EXHIBIT 10.16

AMENDED AND RESTATED

PLAINS EXPLORATION & PRODUCTION COMPANY

LONG-TERM RETENTION AND DEFERRAL AGREEMENT

THIS AGREEMENT (“Agreement”) is made by and between Plains Exploration &
Production Company (the “Company”) and James C. Flores (“Executive”) effective,
the 8th day of August, 2005 pursuant to the terms of the Plains Exploration &
Production Company Executives’ Long-Term Retention and Deferred Compensation
Plan (the “Plan”) and the Plains Exploration & Production Company 2004 Stock
Incentive Plan as amended from time to time, or any successor plan (the “2004
Stock Plan”), which are incorporated herein by reference. Terms used but not
defined herein have the meanings assigned to them in the Plan,

WHEREAS, effective as of June 9, 2004, Executive received an award of five
hundred thousand (500,000) Restricted Stock Units (the “2004 Award”);

NOW THEREFORE, the parties agree as follows:

1. As of the last day of the calendar quarter in which Executive becomes fully
Vested in the 2004 Award, Executive shall have credited to his Account under the
Plan two hundred thousand (200,000) Restricted Stock Units subject to the terms
of the Plan and the 2004 Plan (the “Initial Credit Date”). Additional Awards of
two hundred thousand (200,000) Restricted Stock Units shall be credited to
Executive’s Account on the first and each succeeding anniversary dates of the
Initial Credit Date (each, an “Annual Credit Date”) for a total of nine
(9) Annual Credit Dates; provided, however, that the number of Restricted Stock
Units Executive shall be entitled to have credited to his Account on each Annual
Credit Date shall increase to three hundred thousand (300,000) effective as of
the first Annual Credit Date immediately following the date that the closing
price per share of the Company’s common stock equals or exceeds $75.84 on any
ten out of twenty consecutive trading days on the New York Stock Exchange or
such other exchange or market on which the shares primarily trade. The
Restricted Stock Units awarded or to be awarded to Executive pursuant to this
Paragraph 1 are herein referred to as the “Long-Term Retention Award.” Awards
hereunder shall be made under the Company’s 2004 Stock Plan or, if sufficient
shares of Common Stock are not available under such plan, such other plan or
plans that the Company hereby agrees to adopt and to make all required filings,
obtain all approvals and take all other required regulatory actions, as soon as
administratively feasible, in order to make the foregoing awards or the economic
equivalent thereto.

2. The Restricted Stock Units credited to Executive’s Account on the, Initial
Credit Date and on each of the next four Annual Credit Dates pursuant to
Paragraph 1 above shall become Vested in full at 11:59 p.m. on the fifth
(5th) anniversary of the Initial Credit Date and on the fifth anniversaries of
each of the next four Annual Credit Dates respectively. The Restricted Stock
Units credited to Executive’s Account on the fifth (5th), sixth (6th), seventh
(7th), eighth (8th) and ninth (9th) Annual Credit Dates

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shall become Vested in full on the fifth (5th), fourth (4th), third (3rd),
second (2nd) and first (1st) anniversaries of each such Annual Credit Date,
respectively. Each such Vesting date referred to in this Paragraph 2 is herein
referred to as a “Retention Award Vesting Date.” Except as set forth in this
Agreement, the Plan or the 2004 Stock Plan, Executive must be an employee of the
Company (or any parent or subsidiary) on a Retention Award Vesting Date for the
applicable Restricted Stock Units to become Tested.

3. Except as set forth in Section 4 below, if Executive ceases to be employed by
the Company (or any parent or subsidiary) for any reason at any time prior to
the Initial Credit Date, any Annual Credit Date or the applicable Retention
Award Vesting Date, no further credits shall be made to Executive’s Account and
any unvested Restricted Stock Units shall be automatically forfeited upon such
cessation of employment.

4. In the event of a Change in Control, Executive’s death or Disability, or
termination of employment without Cause or for Good Reason, both as defined
under Executive’s employment agreement with the Company dated as of June 9,
2004, the entire amount of the Long-Term Retention Award not yet credited to
Executive’s Account shall be immediately credited to Executive’s Account and
shall be fully Vested. The amount so credited to Executive’s Account shall then
be contributed by the Company in cash, Common Stock or other property to the
Trust created under the Plan to be held by the trustee of such Trust until paid
according to the terms of this Agreement, to Executive.

5. Absent a Payment Date change by Executive to a later date or dates, the
Payment Date with respect to the portion of Executive’s Account applicable to
the Vested Restricted Stock Units granted pursuant to this Agreement shall be
the earlier of:

(i) the tenth anniversary of the Initial Credit Date;

(ii) death of the Executive;

(iii) Disability of the Executive;

(iv) six months (or such shorter period as may be permitted pursuant to
regulations or interpretations of Section 409A of the Code) following the date
of Executive’s separation from service with the Company following a termination
without Cause or for Good Reason (both as defined under Executive’s employment
agreement with the Company dated as of June 9, 2004); or

(v) occurrence of an unforeseeable emergency (within the meaning of Section 409A
of the Code).

6. Payment hereunder shall be in a single lump sum no later than 2-1/2 months
after the Payment Date. Executive may elect to change the applicable Payment
Date in accordance with the terms of section 3.7(b) of the Plan.

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7. Subject to the provisions of section 3.10 of the Plan, Restricted Stock Units
shall be credited to Executive’s Account pursuant to the terms of the 2004 Stock
Plan. If, for any reason, Restricted Stock Units may not be credited to
Executive’s Account pursuant to the 2004 Stock Plan or any successor plan of the
Company as of the Initial Credit or any Annual Credit Date, an amount of cash
equal to the Fair Market Value of the Restricted Stock Units shall be credited
to Executive’s Account as of such date pursuant to the provisions of section
3.10 of the Plan.

8. In the event of any subdivision or consolidation of outstanding shares of
Common Stock, declaration of a dividend payable in shares of Common Stock or
other stock split, then (i) the number of Restricted Stock Units credited and to
be credited to Executive’s Account under this Long-Term Retention Award shall
each be proportionately adjusted to reflect such transaction. In the event of
any other recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity, the
adoption by the Company of any plan of exchange affecting the Common Stock or
any distribution to holders of Common Stock of securities or property (other
than normal cash dividends or dividends payable in Common Stock), the Company
shall make appropriate adjustments to the number of Restricted Stock Units
credited and to be credited to Executive’s Account to give effect to such
transaction; provided that such adjustments shall only be such as are necessary
to preserve, without increasing, the value of such units. In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Company shall be authorized to issue or
assume units by means of substitution of new units, as appropriate, for
previously issued units or an assumption of previously issued units as part of
such adjustment.

9. Tax withholding shall be made in accordance with the terms of the Plan.

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IN WITNESS WHEREOF, the parties hereto have signed this to be effective as of
the last date of signature.

 

PLAINS EXPLORATION & PRODUCTION COMPANY     By:         Date:      

John F. Wombwell

Executive Vice President, General Counsel

and Secretary

     

 

EXECUTIVE           Date:     James C. Flores