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EXHIBIT 10.5
ENCORE ACQUISITION PARTNERS, INC.
MANAGEMENT STOCK OWNERSHIP PLAN
RECITALS:
A. Effective as of August 18, 1998 (the "Effective Date"), the Board of
Directors of Encore Acquisition Partners, Inc., a Delaware corporation (the
"Company"), hereby adopts this Management Stock Ownership Plan (the "Plan") for
certain executive officers of the Company.
B. It is the purpose of this Plan to promote the interests of the
Company and its stockholders by attracting, retaining and stimulating the
performance of selected members of Management (as defined below) end giving such
persons the opportunity to acquire a proprietary interest in the Company and an
increased personal interest in its continued success and progress, by making
available shares of common stock of the Company, subject to the terms and
conditions described below.
Section 1. Definitions. The following terms shall have the following
meanings:
"Board" means the Board of Directors of the Company.
"Class A Common Stock" means the Class A common stock, par value
$.01 per share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value
$.01 per share, of the Company.
"Fundamental Change" means (i) the Company merges, consolidates or
reconstitutes or exchanges shares with or into any other entity either
in a situation in which (A) the Company is not the surviving entity, or
(B) the Company's stockholders as of the date of the adoption of this
Plan shall collectively no longer own at least 35% of the outstanding
equity securities of the Company, (ii) the Company sells, leases or
exchanges or agrees to sell, lease or exchange all or substantially all
of its assets to any other Person, or (iii) the Company is to be
dissolved and liquidated, or (iii) the Company redeems all of the Class
B Common Stock.
"Management" means any individual designated by the Board from
time to time as a member of the Company's management team. It is
expected that the Board will designate as Management the executive
officers of the Company. As of the date of the adoption of this Plan,
the members of Management are I. Jon Brumley, Jon S. Brumley, Bruce B.
Selkirk, III, Gene Carlson and Kyle Schultz.
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"Stock Purchase Agreement" means the Stock Purchase Agreement
dated even date herewith by and among the Company and the stockholders
a party thereto.
"Person" means an individual, partnership, limited partnership,
limited liability company, foreign limited liability company, trust,
estate, corporation, trustee, executor, administrator, nominee or
entity in a representative capacity.
Section 2. Reservation of Shares. The Board agrees with the members of
Management to reserve at least (i) 2.6% of the outstanding shares of the Class A
Common Stock on a fully diluted basis, after taking into account the number of
shares of Class A Common Stock issuable upon the redemption of the Class B
Common Stock and shares issuable upon the exercise of options granted pursuant
to the Company's employee stock option plans (if any); provided, however, that
if the Company issues shares of capital stock not otherwise contemplated by the
Stock Purchase Agreement then such 2.6% of the outstanding shares of the Class A
Common Stock shall be diluted on a pro rata basis with the other shares of Class
A Common Stock; plus (ii) the number of shares, if any, that the Company or any
other Person repurchases from any member of Management pursuant to the Company's
or any such other Person's rights under Article IV of the Stockholders'
Agreement dated of even date herewith by and among the Company and its
stockholders ((i) plus (ii), collectively, the "Reserved Shares") for sale to
the members of Management on such terms as the Board shall in its sole
discretion determine. As of the date of the adoption of this Plan, the number of
Reserved Shares is 9,971.5.
Section 3. Board Action. The Board shall have full authority,
discretion or power to determine (i) the individuals who will be deemed a member
of Management, (ii) the members of Management to whom the Company will issue
Reserved Shares, (iii) the number of Reserved Shares that may be issuable to the
members of Management, (iv) the time or times at which the Company shall issue
Reserved Shares and (v) the price at which members of Management may purchase
Reserved Shares. The decisions of the Board relating to such matters shall be
final and binding upon the Company and the members of Management.
Section 4. Issuance of Shares Upon Fundamental Change. In the event
that the Company shall enter into a Fundamental Change and the Company shall not
have issued all of the Reserved Shares, immediately prior to the occurrence of
such Fundamental Change, the Company shall issue all remaining Reserved Shares
to Management (provided, that, unless the Board makes a determination to the
contrary, all of such remaining Reserved Shares shall be issued to I. Jon
Brumley). The price of such issuance shall be equal to the purchase price per
share of Class A Common Stock as set forth in the Stock Purchase Agreement, plus
the amount of any Capital Calls (as defined in the Stock Purchase Agreement)
allocable to such shares.
Section 5. Treatment of Proceeds. Proceeds from the sale of Class A
Common Stock pursuant to the Plan shall constitute general funds of the Company.
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As adopted by the Board of Directors of Encore Acquisition Partners,
Inc. on August 18, 1998.
ENCORE ACQUISITION PARTNERS, INC.
By: /s/ BRUCE B. SELKIRK, III
Name:
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Title:
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