Exhibit 10.3

 

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
this              day of                     , 2005 pursuant to the terms of the
Plains Exploration & Production Company Executives’ Long-Term Retention and
Deferred Compensation Arrangement (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 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

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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 Vested.

 

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 of 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.

 

5.      Absent a Deferral Election or 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; or

 

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

 

6.      Executive may make a Deferral Election according to the terms of the
Plan with respect to all or any portion of the Restricted Stock Units to be
credited to Executive’s Account on any Annual Credit Date provided that such
election is made in the calendar year prior to the applicable Annual Credit
Date. Executive may elect to change the applicable Payment Date in accordance
with the terms of section 3.7(b) of the Plan.

 

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.

 

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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.

 

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

 

 

PLAINS EXPLORATION & PRODUCTION COMPANY

 

 

  Date:______________________   By:_____________________________________    
Name:___________________________________    
Title:____________________________________

 

 

Date:______________________   By:______________________________________    
Name:____________________________________    
Title:_____________________________________

 

 

   

EXECUTIVE

 

 

Date:______________________   _________________________________________

 

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