Document:

EXHIBIT 10.2

 

WAIVER AGREEMENT 

 

 

WAIVER AGREEMENT (this “Waiver Agreement”), dated as of August 12,
2005, with respect to the AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”),
dated as of June 30, 2001 (the “Effective Date”), between Plains All American
GP LLC, a Delaware limited liability company (the “Company”), and Harry N.
Pefanis (the “Employee”).

 

RECITALS:

 

A.             Capitalized terms not
otherwise defined in this Waiver Agreement 
are used with the meanings ascribed to such terms in the Agreement.

 

B.               Section 8(d)(ii) of the
Agreement provides that if the Employee shall terminate his employment upon a
Change in Control of the Company pursuant to clause (D) of Section 7(d)(i),
then the Employee will be paid a lump sum amount.

 

C.               A transaction is
contemplated pursuant to which the membership interest in the Company currently
owned by Sable Investments, L.P. will be sold to the other owners of membership
interests in the Company.  Vulcan Energy
Corporation or a subsidiary thereof (as 
applicable, “Vulcan Energy”)  will
purchase all or a portion of the membership interests being sold (the “Vulcan
Purchase”).

 

D.              The Company and the Employee
wish to clarify and agree with respect to the effect of the Vulcan Purchase
under the Agreement.

 

WAIVER

 

In that regard, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Employee
hereby agree as follows:

 

 1.            Acknowledgement of Change in Control.  The Company and the Employee both acknowledge
that the proposed Vulcan Purchase would constitute a Change in Control as
defined in Section 7(d) of the Agreement, and that without this Waiver
Agreement Employee would have the power under Section 7(d) of the Agreement to
terminate his employment (the “Termination Power”) and, having done so, would
have the right to the lump sum payment contemplated by Section 8(d)(ii) of the
Agreement (the “Payment Right”).

 

 2.            Waiver. 
Subject to the terms and conditions contained herein, the Employee
waives his Termination Power and Payment Right, in each case only with respect
to the Vulcan Purchase (the “Waiver”). 
The Waiver shall not apply to any future purchases of membership
interests in the Company by Vulcan Energy.

 

 

 

 3.            Excess Voting Rights Agreement.  The Waiver is contingent upon and will be
effective upon the execution by Vulcan Energy and the Company of an Excess
Voting Rights Agreement in the form of Exhibit A to this Waiver (the “Voting
Agreement”).   The Company will
immediately inform the Employee of any Notice (as defined in the Voting
Agreement) received from Vulcan Energy under the Voting Agreement.

 

 4.            Termination of Waiver.  The Waiver will terminate, and a Change in
Control will be deemed to have occurred coincident with, (a) any breach by
Vulcan Energy of the terms of the Voting Agreement, (b) any termination of the
Voting Agreement by Vulcan Energy or any notice of termination given by Vulcan
Energy, other than any termination (or notice thereof) pursuant to clause (a)
of Section 4 of the Voting Agreement, where Vulcan Energy is no longer a
Majority Holder (as defined in the Voting Agreement) due to any merger,
consolidation or similar transaction involving the Company or the Partnership;
provided, however; this provision shall not reduce or otherwise supercede the
Employee’s rights if any such merger, consolidation or similar transaction
involving the Company or the Partnership would otherwise have resulted in a
Change in Control, (c) during the two-year period following the execution of
this Agreement, the failure of at least two Designated Independent Directors to
be members of the Board of Directors of the Company, provided, that with
respect this clause (c) the Waiver will be deemed not to have terminated, and
no Change in Control will be deemed to have occurred unless the Employee
exercises the Termination Power within 180 days following the first day on
which there shall fail to be at least two Designated Independent Directors on
the Board of Directors of the Company, or (d) the provision of any economic
incentive or other consideration (including any concession or forbearance) by
Vulcan Energy directly or indirectly to any other member of the Company that
has the intent or effect of terminating, obviating or circumventing the Voting
Agreement; provided that for the avoidance of doubt, the foregoing clause (d)
shall not be deemed to include conversations with other members of the Company
regarding the Independent Directors or other matters where Vulcan Energy
attempts to persuade such other members to vote in a specified manner as long
as Vulcan Energy’s solicitations do not involve the direct or indirect
provision of any economic incentives or other consideration.  In addition, notwithstanding anything
contained herein to the contrary, if the Employee is terminated for any reason
other than for Cause within two years of the execution of this amendment, the
Waiver will be deemed to have terminated on the date immediately preceding such
termination or notice of such termination, a Change in Control will be deemed
to have occurred as of such date and the Employee will be paid the lump sum
payment contemplated by Section 8(d)(ii) of the Agreement as if the Employee
had terminated his employment for Good Reason following a Change in Control.  In addition, upon such termination without
Cause or for Good Reason, the Employee shall immediately vest in any and all
unvested long-term incentive arrangements outstanding under the 1998 Long-Term
Incentive Plan or the 2005 Long-Term Incentive Plan.  For purposes of this Agreement, “Designated
Independent Director” means each of the Independent Directors currently serving
on the Board of Directors of the Company and, in the event of the death or
disability of any such Independent Directors, any replacement director who is
nominated for election or elected or appointed to the Board with the approval
of  the remaining Designated Independent
Director or Directors.

 

 

2

 

 5.            Limited Waiver. 
The Waiver is limited to the effects of the Vulcan Purchase under the
Agreement, and does not waive any other provisions of the Agreement nor the
effects of any past, present or future transaction constituting a Change in
Control (or any other Good Reason), including without limitation any other
direct or indirect purchase or sale by Vulcan Energy of any portion of the
membership interest in the Company.

 

6.  No other Changes to
Agreement.  Other than the Waiver as
described herein, the Agreement remains in full force and effect.

 

7.  Notice.  For the purpose of this Waiver Agreement,
notices and all other communications provided for in this Waiver Agreement must
be in writing and will be deemed to have been duly given when delivered or
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed to the parties at their addresses set forth below, or to
such other addresses as either party may have furnished to the other in writing
in accordance herewith except that notices of change of address will be effective
only upon receipt.

 

If to the Company:

 

Plains All American GP LLC

333 Clay Street

Houston, Texas  77002

Attention:  General Counsel

 

If to the Employee:

 

Harry N. Pefanis

4103 University Blvd.

Houston, TX  77005

 

8.  Miscellaneous.  No provisions of this Waiver Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.  The validity, interpretation, construction
and performance of this Waiver Agreement shall be governed by the laws of the
State of Texas.

 

14.  Entire Agreement.  This Waiver Agreement contains the entire
understanding of the parties in respect of its subject matter and supersedes
all prior oral and written agreements and understandings between the parties
with respect to such subject matter.

 

 

3

 

IN WITNESS WHEREOF, the parties have executed this Waiver Agreement as
of the date first above written.

 

 

	
   

  	
  PLAINS ALL AMERICAN GP LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tim Moore

  
	
   

  	
   

  	
  Tim Moore

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HARRY N. PEFANIS

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Harry N. Pefanis

  
	
   

  	
   

  	
  Employee

  

 

 

4Exhibit 10.3

 

Vulcan Energy GP Holdings Inc.

505 Fifth Avenue South

Suite 900

Seattle, Washington 98104

 

 

August 12, 2005

 

 

Plains All American GP LLC

333 Clay Street, Suite 1600

Houston, Texas 77002

 

 

Gentlemen:

 

                                Reference is made to the Amended and Restated
Limited Liability Company Agreement of Plains All American GP LLC, dated as of
June 8, 2001, as amended (the “LLC Agreement”). 
The undersigned has become the beneficial owner of more than 49.9% (a
“Majority Holder”) of the Membership Interests (as defined in the LLC
Agreement) of Plains All American GP LLC, a Delaware limited liability company
(the “Company”).  Capitalized terms that
are not otherwise defined herein shall have the meanings set forth in the LLC
Agreement.

 

                                The undersigned hereby acknowledges its
understanding that, pursuant to the terms of certain employment and incentive
agreements between the Company and its employees, absent the execution and
delivery of this letter agreement by the undersigned, the fact that the
undersigned has become a Majority Holder would constitute a “change in control”
for purposes of those employment and incentive agreements.

 

1.             Subject to the terms and conditions
of this letter agreement, during the term of this letter agreement, at each
annual meeting of the Members, at each special meeting of the Members called
for the purpose of electing Independent Directors, and in respect of any action
by written consent to elect Independent Directors, the undersigned shall vote
or cause to be voted the Excess Interests held by it and its affiliates in
favor of the election of each nominee for Independent Director in the same
proportion as all Membership Interests (other than those beneficially owned by
the undersigned and its affiliates, including the Excess Interests) are voted
with respect to such election.  For the
avoidance of doubt, for purposes of this letter agreement the term “Independent
Director” shall not include any replacement Director who is to be elected by a
Majority in Interest pursuant to the second sentence of Section 7.1(a)(iv) of
the LLC Agreement.  “Excess Interests”
means, with respect to a particular election or removal of Independent
Directors, an amount of Membership Interests equal to the amount, if any, by
which the total Membership Interests beneficially owned by the undersigned and
its affiliates and entitled to vote with respect to such election or removal of
Independent Directors exceeds 49.9% of the outstanding Membership Interests
that are entitled to vote with respect to such election or removal of
Independent Directors.

 

 

2.             Subject to the terms and conditions
of this letter agreement, during the term of this letter agreement, at each
special meeting of the Members called for the purpose of removing any
Independent Director without Good Cause, and in connection with any action by
the Members to remove any Independent Director without Good Cause, including
without limitation pursuant to Section 7.1(a)(iii) of the LLC Agreement, the
undersigned shall vote or cause to be voted the Excess Interests held by it and
its affiliates in favor of or against the removal of such Independent Director
in the same proportion as all Membership Interests (other than those
beneficially owned by the undersigned and its affiliates, including the Excess
Interests) are voted with respect to such removal.  For the purposes of this letter agreement,
the Members shall have “Good Cause” to remove or fail to reelect any
Independent Director only upon such Independent Director’s (i) engaging in
gross misconduct, including without limitation any breach of his fiduciary
duties, (ii) violation of the Company’s Code of Business Conduct (unless waived
in accordance with the terms thereof), (iii) engaging in conduct which is
demonstrably and materially injurious to the Company or to Rodeo, L.P. and its
subsidiaries, taken as a whole, (iv) indictment for, or conviction of, a felony
involving moral turpitude.

 

3.             The undersigned agrees that it will
not provide or promise any economic incentive or other consideration (including
any concession or forbearance) directly or indirectly to any other member of
the Company that has the intent or effect of terminating, obviating or
circumventing this letter agreement; provided that for the avoidance of doubt,
this paragraph 3 shall not be deemed to include routine conversations with
other members of the Company regarding the Independent Directors or other
matters where the undersigned attempts to persuade such other members to vote
in a specified manner as long as the undersigned’s solicitations do not involve
the direct or indirect provision or promise of any economic incentives or other
consideration

 

4.             The term of this letter agreement
shall commence on the date of this letter agreement and shall continue
thereafter unless terminated by the undersigned pursuant to this Section
4.  The undersigned shall be entitled to
terminate this letter agreement at any time upon giving at least the applicable
Minimum Required Notice (as defined below) in writing of such termination to
the Company.  Notwithstanding the
foregoing, the undersigned shall be entitled to terminate this letter agreement
at any time by giving written notice to the Company (which notice shall be
effective immediately) upon and after the occurrence of any of the following
circumstances:  (a) the undersigned, as a
result of an arm’s length transaction with an unrelated third party, is no
longer a Majority Holder, (b) both KAFU Holdings, L.P. and E-Holdings III,
L.P., or any affiliate of any of the foregoing shall cease to be a Member, (c)
any other Member shall be in breach of the LLC Agreement in any manner
materially adverse to the undersigned, (d) the Persons who own the equity
interests in the undersigned, or if the undersigned is controlled directly or
indirectly by any other entity, the ultimate parent of the undersigned, as the
case may be, on the date hereof cease to beneficially own, directly or
indirectly, more than 50% of the equity interest in the undersigned or the
ultimate parent entity, as the case may be, (e) Greg L. Armstrong shall cease
to be the Chief Executive Officer of the Company, or (f) Harry N. Pefanis shall
cease to be the President and Chief Operating Officer of the Company; provided,
that (x) in the case of clause (b) above, to be effective such written notice
must be given within 90 days of such Member ceasing to be a Member, and (y) in

 

 

the case of either clause (e) or (f) above,
to be effective such written notice must be given within 90 days of such
officer ceasing to hold such position.

 

A “Distribution Shortfall” shall occur with respect to any Quarter if
the aggregate amount of cash distributed by Rodeo, L.P. in respect of each
Common Unit (as defined in the Rodeo L.P. Partnership Agreement) with respect
to such Quarter (as defined in the Rodeo L.P. Partnership Agreement) is less
than the aggregate amount of cash distributed by Rodeo, L.P. in respect of each
Common Unit with respect to the immediately preceding Quarter.

 

“Minimum Required Notice” means, with respect to a particular
termination notice, one year prior written notice; provided, however,
that if there shall occur a Distribution Shortfall during any Quarter when the
Minimum Required Notice period is one year (the “Triggering Quarter”), then the
“Minimum Required Notice” with respect to a termination notice given in any
subsequent Quarter shall be (i) 180 days prior written notice if such
termination notice is given during the first such subsequent Quarter (the
“First Adjusted Quarter”), (ii)  90 days
prior written notice if such termination notice is given during the second
Quarter immediately following the Triggering Quarter (the “Second Adjusted
Quarter”); and (iii) 30 days prior written notice if such termination notice is
given during the third Quarter immediately following the Triggering Quarter
(the “Third Adjusted Quarter”) or any subsequent Quarter, except that

 

(1) if there shall have been no Distribution Shortfall during the First
Adjusted Quarter, the “Minimum Required Notice” period shall be 180 days with
respect to any termination notice given during the Second Adjusted Quarter,

 

(2) if there shall have been no Distribution Shortfall during either
the First Adjusted Quarter or the Second Adjusted Quarter, the “Minimum
Required Notice” period shall be one year with respect to any Quarter following
the Second Adjusted Quarter (subject to the application of this proviso to any
subsequent Quarter in the event of a subsequent Distribution Shortfall),

 

(3) if there shall have been a Distribution Shortfall in the First
Adjusted Quarter and (x) no Distribution Shortfall during the Second Adjusted
Quarter, the “Minimum Required Notice” period shall be 90 days with respect to
any termination notice given during the Third Adjusted Quarter, (y) no
Distribution Shortfall during the Second Adjusted Quarter or the Third Adjusted
Quarter, the “Minimum Required Notice” period shall be 90 days with respect to
any termination notice given during the Quarter immediately following the Third
Adjusted Quarter (the “Fourth Adjusted Quarter”), and (z) no Distribution
Shortfall during the Second Adjusted Quarter, the Third Adjusted Quarter or the
Fourth Adjusted Quarter, the “Minimum Required Notice” period shall be one year
with respect to any Quarter following the Fourth Adjusted Quarter (subject to
the application of

 

3

 

this proviso
to any subsequent Quarter in the event of a subsequent Distribution Shortfall),
and

 

(4) thereafter, if there shall have been four consecutive Quarters
without a Distribution Shortfall, the “Minimum Required Notice” period shall be
one year with respect to any Quarter following the fourth of such consecutive
Quarters (subject to the application of this proviso to any subsequent Quarter
in the event of a subsequent Distribution Shortfall).

 

5.             Except to the extent specifically
set forth above, nothing contained herein shall be deemed to modify, supersede
or in any manner limit any rights of the undersigned under the LLC Agreement,
including without limitation, any rights of the undersigned to designate a
Director pursuant to Section 7.1(a)(ii) of the LLC Agreement, or to remove any
such designated Director pursuant to Section 7.1(a)(iii) of the LLC
Agreement.  Nothing contained herein shall
be deemed to modify, supersede or in any manner limit any rights of the
undersigned under the Partnership Agreement or the Rodeo, L.P. Partnership
Agreement.

 

6.             This letter agreement is to be
governed by the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof. 
If any provision hereof is deemed unenforceable, the enforceability of
the other provisions hereof shall not be affected.

 

7.             The undersigned signs solely in
his, her or its individual capacity with respect to his, her or its beneficial
ownership of Membership Interests and makes no agreement or understanding
herein in any other capacity, including his, her or its capacity as a director
of the Company.

 

8.             This letter agreement may be
executed in two or more counterparts, each of which shall be considered an
original but all of which together shall constitute the same instrument.

 

9.             This letter agreement (including
the documents and instruments referred to herein) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the undersigned and the Company, or any of them, with
respect to the subject matter hereof.

 

10.           This letter agreement may not be
modified, amended, altered or supplemented except upon the execution and delivery
of a written agreement executed by each of the undersigned and the Company.

 

11.           This letter agreement shall not be
assigned by the Company by operation of law or otherwise without the prior
written consent of the undersigned.

 

12.           This letter agreement shall be
binding upon and inure solely to the benefit of each party to this letter
agreement and their permitted assignees, and nothing in this letter agreement,
express or implied, is intended to or shall confer upon any other Person any
rights, benefits or remedies of any nature whatsoever under or by reason of
this

 

4

 

letter agreement.  Without limiting the foregoing, no direct or
indirect holder of any equity interests or securities of any party to this letter
agreement (whether such holder is a limited or general partner, member,
stockholder or otherwise), nor any Affiliate of any party to this letter
agreement, nor any director, officer, employee, representative, agent or other
controlling Person of each of the parties to this letter agreement and their
respective Affiliates shall have any liability or obligation arising under this
letter agreement.

 

13.           The undersigned acknowledges and
agrees that the Company could not be made whole by monetary damages in the
event of any default by the undersigned of the terms and conditions set forth
in this letter agreement.  It is
accordingly agreed and understood that the Company, in addition to any other
remedy that it may have at law or in equity, shall be entitled to an injunction
or injunctions to prevent breaches of this letter agreement and specifically to
enforce the terms and provisions hereof in any action instituted in any court
of the United States or in any state having appropriate jurisdiction.

 

	
   

  	
  Very truly
  yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VULCAN
  ENERGY GP HOLDINGS INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David N. Capobianco

  	
   

  
	
   

  	
   

  	
  Name: David
  N. Capobianco

  	
   

  
	
   

  	
   

  	
  Title: President

  	
   

  

 

 

Agreed and accepted as of

this 12th day of August, 2005:

 

PLAINS ALL AMERICAN GP LLC

 

 

	
  By:

  	
  /s/ Tim Moore

  	
   

  
	
   

  	
  Name: Tim
  Moore

  	
   

  
	
   

  	
  Title: Vice
  President

  	
   

  

 

5

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