Document:

exhibit10_55.htm

 

 

  

Exhibit 10.55

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement” or “employment agreement”) is made and entered into as of December 30, 2013, effective as of November 30, 2013 (the “Effective Date”), by and between Gregory Schaan (“employee”), Imperial Nurseries, Inc., a Delaware corporation (“employer”) and Griffin Land & Nurseries, Inc., a Delaware corporation (“Griffin”).

 

WITNESSETH:

 

WHEREAS, employee and employer deem it to be in their respective best interests to enter into an agreement providing for employer’s employment of employee pursuant to the terms herein stated;

 

WHEREAS, this employment agreement amends and restates in its entirety that certain Employment Agreement by and between employer and employee, dated as of January 1, 2001, as amended on April 7, 2008 (the “original employment agreement”); and

 

WHEREAS, employer is in the business of growing containerized landscape nursery plants for sale principally to independent retail garden centers and rewholesalers (the “Imperial Business”).

 

NOW, THEREFORE, in consideration of the premises and the mutual promises and agreements contained herein, it is hereby agreed as follows:

 

ARTICLE 1.

 

 

EMPLOYMENT OF EMPLOYEE

 

 

 

Effective as of the Effective Date, employer agrees to employ employee, and employee agrees to provide services to employer, upon the terms and conditions set forth in this Agreement.

 

ARTICLE 2.

 

 

DUTIES OF EMPLOYEE

 

Section 2.1    Position and Duties

 

Employer agrees to employ employee and employee agrees to serve as President of employer for the term of employment (as described in Section 2.3). In this capacity, employee shall devote his reasonable best efforts to the performance of the services customarily incident to such office and position and to such other services of an executive nature as may be reasonably requested by the board of directors of employer which may include services for one or more subsidiaries or affiliates of employer, including without limitation, Griffin.  Employee shall in his capacity as an employee and officer of employer be responsible to and obey the reasonable and lawful directives of the board of directors of employer.

 

 

  

  

  

 

Section 2.2    Time Devoted to Work

 

Employee shall devote substantially all his business time and attention, and shall use his reasonable best efforts, toward fulfillment of his duties under this Agreement and toward protecting, encouraging and promoting the interests of employer.

 

Section 2.3    Term of Employment

 

Except as otherwise specifically provided herein, employer shall employ employee, and employee shall provide services to employer, upon the terms and conditions set forth in this Agreement during the period beginning on the Effective Date and ending on the date provided under Section 6 of this Agreement.

 

ARTICLE 3.

 

 

PLACE OF EMPLOYMENT

 

Section 3.1    Place of Employment

 

Employee shall be based at employer’s principal office Granby, Connecticut.  Employer agrees that during the term of this employment agreement it shall not assign employee to work at any location other than its principal office on a permanent basis without employee’s consent.

 

ARTICLE 4.

 

 

COMPENSATION OF EMPLOYEE

 

Section 4.1    Base Salary

 

For all services rendered by employee under this employment agreement, employer agrees to pay employee an annual base salary of $249,700, which shall be payable to employee in such installments, but not less frequently than monthly, as are consistent with employer’s practice for its other employees.

 

Section 4.2    Incentive Compensation

 

In addition to the base salary, employee shall be entitled to receive not less than 30% of employer’s senior management incentive pool as established by the Compensation Committee of Griffin’s Board of Directors (the “Committee”).

 

Section 4.3    Stock Options

 

Employee shall be eligible to participate in the Griffin Land & Nurseries, Inc. 2009 Stock Option Plan (the “Option Plan”), at such level and in such amounts as may be determined by Griffin’s board of directors (or, if appropriate, the Committee) in its sole discretion, subject to the terms and conditions of the Option Plan and any applicable award agreements.

 

Section 4.4    Retirement and Deferred Compensation

 

Employee shall be eligible to participate in Griffin’s 401k plan and Griffin’s non-qualified deferred compensation plan to the extent provided by the terms of such plans.

 

Section 4.5    Reimbursement for Business Expenses

 

Employer shall promptly pay or reimburse employee for all reasonable business expenses incurred by employee in performing employee’s duties and obligations under this employment agreement, but only if employee properly accounts for expenses in accordance with employer’s policies.

 

 

  

  

  

 

ARTICLE 5.

 

 

FRINGE BENEFITS

 

Section 5.1    Employer Employee Benefit Plans

 

Employee shall be entitled to participate in and receive benefits from all of employer’s employee benefit plans that currently are maintained by employer for senior employees of employer.  Employee shall be entitled to participate in and receive benefits under any retirement plan, profit-sharing plan, or other employee benefit plan that employer establishes for the benefit of similarly situated employees of employer, after the Effective Date.  No amounts paid to employee from an employee benefit plan shall count as compensation due employee as base salary or incentive compensation.  Nothing in this employment agreement shall prohibit employer from modifying or terminating any of its employee benefit plans in a manner that does not discriminate between employee and other employees of employer.

 

Section 5.2    Life Insurance

 

Employer shall maintain in effect during the term of employee’s employment a term life insurance policy in an amount equal to employee’s base salary.  In addition, employee shall be able to purchase additional term life insurance in accordance with the group life insurance policy made available by employer.  Any proceeds payable under the policy shall be paid to the beneficiary or beneficiaries designated in writing from time to time by employee.

 

ARTICLE 6.

 

 

TERMINATION OF EMPLOYMENT

 

Section 6.1    Term of Employment

 

Employee’s employment under this Agreement shall commence on the Effective Date and shall terminate on November 30, 2014, unless extended or terminated sooner, as provided by this article of the employment agreement.  For purposes of this employment agreement, the “end-of-employment date” as of any date shall be the later of November 30, 2014 or the last day of the then-current Extension Term (as defined in Section 6.2) as of such date.

 

Section 6.2    Extension of Employment

 

On November 30, 2014 and on each December 1 occurring in 2015 or thereafter, employee’s employment with employer automatically shall be extended for an additional year (each such additional year, an “Extension Term”) unless, at least sixty (60) days prior to the then-current end-of-employment date, employer or employee delivers to the other a written notice that employee’s employment with employer is not to be extended.  In the absence of an agreement, employee’s annual base compensation shall be determined by the Committee, but shall be not less than the employee’s previous year’s annual base compensation.

 

Section 6.3    Termination at Employee’s Death or Disability

 

Employee’s employment with employer shall terminate as of the date of employee’s death or as the effective date of his “Disability.”   For purposes of this Agreement, “Disability” shall mean employee’s incapacity due to physical or mental illness (as determined in good faith by a physician acceptable to employer) which (a) results in employee being absent from the full-time performance of his duties with employer for 120 consecutive days during any 12 month period or (b) which (as determined in good faith by a physician acceptable to employer) will likely result in employee’s inability to return to the full-time performance of his duties with employer for 120 consecutive days during the succeeding 12 month period.

 

 

  

  

  

 

Section 6.4    Termination by Employee

 

Employee may, but is not obligated to, terminate this employment agreement at any time within 90 days following the existence of any of the following circumstances (and after providing employer with 30 days’ notice and opportunity to cure such circumstance(s), if curable):

 

(a) There is a Change in Control of employer.  There is a “Change in Control” of employer if (i) someone other than a current owner of employer becomes the beneficial owner of more than 50% of the voting power of employer or (ii) the current owner of employer sells all or substantially all of the assets of employer or consummates a transaction immediately following which it does not conduct the Imperial Business in any material respect.  No transaction or event will be deemed to have caused a Change in Control if employee gives prior consent to the transaction or event.

 

(b) Employee is assigned duties that are significantly adversely different than those described in this employment agreement without his consent.

 

(c) Employee is removed from any of the positions described in Section 2.1 of this employment agreement (other than by employer for cause).

 

(d) Employee’s fringe benefits or other compensation are materially reduced.

 

(e) Employer fails to have a successor assume this employment agreement.

 

(f) Employer becomes insolvent or files a bankruptcy petition.

 

Section 6.5    Termination by Employer

 

(a)    Termination for Cause.  Employer may terminate employee’s employment for cause.

 

(b)    “Cause” Defined.  Employer shall have cause to terminate employee’s employment if employee willfully fails to substantially perform any duties required by this employment agreement (unless employee’s failure is due to a physical or mental incapacity), employee is grossly negligent in the performance of required duties, employee engages in conduct that demonstrably and substantially damages employer, employee is convicted of or pleads nolo contendere to a felony or a crime of moral turpitude, or employee discloses material confidential information. No act or failure to act by employee may be considered “willful” unless employee acted or failed to act without any reasonable belief that the act or omission was in employer’s best interests and without good faith.

 

  

  

  

 

Section 6.6    Notice of Termination

 

Any termination of employee’s employment by employer or employee must be communicated to the other party by a written notice of termination.  The notice must specify the provision of this employment agreement authorizing the termination and must set forth in reasonable detail the facts and circumstances providing the basis for termination of employee’s employment.

 

Section 6.7    Date Termination Is Effective

 

If employee’s employment terminates because this employment agreement expires, then employee’s employment will be considered to have terminated on that expiration date.  If employee’s employment terminates because of employee’s death, then employee’s employment will be considered to have terminated on the date of employee’s death. If employee’s employment terminates because of employee’s Disability, then employee’s employment will be considered to have terminated on the date as of which employee is determined to be disabled in accordance with Section 6.3. If employee’s employment is terminated by employee, then employee’s employment will be considered to have terminated on the date that notice of termination is given.  If employee’s employment is terminated by employer, then employee’s employment will be considered to have terminated on the date specified by the notice of termination.

 

Section 6.8    Compensation Following Termination

 

    Subject to Section 8.11(b):

 

(a) If employee’s employment terminates because of employee’s death, employer shall pay a death benefit to the person or persons designated in a written notice filed with employer by employee or, if no person has been designated, to employee’s estate.  The amount of the death benefit shall equal the sum of (i) the employee’s then current annual base salary plus (ii) a pro-rated amount (based on number of days in the performance period for which he was employed during the applicable fiscal year) of the incentive compensation that the employee would have otherwise earned with respect to the fiscal year in which the employee’s death occurs based on actual results for the full fiscal year.  Such annual base salary shall be paid on the first payroll date immediately following the date of death of employee.  Such pro-rated amount of incentive compensation shall be paid at such time as the employee would have otherwise received any such incentive compensation pursuant to the Imperial Nurseries, Inc. Incentive Compensation Plan as in effect for such fiscal year (the “Imperial Incentive Plan”); provided that, such pro-rated amount shall be paid no earlier than January 1, and no later than December 31, of the calendar year immediately following the date of termination.  This death benefit shall be in addition to any other amounts that the employee’s beneficiaries and estate may be entitled to receive under any employee benefit plan maintained by employer.

 

(b) If employee’s employment terminates because of employee’s Disability, employer shall pay employee (i) in accordance with employer’s customary payroll practices, his then current annual base salary during the period commencing on the effective date of such termination and ending on the first anniversary of the date the employee’s employment was terminated and (ii) a pro-rated amount (based on number of days in the performance period for which he was employed during the applicable fiscal year) of the incentive compensation that the employee would have otherwise earned with respect to the fiscal year in which the employee’s Disability occurs based on actual results for the full fiscal year.  Such pro-rated amount of incentive compensation shall be paid at such time as the employee would have otherwise received any such incentive compensation pursuant to the Imperial Incentive Plan; provided that, such pro-rated amount shall be paid no earlier than January 1, and no later than December 31, of the calendar year immediately following the date of termination.  Amounts payable under this Section 6.8(b) shall be paid in addition to any other amounts that employee may be entitled to receive under any employee benefit plan or insurance arrangement maintained by employer.

 

  

  

  

 

(c) If employee’s employment is terminated by employer for cause or in connection with a Change in Control, employer shall pay employee his then current base salary through the date employment is terminated, and employer shall have no further obligations to employee under this employment agreement (except as may be required under Section 8.2(c)).

 

(d) If employer terminates the employee’s employment other than (i) for cause or (ii) in connection with a Change in Control, employer shall pay employee his then current base salary through the date employment is terminated.  In addition, employer shall pay employee as liquidated damages an amount equal to the sum of (A) his then current annual base salary and (B) a pro-rated amount (based on number of days in the performance period for which he was employed during the applicable fiscal year) of the incentive compensation that the employee would have otherwise earned with respect to the fiscal year in which the employee’s termination of employment occurs based on actual results for the full fiscal year.  Such annual base salary shall be paid in accordance with employer’s customary payroll practices during the period commencing on the effective date of such termination and ending on the first anniversary of the date the employee’s employment was terminated.  Such pro-rated amount of incentive compensation shall be paid at such time as the employee would have otherwise received any such incentive compensation pursuant to the Imperial Incentive Plan; provided that, such pro-rated amount shall be paid no earlier than January 1, and no later than December 31, of the calendar year immediately following the date of termination.

 

(e) If employee’s employment is terminated by employee in accordance with the provisions of Section 6.4 of this employment agreement upon the existence of a circumstance set forth in Section 6.4(b), (c), (d) or (f) of this employment agreement, employer shall pay employee severance pay in an amount equal to the sum of (i) his then current annual base salary and (ii) a pro-rated amount (based on number of days in the performance period for which he was employed during the applicable fiscal year) of the incentive compensation that the employee would have otherwise earned with respect to the fiscal year in which the employee’s termination of employment occurs based on actual results for the full fiscal year.  Such annual base salary shall be paid in accordance with employer’s customary payroll practices during the period commencing on the effective date of such termination and ending on the first anniversary of the date the employee’s employment was terminated.  Such pro-rated amount of incentive compensation shall be paid at such time as the employee would have otherwise received any such incentive compensation pursuant to the Imperial Incentive Plan; provided that, such pro-rated amount shall be paid no earlier than January 1, and no later than December 31, of the calendar year immediately following the date of termination.  If employee’s employment is terminated by employee other than in accordance with Section 6.4 of this employment agreement upon the existence of a circumstance set forth in Section 6.4(b), (c), (d) or (f) of this employment agreement, employer shall pay to employee his then current base salary through the date of such termination of employment and employer shall have no further obligations to employee under this employment agreement (except as may be required under Section 8.2(c)).

 

  

  

  

 

ARTICLE 7.

 

 

CONFIDENTIAL INFORMATION; NON-SOLICITATION; NON-COMPETITION

 

 

 

Section 7.1                      During the term of employment hereunder and for one year thereafter (the “Non- Compete Period”),  employee shall not, directly or indirectly in any manner or capacity (e.g., as an advisor, principal, agent, partner, officer, director, shareholder, employee, member of any association or otherwise) engage in, work for, consult, provide advice or assistance or otherwise participate in any activity which is competitive with the business of employer or Griffin in any geographic area in which employer is now or shall then be doing business.  Employee further agrees that during the Non-Compete Period he will not assist or encourage any other person in carrying out any activity that would be prohibited by the provisions of this Section 7 if such activity were carried out by employee and, in particular, employee agrees that he will not induce any employee of employer or Griffin to carry out any such activity; provided, however, that the “beneficial ownership” by employee, either individually or as a member of a “group,” as such terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, of not more than two percent (2%) of the voting stock of any publicly held corporation shall not be a violation of this employment agreement.  It is further expressly agreed that employer will or would suffer irreparable injury if employee were to compete with employer or any subsidiary or affiliate of employer in violation of this employment agreement and that employer would by reason of such competition be entitled to injunctive relief in a court of appropriate jurisdiction, and employee further consents and stipulates to the entry of such injunctive relief in such a court prohibiting employee from competing with employer or any subsidiary or affiliate of employer in violation of this employment agreement.

 

 

 

Section 7.2                      During the term of employment and for one year thereafter, employee shall not, directly or indirectly, influence or attempt to influence customers or suppliers of employer or any of its subsidiaries or affiliates, to divert their business to any competitor of employer.

 

 

 

Section 7.3                      Employee recognizes that he will possess confidential information about other employees of employer relating to their education, experience, skills, abilities, compensation and benefits, and interpersonal relationships with customers of employer. Employee recognizes that the information he will possess about these other employees is not generally known, is of substantial value to employee in developing its business and in securing and retaining customers, and will be acquired by him because of his business position with employer. Employee agrees that, during the term of employment, and for a period of one year thereafter, he will not, directly or indirectly, solicit or recruit any employee of employer for the purpose of being employed by him or by any competitor of employer on whose behalf he is acting as an agent, representative or employee and that he will not convey any such confidential information or trade secrets about other employees of employer to any other person.

 

  

  

  

 

 

Section 7.4                      If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 7 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction shall be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state.

 

ARTICLE 8.

 

 

MISCELLANEOUS

 

Section 8.1    Notices

 

Any notice given under this employment agreement to either party shall be made in writing.  Notices shall be deemed given when delivered by hand or when mailed by registered or certified mail, return receipt requested, postage prepaid, and addressed to the party at the address set forth below.

 

Employee’s address:                                              Gregory Schaan

              100 Wheeler Drive

              West Suffield, CT 06093

 

Employer’s address:                                              Imperial Nurseries, Inc.

              90 Salmon Brook Street

              Granby, CT 06035

 

Guarantor’s address:                                              Griffin Land & Nurseries, Inc.

              One Rockefeller Plaza, suite 2301

              New York, NY 10020

 

Each party may designate a different address for receiving notices by giving written notice of the different address to the other party. The written notice of the different address will be deemed given when it is received by the other party.

 

Section 8.2    Binding Agreement - Employer’s Successors

 

 

 

(a) The rights and obligations of Griffin and employer under this employment agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Griffin and employer.

 

(b) Employer shall use commercially reasonable efforts to require any direct or indirect successor (by purchase, merger, consolidation, or otherwise) of all or substantially all of employer’s business and/or assets relating to employer’s growing operations to expressly agree (or cause one of its affiliates to agree) to assume employer’s obligations under this employment agreement and perform them in substantially the same manner and to substantially the same extent as employer would have been required to do if no succession had occurred.  Any agreement assuming such obligations must be in a form and substance reasonably satisfactory to employee.

 

  

  

  

 

(c) If employer fails to obtain such an agreement before the effective date of the succession and employee does not otherwise commence employment or service with the successor or any of its affiliates at any time prior to the end-of employment date (as of the effective date of the succession), employee shall be entitled to a payment in the same amount of base salary that employee would have been entitled to if employee had remained employed from the date of succession through the end-of-employment date (as of the effective date of the succession).  Subject to Section 8.11, such base salary shall be paid in accordance with employer’s customary payroll practices during the period commencing on the effective date of such succession and ending on end-of-employment date (as of the effective date of the succession). For the avoidance of doubt, any payment required under this Section 8.2(c) shall be paid in lieu of (and, in no event, in addition to) any severance rights or obligations, whether under this employment agreement or otherwise.

 

Section 8.3    Binding Agreement - Employee’s Successors

 

  This employment agreement shall inure to the benefit and be enforceable by employee’s personal representatives, legatees, and heirs.  If employee dies while amounts are still owed, such amounts shall be paid to employee’s legatees or, if no such person or persons have been designated, to employee’s estate.

 

Section 8.4    Waivers

 

  The waiver by either party of a breach of any provision of this employment agreement shall not operate or be construed as a waiver of any subsequent breach.

 

Section 8.5    Entire Agreement

 

  This instrument contains the entire agreement of the parties.  The parties have not made any agreements or representations, oral or otherwise, express or implied, pertaining to the subject matter of this employment agreement other than those specifically included in this employment agreement.

 

Section 8.6    Prior Agreements

 

  This employment agreement supersedes any prior agreements pertaining to or connected with or arising in any manner out of the employment of employee by employer (including, without limitation, the original employment agreement).  All such agreements are terminated and are of no force or effect whatsoever.

 

Section 8.7    Amendment of Agreement

 

  No change or modification of this employment agreement shall be valid unless it is in writing and signed by the party against whom the change or modification is sought to be enforced.  No change or modification by employer shall be effective unless it is approved by Griffin’s Board of Directors and signed by an officer specifically authorized to sign such documents.

 

Section 8.8    Severability of Provisions

 

  If any provision of this employment agreement is invalidated or held unenforceable, the invalidity or unenforceability of that provision or provisions shall not affect the validity or enforceability of any other provision of this employment agreement.

 

Section 8.9    Assignment of Agreement

 

  Employer shall not assign this employment agreement without employee’s prior written consent, which consent shall not be unreasonably withheld.  Employee may not assign this employment agreement.

 

Section 8.10    Governing Law

 

  All questions regarding the validity and interpretation of this employment agreement shall be governed by and construed and enforced in all respects in accordance with the laws of the State of Connecticut.

 

  

  

  

 

Section 8.11    Section 409A

 

 

 

(a) The parties hereto acknowledge and agree that, to the extent applicable, this employment agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the Department of Treasury regulations and other interpretive guidance issued thereunder (collectively, “Section 409A”).  Notwithstanding any provision of this employment agreement to the contrary, in the event that employer determines that any amounts payable hereunder will be immediately taxable to employee under Section 409A, employer reserves the right (without any obligation to do so or to indemnify employee for failure to do so) to (i) adopt such amendments to this employment agreement and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Company determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this employment agreement, to preserve the economic benefits of this employment agreement and to avoid less favorable accounting or tax consequences for employer and/or (ii) take such other actions as employer determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.  Notwithstanding anything herein to the contrary, in no event shall any liability for failure to comply with the requirements of Section 409A be transferred from employee or any other individual to employer or any of its affiliates, employees or agents pursuant to the terms of this employment agreement or otherwise.

 

(b) Notwithstanding any provision to the contrary in this employment agreement: (i) no amount shall be payable pursuant to Section 6.8 or 8.2(c) unless the termination of employee’s employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations; (ii) for purposes of Section 409A, employee’s right to receive installment payments pursuant to Section 6.8 or 8.2(c) shall be treated as a right to receive a series of separate and distinct payments; and (iii) to the extent that any reimbursement of expenses or in-kind benefits constitutes “deferred compensation” under Section 409A, such reimbursement or benefit shall be provided no later than December 31 of the year following the year in which the expense was incurred.  The amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year.  The amount of any in-kind benefits provided in one year shall not affect the amount of in-kind benefits provided in any other year. Notwithstanding any provision to the contrary in this employment agreement, if employee is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which employee is entitled under this employment agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of employee’s termination benefits shall not be provided to employee prior to the earlier of (A) the later of (x) expiration of the six-month period measured from the date of employee’s “separation from service” with employer (as such term is defined in the Treasury Regulations issued under Section 409A of the Code) and (y) the expiration of the eighteen-month period measured from December 30, 2013, or (B) the date of employee’s death; upon the earlier of such dates, all payments deferred pursuant to this sentence shall be paid in a lump sum to employee, and any remaining payments due under this employment agreement shall be paid as otherwise provided herein.

 

  

  

  

 

ARTICLE 9.

 

 

AGREEMENTS BY GRIFFIN LAND & NURSERIES, INC.

 

Section 9.1    Guaranty

 

As a material inducement to employee to enter into this Agreement and in recognition to the contribution to be made by employee to its own business, Griffin hereby guaranties full performance of this employment agreement by employer.

 

Section 9.2    Direct Agreement

 

As a material inducement to employee to enter into this employment agreement and in recognition to the contribution to be made by employee to its own business, Griffin hereby agrees to ratify and confirm the firm offer of employment contained in Article 6 and to allow continuing participation by employee in stock option plans identified in Article 4.

 

[signature page follows]

 

 

  

  

  

IN WITNESS WHEREOF, the parties have executed this employment agreement in duplicate and effective as of the Effective Date.

 

Imperial Nurseries, Inc.

By: /s/Anthony Galici                                                                           /s/Gregory Schaan

Its:      Senior Vice President                                                                      Gregory Schaan

 

Griffin Land & Nurseries, Inc.

 

By: /s/Anthony Galici

Its: Vice President, Chief Financial Officer and SecretaryExhibit 4.2

 

FORM OF STOCKHOLDERS’ AGREEMENT

 

This STOCKHOLDERS’ AGREEMENT (this “Agreement”), dated as of                   , is entered into by and among RSP Permian, Inc., a Delaware corporation (the “Company”), and each of the other parties identified on the signature pages hereto (collectively, but subject to Section 3.2 hereof, the “Principal Stockholders”).

 

RECITALS

 

WHEREAS, the Company is currently contemplating an underwritten public offering (the “IPO”) of shares of Common Stock (as defined below); and

 

WHEREAS, in connection with, and effective upon, completion of the IPO, the Company and the Principal Stockholders wish to set forth certain understandings among such parties, including with respect to certain corporate governance matters.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.1                                    Certain Definitions.  As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” of a specified Person is a Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, the Person specified.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“Beneficial Owner” of a security is a Person who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares (i) voting power, which includes the power to vote, or to direct the voting of, such security and/or (ii) investment power, which includes the power to dispose, or to direct the disposition of, such security.  The terms “Beneficially Own” and “Beneficial Ownership” shall have correlative meanings.

 

“Board” means the Board of Directors of the Company.

 

“Board Observer” has the meaning set forth in Section 2.1(b) of this Agreement.

 

“Collins Directors” has the meaning set forth in Section 2.1(a)(ii) of this Agreement.

 

“Collins Entities” has the meaning set forth in Section 2.1(a)(ii) of this Agreement.

 

“Common Stock” means the common stock, par value $0.01 per share, of the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

 

“Control” (including the terms “Controlling,” “Controlled by” and “under common Control with”) means the possession, direct or indirect, of the power to (a) direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise or (b) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person.

 

“Equity Securities” means any equity securities of the Company or any options, warrants or other securities that are directly or indirectly convertible into, or exercisable or exchangeable for, any equity securities of the Company.

 

“IPO” has the meaning set forth in the Recitals to this Agreement.

 

“Necessary Action” shall mean, with respect to a specified result, all actions (to the extent such actions are permitted by applicable law and, in the case of any action by the Company that requires a vote or other action on the part of the Board, to the extent such action is consistent with the fiduciary duties that the Company’s directors may have in such capacity) necessary to cause such result, including (i) voting or providing a written consent or proxy with respect to shares of Common Stock, (ii) causing the adoption of stockholders’ resolutions and amendments to the organizational documents of the Company, (iii) executing agreements and instruments and (iv) making or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similar actions that are required to achieve such result.

 

“NGP Representative” shall mean any manager, employee, director or officer of Production Opportunities II, L.P., a Delaware limited partnership, Natural Gas Partners IX, L.P., a Delaware limited partnership, or any Affiliate thereof.  For purposes of this definition, RSP Permian Holdco, L.L.C. shall not be considered an “Affiliate” of Production Opportunities II, L.P. or Natural Gas Partners IX, L.P.

 

“Person” means any individual, corporation, firm, partnership, joint venture, limited liability company, estate, trust, business association, organization, any court, administrative agency, regulatory body, commission or other governmental authority, board, bureau or instrumentality, domestic or foreign and any subdivision thereof or other entity, and also includes any managed investment account.

 

“Principal Stockholders” has the meaning set forth in the preamble to this Agreement.

 

“Proceeding” has the meaning set forth in Section 4.7 of this Agreement.

 

“RSP Permian Holdco Directors” has the meaning set forth in Section 2.1(a)(i) of this Agreement.

 

“RSP Permian Holdco Entities” has the meaning set forth in Section 2.1(a)(i) of this Agreement.

 

“Selected Courts” has the meaning set forth in Section 4.7 of this Agreement.

 

2

 

“Sponsor” means the RSP Permian Holdco Entities, the Collins Entities or the Wallace Entities, and “Sponsors” means the RSP Permian Holdco Entities, the Collins Entities and the Wallace Entities collectively.

 

“Wallace Director” has the meaning set forth in Section 2.1(a)(iii) of this Agreement.

 

“Wallace Entities” has the meaning set forth in Section 2.1(a)(iii) of this Agreement.

 

Section 1.2                                    Rules of Construction.  Unless the context otherwise requires:

 

(a)                                 References in the singular or to “him,” “her,” “it,” “itself” or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;

 

(b)                                 References to Articles and Sections shall refer to articles and sections of this Agreement, unless otherwise specified;

 

(c)                                  The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof;

 

(d)                                 This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted; and

 

(e)                                  References to “including” in this Agreement shall mean “including, without limitation,” whether or not so specified.

 

ARTICLE II
 GOVERNANCE MATTERS

 

Section 2.1                                    Designees.

 

(a)                                 The Company and the Principal Stockholders shall take all Necessary Action to cause the Board to consist of members designated as follows:

 

(i)                                     Two nominees shall be designated by RSP Permian Holdco, L.L.C. (the “RSP Permian Holdco Directors”); provided, that (A) the number of nominees designated by RSP Permian Holdco, L.L.C. shall be reduced to one director at such time as RSP Permian Holdco, L.L.C. and its Affiliates (the “RSP Permian Holdco Entities”) collectively Beneficially Own less than 15% and greater than or equal to 5% of the outstanding shares of Common Stock, at which point one RSP Permian Holdco Director shall tender his resignation to the Board, and (B) RSP Permian Holdco, L.L.C. shall no longer be entitled to designate a nominee at such time as the RSP Permian Holdco Entities collectively Beneficially Own less than 5% of the outstanding shares of Common Stock, at which point the RSP Permian Holdco Directors shall tender their resignation to the Board.  At any given time, and provided that the directors are

 

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allocated among separate classes, the RSP Permian Holdco Directors shall be in different classes of directors;

 

(ii)                                  One nominee shall be designated by Ted Collins, Jr. (the “Collins Director”); provided, that Ted Collins, Jr. shall no longer be entitled to designate a nominee at such time as Ted Collins, Jr. and his Affiliates (the “Collins Entities”) collectively Beneficially Own less than 5% of the outstanding shares of Common Stock, at which point the Collins Director shall tender his resignation to the Board; provided, further, however, that with respect to shares held directly by Collins & Wallace Holdings, LLC, the Collins Entities shall be deemed to Beneficially Own only the number of shares that is proportional to the Collins Entities’ ownership of Collins & Wallace Holdings, LLC; and

 

(iii)                               One nominee shall be designated by Wallace Family Partnership, LP (the “Wallace Director”); provided, that Wallace Family Partnership, LP shall no longer be entitled to designate a nominee at such time as Wallace Family Partnership, LP and its Affiliates (the “Wallace Entities”) collectively Beneficially Own less than 5% of the outstanding shares of Common Stock, at which point the Wallace Director shall tender his resignation to the Board; provided, further, however, that with respect to shares held directly by Collins & Wallace Holdings, LLC, the Wallace Entities shall be deemed to Beneficially Own only the number of shares that is proportional to the Wallace Entities’ ownership of Collins & Wallace Holdings, LLC.

 

(b)                                 So long as RSP Permian Holdco, L.L.C. is entitled to designate a nominee pursuant to (a)(i), in the event that any RSP Permian Holdco Director is not a NGP Representative, then RSP Permian Holdco,L.L.C. shall have the right to appoint one individual to attend all meetings of the Board in a non-voting, observer capacity (the “Board Observer”).  The Board Observer shall be entitled to (i)  be given notice by the Company of any meeting of the Board or any committee thereof at the same time as the directors of the Company, (ii)  be present at all meetings of the Board or any committee thereof, (iii)  receive copies of all minutes of Board meetings and Board committee meetings and (iv) receive copies of any reports, minutes or other documents distributed to the Board or any committee thereof at the time such materials are given to the directors of the Company. Prior to such appointment, the Board Observer shall cooperate in good faith with the Company to enter into a reasonable and customary confidentiality agreement with respect to confidential materials received by the Board Observer in his capacity as such. The Company shall reimburse the Board Observer for all reasonable out-of-pocket expenses (including travel and lodging) incurred in connection with his attendance at meetings of the Board.

 

(c)                                  So long as the RSP Permian Holdco Entities collectively Beneficially Own 15% or more of the outstanding shares of Common Stock, the Board shall include at least one RSP Permian Holdco Director on each committee of the Board as designated by RSP Permian Holdco, L.L.C. (subject to any independence requirement imposed by law or by the rules of any national securities exchange on which the Common Stock may be listed or traded).

 

(d)                                 So long as a Sponsor is entitled to designate a nominee pursuant to Section 2.1(a), the Sponsor shall have the right to remove its nominee(s) (with or without cause), from time to time and at any time, from the Board, exercisable upon written notice to the Company.

 

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Should a director designated by a Sponsor be removed for any reason, whether by such Sponsor or otherwise in accordance with the Company’s certificate of incorporation and bylaws, as either may be amended or restated from time to time, the Sponsor shall be entitled to designate an individual to fill the vacancy created by such removal so long as the Sponsor is entitled to designate a nominee pursuant to Section 2.1(a) on the date of such replacement designation.

 

(e)                                  Each Principal Stockholder hereby agrees to vote, in respect of the Board, such Principal Stockholder’s shares of Common Stock and Equity Securities for any nominee designated by a Sponsor so long as the Sponsor is entitled to designate such nominee pursuant to Section 2.1(a).  In the event that a Sponsor wishes to remove its designee to the Board in accordance with Section 2.1(d), each Principal Stockholder hereby agrees to vote, in respect of the Board, its shares of Common Stock or Equity Securities for the removal of such designee from the Board.

 

Section 2.2                                    Restrictions on Other Agreements.  No Principal Stockholder shall grant any proxy or enter into or agree to be bound by any voting trust, agreement or arrangement of any kind with respect to its shares of Common Stock or Equity Securities if and to the extent the terms thereof conflict with the provisions of this Agreement (whether or not such proxy, voting trust, agreement or arrangements are with other Principal Stockholders, holders of shares of Common Stock or Equity Securities that are not parties to this Agreement or otherwise).

 

ARTICLE III
  EFFECTIVENESS AND TERMINATION

 

Section 3.1                                    Effectiveness.  Upon the closing of the IPO, this Agreement shall thereupon be deemed to be effective.  However, to the extent the closing of the IPO does not occur, the provisions of this Agreement shall be without any force or effect.

 

Section 3.2                                    Termination.  This Agreement shall terminate upon the earlier to occur of (a) such time as none of the Principal Stockholders Beneficially Own any shares of Common Stock and (b) the delivery of written notice to the Company by all of the Principal Stockholders, requesting the termination of this Agreement.  Further, at such time as a particular Principal Stockholder no longer Beneficially Owns any shares of Common Stock, all rights and obligations of such Principal Stockholder under this Agreement shall terminate.

 

ARTICLE IV
 MISCELLANEOUS

 

Section 4.1                                    Notices.  All notices, requests, consents and other communications hereunder to any party shall be in writing and shall be personally delivered, sent by nationally recognized overnight courier or mailed by registered or certified mail to such party at the address set forth below (or such other address as shall be specified by like notice).  Notices will be deemed to have been given hereunder when personally delivered, one calendar day after deposit with a nationally recognized overnight courier and five calendar days after deposit in U.S. mail.

 

(a)                                 if to the Company, to:

 

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RSP Permian, Inc.
 3141 Hood Street, Suite 701
 Dallas, Texas 75219
 Attention: Scott McNeill

 

(b)                                 if to RSP Permian Holdco, L.L.C., to:

 

RSP Permian Holdco, L.L.C.
 3141 Hood Street, Suite 701

Dallas, Texas 75219

Attention: Scott McNeill

 

with a copy to:

 

Natural Gas Partners

5221 N. O’Connor Blvd., Suite 1100

Irving, Texas 75039

Attention: Jesse Bomer

 

(c)                                  if to Ted Collins, Jr., to:

 

Ted Collins, Jr. 
 508 West Wall Street, Suite 1200
 Midland, TX 79701

 

(d)                                 if to Wallace Family Partnership, LP, to:

 

Wallace Family Partnership, LP
 508 West Wall Street, Suite 1200
 Midland, TX 79701

 

(e)                                  if to Rising Star Energy Development Co., LLC, to:

 

Rising Star Energy Development Co., LLC
 3141 Hood Street, Suite 701

Dallas, Texas 75219

Attention: Tamara Pollard

 

with a copy to:

 

Natural Gas Partners

5221 N. O’Connor Blvd., Suite 1100

Irving, Texas 75039

Attention: Jesse Bomer

 

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(f)                                   if to Pecos Energy Partners, L.P., to:

 

Pecos Energy Partners, L.P.
 125 W. Missouri Ave, Suite 450

Midland, Texas 79701

Attention: Steve Gray

 

Section 4.2                                    Severability.  The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is found to be invalid or unenforceable in any jurisdiction, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

Section 4.3                                    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall be considered one and the same agreement.

 

Section 4.4                                    Entire Agreement; No Third Party Beneficiaries.  This Agreement (a) constitutes the entire agreement and supersedes all other prior agreements, both written and oral, among the parties with respect to the subject matter hereof and (b) is not intended to confer upon any Person, other than the parties hereto, any rights or remedies hereunder.

 

Section 4.5                                    Further Assurances.  Each party shall execute, deliver, acknowledge and file such other documents and take such further actions as may be reasonably requested from time to time by the other parties hereto to give effect to and carry out the transactions contemplated herein.

 

Section 4.6                                    Governing Law; Equitable Remedies.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF).  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or was otherwise breached.  It is accordingly agreed that the parties hereto shall be entitled to an injunction or injunctions and other equitable remedies to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any of the Selected Courts (as defined below), this being in addition to any other remedy to which they are entitled at law or in equity.  Any requirements for the securing or posting of any bond with respect to such remedy are hereby waived by each of the parties hereto.  Each party further agrees that, in the event of any action for an injunction or other equitable remedy in respect of such breach or enforcement of specific performance, it will not assert the defense that a remedy at law would be adequate.

 

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Section 4.7                                    Consent To Jurisdiction.  With respect to any suit, action or proceeding (“Proceeding”) arising out of or relating to this Agreement, each of the parties hereto hereby irrevocably (a) submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware and the United States District Court for the District of Delaware and the appellate courts therefrom (the “Selected Courts”) and waives any objection to venue being laid in the Selected Courts whether based on the grounds of forum non conveniens or otherwise and hereby agrees not to commence any such Proceeding other than before one of the Selected Courts; provided, however, that a party may commence any Proceeding in a court other than a Selected Court solely for the purpose of enforcing an order or judgment issued by one of the Selected Courts; (b) consents to service of process in any Proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, or by recognized international express carrier or delivery service, to the Company or the Principal Stockholders at their respective addresses referred to in Section 4.1 hereof; provided, however, that nothing herein shall affect the right of any party hereto to serve process in any other manner permitted by law; and (c) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH THIS AGREEMENT, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AND AGREES THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT AND TO HAVE ALL MATTERS RELATING TO THIS AGREEMENT BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

Section 4.8                                    Amendments; Waivers.

 

(a)                                 No provision of this Agreement may be amended or waived unless such amendment or waiver is in writing and signed, in the case of an amendment, by each of the parties hereto, or in the case of a waiver, by each of the parties against whom the waiver is to be effective.

 

(b)                                 No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 4.9                                    Assignment.  Neither this Agreement nor any of the rights or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties; provided, however, that a Sponsor may assign any of its respective rights hereunder to any of its Affiliates.  Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered, all as of the date first set forth above.

 

	
 
    	
RSP PERMIAN, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RSP PERMIAN HOLDCO, L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TED COLLINS, JR.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WALLACE FAMILY PARTNERSHIP, LP
    
	
 
    	
By:
    	
Michael Wallace Management, LLC, its General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Michael W. Wallace
    
	
 
    	
 
    	
Title: Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RISING STAR ENERGY DEVELOPMENT CO., L.L.C.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    

 

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PECOS ENERGY PARTNERS, L.P.
    
	
 
    	
By:
    	
Pecos Operating Company, LLC, its General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

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