received or held by the Company under the Plan shall be included in the general funds of the Company free of any trust or other restriction, and may be used for any corporate purpose. No interest shall be paid to any Participant or credited to his account under the Plan. 14. Term of the Plan. The Plan shall be effective as of January 1, 1998. If not sooner terminated under the provisions of paragraph 15, the Plan shall terminate upon and no further options shall be granted after December 31, 2007. 15. Amendment or Termination of the Plan. The Board in its discretion may terminate the Plan at any time with respect to any shares for which options have not theretofore been granted. The Board shall have the right to alter or amend the Plan or any part thereof from time to time; provided, that no change in any option theretofore granted may be made which would impair the rights of the Participant without the consent of such Participant; and provided, further, that the Board may not make any alteration or amendment which would materially increase the benefits accruing to Participants under the Plan, increase the aggregate number of shares which may be issued pursuant to the provisions of the Plan (other than as a result of the anti-dilution provisions of the Plan), change the class of individuals eligible to receive options under the Plan, extend the term of the Plan, cause options issued under the Plan to fail to meet the requirements for employee stock purchase plans as defined in Section 423 of the Code, or otherwise modify the requirements as to eligibility for participation in the Plan without the approval of the stockholders of the Company. 16. Securities Laws. The Company shall not be obligated to issue any Stock pursuant to any option granted under the Plan at any time when the shares covered by such option have not been registered under the Securities Act of 1933, as amended, and such other state and federal laws, rules or regulations as the Company or the Committee deems applicable and, in the opinion of legal -9- counsel for the Company, there is no exemption from the registration requirements of such laws, rules or regulations available for the issuance and sale of such shares. Further, all Stock acquired pursuant to the Plan shall be subject to the Company's policy or policies, if any, concerning compliance with securities laws and regulations, as the same may be amended from time to time. 17. No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to prevent the Company or any subsidiary from taking any corporate action which is deemed by the Company or such subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any award made under the Plan. No employee, beneficiary or other person shall have any claim against the Company or any subsidiary as a result of any such action. EXECUTED this 9th day of December, 2005. PIONEER NATURAL RESOURCES COMPANY By: /s/ Mark Berg --------------------------------------- Mark Berg Executive Vice President and General Counsel -10- EX-10 3 dec98kx102.txt PIONEER 12/9/05 FORM 8-K EXH. 10.2 EXHIBIT 10.2 PIONEER NATURAL RESOURCES COMPANY SEVERANCE AGREEMENT This Severance Agreement ("Agreement") is entered into, as of December 12, 2005, among Pioneer Natural Resources Company, a Delaware corporation ("Parent"), Pioneer Natural Resources USA, Inc., a Delaware corporation that is a wholly-owned subsidiary of Parent ("Employer") and William Hannes ("Employee"). As used henceforth in this Agreement, the term "Company" shall be deemed to include Parent and its direct or indirect majority-owned subsidiaries. Recitals Parent and Employer acknowledge that Employee possesses skills and knowledge instrumental to the successful conduct of the Company's business. Parent and Employer are willing to enter into this Agreement with Employee in order to better ensure themselves of access to the continued services of Employee. NOW, THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows: 1. Term. The term of this Agreement shall commence on the date indicated above (the "Effective Date") and end on September 30, 2007. Thereafter, on the date on which the term of this Agreement (as it may be extended from time to time under this paragraph 1) would otherwise expire, so long as Employee is still an employee of the Company on such date, such term will be automatically extended for 12 months, unless Parent shall have provided written notice to Employee at least 6 months before the date that the term would otherwise expire that it does not want the term to be extended. Parent may deliver a conditional notice of non-renewal that will be effective only if Employee does not agree, within the time period specified by Parent, to any amendment or modification of this Agreement that Parent shall request be executed as a condition to allowing the term hereof to be extended. Notwithstanding the foregoing, so long as Employee is in the employ of the Company on the date on which a Potential Change in Control occurs, the term of this Agreement shall continue in effect following such Potential Change in Control until the date on which the term of any separate agreement between Parent and Employer and Employee relating to the provision of severance and other benefits after a Change in Control (the "Change in Control Agreement") expires; provided, however, that upon the occurrence of such a Change in Control, this Agreement shall terminate and such Change in Control Agreement shall govern the rights of Employee to, or obligations of Parent and Employer to provide, severance and other benefits to Employee. 2. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Obligations" shall mean any vested amounts or benefits owing to Employee under any of the Company's employee benefit plans and programs in which Employee has participated, including any compensation previously deferred by Employee (together with any accrued earnings thereon) and not yet paid. (b) "Across-the-Board Salary Reduction" shall mean a reduction in Employee's Base Salary that is a part of, and is at a level consistent with, a reduction in the base salaries paid to substantially all employees of Company who are parties to an agreement with the Company that would provide them with severance and other termination benefits in the event of an involuntary termination of employment by the Company without cause prior to the occurrence of a Change in Control. (c) "Base Salary" shall mean Employee's annualized base salary at the rate in effect at the relevant date or event as reflected in Employer's regular payroll records. (d) "Change in Control" shall mean an event that constitutes a "change in control" as defined in Parent's Long-Term Incentive Plan (the "LTIP"), as in effect on the Effective Date or as subsequently amended from time to time (except that any amendment to such definition adopted (1) on or within 180 days prior to a Change in Control or Potential Change in Control or (2) on or after a Potential Change in Control shall not be applied in determining the definition of such term under this Agreement unless such amendment is favorable to Employee). (e) "Date of Termination" shall mean (1) In the case of a termination for which a Notice of Termination is required, the date of receipt of such Notice of Termination or, if later, the date specified therein; and (2) In all other cases, the actual date on which Employee's employment terminates. (f) "Disability" shall mean Employee's physical or mental impairment or incapacity of sufficient severity such that (1) In the opinion of a qualified physician selected by Parent, after taking into account all reasonable accommodations that the Company has made or could make, Employee is unable to continue to perform Employee's duties and responsibilities as an employee of the Company; or (2) Employee's condition entitles Employee to long-term disability benefits under any employee benefit plan maintained by the Company in which Employee participates. For purposes of subparagraph (f)(1), Employee agrees to provide such access to Employee's medical records and to submit to such physical examinations or medical tests as, in the opinion of the physician selected by Parent, is reasonably necessary to make the determination required as to Employee's ability to perform Employee's duties and responsibilities. If such physician is unable to render an opinion as to Employee's ability to perform such duties and responsibilities due to Employee's failure to provide such access to any of Employee's medical records or to submit to any such examination or test (unless, in the opinion of such physician such failure is a direct result of Employee's physical or mental impairment), any failure by Employee to perform Employee's duties and responsibilities shall be deemed not to be on account of Employee's physical or mental impairment or incapacity. (g) "Earned Salary" shall mean the Base Salary earned by Employee, but unpaid, through Employee's Date of Termination. -2- (h) "Excessive Salary Reduction" shall mean (1) A reduction in Employee's Base Salary that is not an Across- the-Board Salary Reduction and that, when combined with the net effect of all prior reductions in Employee's Base Salary (other than prior reductions that were Across-the-Board Salary Reductions), results in the Base Salary then payable to Employee being less than 80% of the highest Base Salary which Employee has ever received from the Company (as reflected in Employer's regular payroll records); or (2) A reduction in Employee's Base Salary (whether or not an Across-the-Board Salary Reduction) that, when combined with the net effect of all prior reductions in Employee's Base Salary (whether or not Across-the-Board Salary Reductions), results in the Base Salary payable to Employee being less than 65% of the highest Base Salary which Employee has ever received from the Company (as reflected in Employer's regular payroll records). (i) "Management Committee" shall mean the group of officers of Parent, as the same may be constituted from time to time during the term of this Agreement that is primarily responsible for establishing strategy, overall policy and the business plan for Parent, and approving all material business decisions affecting Parent. (j) "Normal Retirement Date" shall mean the date on which Employee attains age 60. (k) "Notice of Termination" shall mean a written notice given by the party effecting the termination of Employee's employment which shall (1) Indicate the specific termination provision in this Agreement relied upon; (2) Set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee's employment under the provision so indicated; and (3) If the Date of Termination is other than the date of receipt of such notice, specify the Date of Termination (which date shall be not more than 30 days after the giving of such notice). The failure by Employee or Parent or Employer to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Termination for Good Reason or Termination for Cause shall not waive any right of such party hereunder or preclude such party from asserting such fact or circumstance in enforcing such party's rights hereunder. In the event that a Potential Change in Control has occurred, any Notice of Termination by Parent or Employer intended to effect a Termination for Cause must be given with 45 days of Parent or Employer's having actual knowledge of the events giving rise to Termination for Cause. (l) "Potential Change in Control" shall mean the occurrence of any of the following events: -3- (1) Any person or group shall have announced publicly an intention to effect a Change in Control, or commenced any action (such as the commencement of a tender offer for Parent's common stock or the solicitation of proxies for the election of any of Parent's directors) that, if successful, could reasonably be expected to result in the occurrence of a Change in Control; (2) Parent enters into an agreement the consummation of which would constitute a Change in Control; or (3) Any other event occurs which the Board of Directors of Parent (the "Board") declares to be a Potential Change in Control. (m) "Separation Payment" shall mean any lump sum payment in excess of Earned Salary and Accrued Obligations payable to Employee under this Agreement. (n) "Termination for Cause" shall mean a termination of Employee's employment by the Company following the occurrence of any of the following: (1) Employee's continued failure to substantially perform Employee's duties and responsibilities (other than any such failure resulting from Employee's physical or mental impairment or incapacity); (2) Employee's engaging in fraud or other misconduct that is injurious to the Company, monetarily or otherwise; (3) Employee's engaging in insubordination; (4) Employee's violation of, or failure to comply with, any material written policy, guideline, rule or regulation of the Company; (5) Employee's conviction of (or plea of guilty or nolo contendere to a charge of) any felony, or any crime or misdemeanor involving moral turpitude or financial misconduct; (6) Employee's failure, following a written request from Parent, reasonably to cooperate (including, without limitation, the refusal by Employee to be interviewed or deposed, or to give testimony) in connection with any investigation or proceeding, whether internal or external (including, without limitation, by any governmental or quasi- governmental agency) into the business practices or operations of the Company; or (7) A material violation by Employee of the provisions of paragraphs 5 or 6 of this Agreement. (o) "Termination for Good Reason" shall mean a termination of Employee's employment by Employee within 30 days after (1) the earlier of receipt by Employee of (i) written notice of an Excessive Salary Reduction and (ii) Employee's first paycheck that reflects an Excessive Salary Reduction; or -4- (2) if Employee is an officer of Parent or Employer, the demotion of Employee to either a non-officer position or an officer position with such entity that is junior to the officer position held by Employee immediately prior to such demotion, provided, however, that if Employee is a member of the Management Committee at any time during this Agreement, removal from, or exclusion from regular participation as a member of, the Management Committee shall be deemed to be a demotion to a junior officer position on the date Employee receives written notice from the Company of such removal or exclusion or, if no such notice is given, the date Employee has actual knowledge of such removal or exclusion. 3. Termination of Employment, Relocation. (a) Right to Terminate. Nothing in this Agreement shall be construed in any way to limit the right of the Company to terminate Employee's employment, with or without cause, or for Employee to terminate Employee's employment with the Company, with or without reason; provided, however, that the Company and Employee must nonetheless comply with any duty or obligation such party has at law or under any agreement (including paragraphs 5 and 6 of this Agreement) between the parties. (b) Termination due to Death or Disability. Employee's employment with the Company shall be terminated upon Employee's death. By written notice to the other party, either the Company or Employee may terminate Employee's employment due to Disability. (c) Relocation. Nothing in this Agreement shall be construed in any way to limit the right of the Company to require Employee to perform Employee's services on behalf of the Company at a different location or locations than the one at which Employee was performing Employee's services immediately prior to the date hereof, or to require the Company to pay or provide any benefits to Employee on account of such relocation, other than to the extent benefits would be payable to Employee under the Company's applicable relocation policy as in effect at the relevant time. 4. Amounts Payable Upon Termination of Employment. The following provisions shall apply to any termination of Employee's employment: (a) Death, Disability or Normal Retirement. In the event that Employee's employment terminates due to Employee's death or Disability (regardless of whether such Disability termination is initiated by Employee or the Company), or due to the voluntary retirement by Employee (which is not a Termination for Good Reason) at or after attaining Employee's Normal Retirement Date, Parent or Employer shall pay Employee (or, if applicable, Employee's beneficiaries or legal representative(s)): (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee's Date of Termination; (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice; and (3) A Separation Payment in an amount equal to Employee's Base Salary, which shall be paid, in all cases other than voluntary retirement on or after Normal Retirement Date, within 10 days -5- following Employee's Date of Termination, and, in the case of voluntary retirement on or after Normal Retirement Date, 6 months and 1 day after Employee's Date of Termination. (b) Cause and Voluntary Termination. If Employee's employment is terminated by the Company in a Termination for Cause or voluntarily by Employee (other than in a Termination for Good Reason or at or after Normal Retirement Date), Parent or Employer shall pay Employee (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee's Date of Termination; and (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice. (c) Termination for Good Reason or Not for Cause. If Employee terminates Employee's employment in a Termination for Good Reason, or the Company terminates Employee's employment for any reason other than those described in paragraphs 4(a) and (b) above, Parent or Employer shall pay or shall provide to Employee the following benefits and compensation: (1) The Earned Salary, as soon as practicable (but not more than 10 days) following Employee's Date of Termination; (2) The Accrued Obligations, in accordance with applicable law and the provisions of any applicable plan, program, policy or practice; (3) A Separation Payment, as soon as practicable (but not more than 10 days) following the expiration of the revocation period stated in the General Release Agreement described in subparagraph 4(d) below, in an amount equal to the sum of (i) The Employee's Base Salary; (ii) The product of (A) the monthly amount that, on the Date of Termination, Employee would be required to pay to continue coverage under the Employer's group health plan(s) (as defined by the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA") for Employee and Employee's eligible dependents, if any, covered thereunder immediately prior to the Date of Termination and (B) 18; provided, however, that if Employee is covered under group health plan(s) not subject to COBRA, instead of including this amount as part of the Separation Payment, the Company shall either, at its election, provide Employee and Employee's covered dependents continued coverage under such medical plan, at its expense, for a number of months equal to the number specified in this subparagraph (c)(3)(ii)(B) or include in the Separation Payment an amount equal to the value of such continued coverage. For the avoidance of doubt, such payment shall not in any way alter, modify or affect Employee's right to (and the conditions upon which, and the period during which, -6- Employee may elect to) continue coverage for Employee and Employee's eligible dependents under COBRA ; and (iii) If the termination of employment is by the Company and if the Date of Termination is less than 30 days after the date Notice of Termination is given, an amount equal to 1/12 (one twelfth) of Employee's Base Salary, which amount shall be paid in cash on the Date of Termination; and (4) Any additional rights that may be afforded to Employee in accordance with the terms of the LTIP with respect to awards made to Employee thereunder which are not vested as of such Date of Termination. (d) Separation Payment Contingent on Release. Any Separation Payment payable to Employee under subparagraph 4(c) shall be subject to, and contingent upon, Employee's execution and non-revocation of a General Release Agreement in favor of the Company in substantially the form and substance as the one attached hereto as Schedule A. 5. Nonpublic Information. (a) Acknowledgement of Access. Employee hereby acknowledges that, in connection with Employee's employment with the Company, Employee has received, and will continue to receive, various information regarding the Company and its business, operations and affairs. All such information, to the extent not publicly available other than as a result of a disclosure by Employee in violation of this Agreement, is referred to herein as the "Nonpublic Information." (b) Agreement to Keep Confidential. Employee hereby agrees that, from and after the Effective Date and continuing until 3 years following the Employee's Date of Termination, Employee will keep all Nonpublic Information confidential and will not, without the prior written consent of the Board or the President of Parent, disclose any Nonpublic Information in any manner whatsoever or use any Nonpublic Information other than in connection with the performance of Employee's services to the Company; provided, however, that the provisions of this subparagraph shall not prevent Employee from (1) Disclosing any Nonpublic Information to any other employee of the Company or to any representative or agent of the Company (such as an independent accountant, engineer, attorney or financial advisor) when such disclosure is reasonably necessary or appropriate (in Employee's judgment) in connection with the performance by Employee of Employee's duties and responsibilities; (2) Disclosing any Nonpublic Information as required by applicable law, rule, regulation or legal process (but only after compliance with the provisions of subparagraph (c) of this paragraph); and (3) Disclosing any information about this Agreement and Employee's other compensation arrangement to Employee's spouse, financial advisors or attorneys, or to enforce any of Employee's rights under this Agreement. -7- (c) Commitment to Seek Protective Order. If Employee is requested pursuant to, or required by, applicable law, rule, regulation or legal process to disclose any Nonpublic Information, Employee will notify Parent promptly so that the Company may seek a protective order or other appropriate remedy or, in Parent's sole discretion, waive compliance with the terms of this subparagraph, and Employee will fully cooperate in any attempt by the Company to obtain any such protective order or other remedy. If no such protective order or other remedy is obtained, or if Parent waives compliance with the terms of this subparagraph, Employee will furnish or disclose only that portion of the Nonpublic Information as is legally required and will exercise all reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Nonpublic Information that is so disclosed. 6. Non-Solicitation and Non-Interference. (a) Non-Solicitation of Employees. During the period of Employee's employment with the Company (the "Employment Period") and during the 2 year period following Employee's Date of Termination (the "Restriction Period"), Employee shall not directly or indirectly induce any employee of the Company to terminate employment with such entity, and shall not directly or indirectly, either individually or as owner, agent, employee, consultant or otherwise, employ or offer employment to any person who is or was employed by the Company unless such person shall have ceased to be employed by the Company for a period of at least 6 months. (b) Non-Interference with Business Relationships. During the Employment Period and the Restriction Period, Employee shall not directly or indirectly take any actions which can reasonably be expected to, or are intended to, disrupt or interfere with in any significant way any existing relationship that the Company has with any third party. (c) No Disparaging Comments. Except to the extent otherwise required or compelled at law or under subpoena, during the Employment Period and the Restriction Period, Employee shall refrain from making any public derogatory or disparaging comment concerning the Company or any of the current or former officers, directors or employees of the Company. Notwithstanding the immediately preceding sentence, nothing herein shall be construed to preclude Employee from enforcing any rights or claims Employee may have against the Company (or to defend against any claims by the Company) arising under this Agreement. (d) Company Property. Promptly following Employee's Date of Termination, Employee shall return to the Company all property of the Company, and all copies thereof in Employee's possession or under Employee's control. 7. Miscellaneous Provisions. (a) No Mitigation, No Offset. Employee shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and the amount of any payment provided for in this Agreement shall not be reduced by any compensation earned by Employee as the result of employment by another employer after the Date of Termination or otherwise. Except as provided in subparagraph 4(d), Parent's or Employer's obligation to make the payments provided for -8- in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against Employee or others whether by reason of the subsequent employment of Employee or otherwise. (b) Arbitration. Except to the extent provided in paragraph 7(d), any dispute or controversy arising under or in connection with this Agreement shall be resolved by binding arbitration. The arbitration shall be held in Dallas, Texas and except to the extent inconsistent with this Agreement, shall be conducted in accordance with the Expedited Employment Arbitration Rules of the American Arbitration Association then in effect at the time of the arbitration, and otherwise in accordance with principles which would be applied by a court of law or equity. The arbitrator shall be acceptable to both Parent and Employee. If the parties cannot agree on an acceptable arbitrator, the dispute shall be heard by a panel of three arbitrators, one appointed by each of the parties and the third appointed by the other two arbitrators. The arbitrator may award pre-judgment interest on any amount found to be due under this Agreement at a rate not in excess of the rate that would be payable with respect to judgments rendered in a Texas state court. (c) Attorney Fees. All legal fees and other costs incurred by Employee in connection with the resolution of any dispute or controversy under or in connection with this Agreement shall be reimbursed by the Company to Employee if such dispute or controversy is resolved in favor of Employee. The Company shall be responsible for, and shall pay, all legal fees and other costs incurred by the Company in connection with the resolution of any dispute or controversy under or in connection with this Agreement, regardless of whether such dispute or controversy is resolved in favor of the Company or Employee. (d) Equitable Relief Available. Employee acknowledges that remedies at law may be inadequate to protect the Company against any actual or threatened breach by Employee of the provisions of paragraphs 5 or 6. Accordingly, without prejudice to any other rights or remedies otherwise available to the Company, Employee agrees that the Company shall have the right to equitable and injunctive relief (without requirement to post any bond) to prevent any breach of the provisions of paragraphs 5 or 6 (without any requirement to post any bond), as well as to such damages or other relief as may be available to the Company by reason of any such breach that does occur. (e) Not A Contract of Employment. Employee acknowledges that that this Agreement is not an "employment agreement" or "employment contract" (written or otherwise), as either term is used or defined in, or contemplated by or under (1) Parent's LTIP; (2) Any other plan or agreement to which the Company is a party; or (3) Applicable statutory, common or case law. (f) Notices. Any Notice of Termination or other communication called for by the terms of this Agreement shall be in writing and either delivered personally or by registered or certified mail (postage prepaid and return -9- receipt requested) and shall be deemed given when received at the following addresses (or at such other address for a party as shall be specified by like notice): (1) If to Parent, Employer or the Company, 5205 North O'Connor Boulevard, Suite 900, Irving, Texas 75039, Attention: General Counsel; (2) If to Employee, the address of Employee set forth below Employee's signature on the signature page of this Agreement. (g) Assignment. Employer may assign its duties and obligations hereunder to any other direct or indirect, majority-owned subsidiary of Parent, but shall remain secondarily liable for the performance of this Agreement by Parent and/or any such assignee. Except pursuant to the immediately preceding sentence or an assumption by a successor described in subparagraph (h) of this paragraph, the rights and obligations of Parent and Employer pursuant to this Agreement may not be assigned, in whole or in part, by Parent or Employer to any other person or entity without the express written consent of Employee. The rights and obligations of Employee pursuant to this Agreement may not be assigned, in whole or in part, by Employee to any other person or entity without the express written consent of the Board. (h) Successors. Parent shall require any successor (whether direct or indirect) to all or substantially all of the business or assets of Parent (whether by purchase of securities, merger, consolidation, sale of assets or otherwise), to expressly assume and agree to perform the obligations to be performed by the Company under this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. This Agreement shall be binding on, and shall inure to the benefit of, Parent, Employer, the Company, Employee and their respective successors, permitted assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees and legatees, as applicable. (i) Amendments and Waivers. No provision of this Agreement may be amended or otherwise modified, and no right of any party to this Agreement may be waived, unless such amendment, modification or waiver is agreed to in a written instrument signed by Employee and Company. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. (j) Complete Agreement. This Agreement replaces and supersedes all prior agreements, including, but not limited to, the Severance Agreement between Parent and Employee, as in effect immediately prior to the date hereof, among the parties with respect to payments to be made to Employee upon the termination of Employee's employment prior to a Change in Control, and the provisions of this Agreement constitute the complete understanding and agreement among the parties with respect to such subject matter. Nothing in this subparagraph (j) is intended to, or shall be construed to (1) supercede the Change in Control Agreement or (2) limit Employee's rights under the LTIP or any other Company plan, program, policy or practice (other than any plan, program, policy or practice primarily providing severance or other termination benefits) generally applicable to similarly situated employees. -10- (k) 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. (l) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same agreement. (m) Construction. The captions of the paragraphs, subparagraphs and sections of this Agreement have been inserted as a matter of convenience of reference only and shall not affect the meaning or construction of any of the terms or provisions of this Agreement. Unless otherwise specified, references in this Agreement to a "paragraph," "subparagraph," "section," "subsection" or "schedule" shall be considered to be references to the appropriate paragraph, subparagraph, section, subsection or schedule, respectively, of this Agreement. As used in this Agreement, the term "including" shall mean "including, but not limited to." (n) Validity and Severability. If any term or provision of this Agreement is held to be illegal, invalid or unenforceable under the present or future laws effective during the term of this Agreement, (1) such term or provision shall be fully severable, (2) this Agreement shall be construed and enforced as if such term or provision had never comprised a part of this Agreement and (3) the remaining terms and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable term or provision, there shall be added automatically as a part of this Agreement, a term or provision as similar to such illegal, invalid or unenforceable term or provision as may be possible and be legal, valid and enforceable. (o) Survival. Notwithstanding anything else in this Agreement to the contrary, paragraphs 5, 6 and 7, and, to the extent that any of Parent's and Employer's obligations thereunder have not theretofore been satisfied, paragraph 4 of this Agreement shall survive the termination hereof. (p) Joint and Several Liability. Parent and Employer (or any assignee of Employer pursuant to paragraph 7(g)) shall each be jointly and severally liable to Employee hereunder with regard to any obligation imposed by the terms hereof on Parent or Employer. (SIGNATURE PAGE ATTACHED) -11- In Witness Whereof, the parties have executed this Agreement to be effective as of the Effective Date. PIONEER NATURAL RESOURCES COMPANY By: /s/ Mark S. Berg -------------------------- Name: Mark S. Berg Title: EVP & General Counsel PIONEER NATURAL RESOURCES USA, INC. By: /s/ Mark S. Berg --------------------------- Name: Mark S. Berg Title: EVP & General Counsel EMPLOYEE: /s/ William F. Hannes --------------------------------- Address: 5205 North O'Connor Boulevard, Suite 900, Irving, Texas 75039 -12- Schedule A GENERAL RELEASE AGREEMENT NOTICE: You should thoroughly review and understand the effect of this General Release Agreement ("Release") before signing it, and you are advised to discuss this document with your attorney. In accordance with the requirements of the Older Workers Benefit Protection Act ("OWBPA"), you are allowed at least [number] days from the date of your receipt of this document to consider the offer made to you and to return an executed copy of this Release to the Vice President Administration. Additionally, after you have executed this Release, you have seven (7) days to reconsider and revoke your agreement. GENERAL RELEASE: In consideration of my acceptance of the payments and benefits offered to me under the Pioneer Natural Resources Company Severance Agreement effective [date][, as amended,] (the "Agreement"), I hereby release and discharge Pioneer Natural Resources Company (the "Company") and its subsidiaries and affiliates, and the officers, directors, employees, agents, predecessors, successors, and assigns of such entities (collectively the "Released Parties) from any and all claims, liabilities, demands, and causes of action, known or unknown, fixed or contingent, which I have or claim against any of them as a result of my employment the termination of my employment or any other act or omission relating to any matter arising on or before the date I sign this Release, including but not limited to claims arising under federal, state, or local laws prohibiting employment discrimination, including, but not limited to, the Age Discrimination in Employment Act, and including, but not limited to, claims arising out of any legal restrictions, contractual or otherwise, on the Company's right to terminate the employment of its employees (any and all "Potential Claims"), and I do hereby agree not to file a lawsuit, arbitral proceeding or other legal action to assert such Potential Claims. I acknowledge and agree that the Released Parties may recover from me any loss, including attorney's fees and costs of defending against any such legal action, that they may suffer arising out of my breach of this Release. I understand that this Release is final and binding, and I agree not to challenge its enforceability other than as permitted by applicable laws. If I do challenge the enforceability of this Release other than with respect to claims of age discrimination, I agree initially to tender to the Company an amount equivalent to the payment and benefits I received pursuant to the Agreement, and invite the Company to retain such amount and agree with me to cancel this Release. In the event the Company accepts this offer, the Company shall retain such amount and this Release will be void. In the event the Company does not accept such offer, the Company shall so notify me, and shall place such amount in an interest-bearing escrow account pending the resolution of any dispute as to whether this Release shall be set aside and/or otherwise be rendered unenforceable. If I am successful in challenging the enforceability of this Release as to age discrimination claims, then, to the extent permitted by law, any damages I may recover for those claims will be offset by any payments and benefits made to me under the Agreement. I acknowledge and agree that the Company has no legal obligation to provide the payments and/or benefits offered to me under the Agreement, except in exchange for this Release, and my acceptance of such payments and benefits constitutes my agreement to all terms and conditions set forth in this Release. I acknowledge and agree that, except to the extent otherwise provided in the Agreement or prohibited by law (for example by the OWBPA with respect to claims of age discrimination), this Release constitutes a waiver of any and all Potential Claims that I have or may have against the Released Parties. I further acknowledge and agree that this Release has no effect on any obligations I have assumed under the Agreement with respect to confidentiality, non-solicitation, non-interference and other such matters and that any such obligations shall survive my execution of this Release in accordance with the terms of the Agreement. I acknowledge that I have [number] days to consider this Release before executing it, although I may execute it any time during this [number] day period (but not before my last day of employment), that I may revoke this Release within 7 days after I execute it by written notice to the Company's Vice President of Administration and that this Release will not become effective or enforceable, and the payments and benefits offered under the Agreement will not be made or provided, until expiration of this 7 day period without my revocation. I have carefully read and fully understand all of the provisions of this Release. I further acknowledge that entering into this General Release Agreement is knowing and voluntary on my part, that I have had a reasonable time to deliberate regarding its terms, and that I have had the right to consult with an attorney prior to executing this Release if I so desired. - --------------------------------- ------------------------------------- Date signed: Signature of [employee] - --------------------------------- ------------------------------------- Date signed: Witness -----END PRIVACY-ENHANCED MESSAGE-----