Employee Shareholders Agreement, Dated 05/31/95

EMPLOYEE SHAREHOLDERS AGREEMENT


THIS EMPLOYEE SHAREHOLDERS AGREEMENT is made as of this 31st day of May, 1995 by and among Statoil Energy, Inc., a Virginia corporation (the "Corporation"), and the persons who have executed this agreement who are owners of Common Stock of the Corporation ("Shareholders") and/or holders of options to purchase Common Stock ("Option Holders").


EXPLANATORY STATEMENT


The parties believe that it is desirable and in their best interests to provide a means for Holders to achieve liquidity for shares of the Corporation's Common Stock owned or to be acquired by employees of the Corporation and to restrict the ownership of the Common Stock, in each case until such time as the Corporation completes an initial public offering of its Common Stock.


NOW, THEREFORE, in consideration of the matters set forth in the Explanatory Statement and the mutual covenants, promises, agreements, representations and warranties of the parties hereto, the parties hereto do hereby covenant, promise, agree, represent and warrant as follows:


1. Definitions. Capitalized words and phrases used in this Agreement shall have the following meanings:


"Act" means the Securities Act of 1933, as amended.


"Agreement" means this Employee Shareholders Agreement, as amended from time to time.


"Appraiser" shall be the appraiser that shall initially determine the Established Value Per Share for any year, as contemplated by Section 3 hereof.


"Bradley" means Ralph L. Bradley, an individual residing in Alexandria, Virginia.


"Cause", when used with respect to a Holder, means the Termination of a Holder's employment by the Corporation by reason of (i) the material breach by the Holder of any of his employment duties, as reasonably determined by the Corporation following notice to the Holder of the details of such breach and a period of at least thirty (30) days during which the Holder shall be given an opportunity to cure such breach, (ii) conviction of the Holder of the commission of any felony, (iii) alcoholism or drug addiction of the Holder (other than addiction caused by medical treatment for illness or injury), but only if the Holder has refused to submit to rehabilitation for such condition upon the request of the Corporation, or (iv) violation of agreements and. policies of the Corporation regarding non-disclosure of confidential information, confidentiality, and anti-competitive behavior, whether pursuant to an employment agreement or otherwise.


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"Closing" and "Closing Date" each means the date and time at which a Closing of the purchase of Shares by the Corporation under this Agreement occurs.


"Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of any succeeding law).


"Committee" means the Compensation Committee of the Board of Directors of Statoil Energy, Inc.


"Common Stock" means the Corporation's authorized shares of Common Stock, $0.01 par value per share.


"Consensus Appraisers" has the meaning set forth in Section 7.2 of this Agreement.


"Corporation" means Statoil Energy, Inc., a Virginia corporation.


"Days" means all calendar days, inclusive of Saturdays, Sundays and days which are legal holidays under the laws of the United States or the State.


"Decedent" means a deceased Holder, the personal representative or estate of which shall have certain rights pursuant to Section 6 of this Agreement.


"Established Value Per Share" means the fair market value per share of Common Stock of the Corporation on a fully diluted basis as determined under the provisions of Section 3 of this Agreement, or in the case of an eligible Holder or Decedent electing to utilize the provisions of Section 7 of this Agreement the price determined under Section 7.


"Holder" means an Option Holder or a Shareholder.


"Incentive Compensation Plan" means the Amended and Restated Incentive Compensation Plan of Statoil Energy, Inc. as currently in effect or as amended from time to time.


"Justification", when used with respect to a Holder, means the resignation of a Holder from employment with the Corporation upon (i) a substantial diminution in responsibilities, position, or salary, or (ii) the involuntary transfer to an office or business location, in the case of a Holder then assigned to the Corporation's headquarters offices, outside of the Washington/Baltimore metroplex and in the case of any other Holder, by more than 75 miles from the location of the Holder's immediately preceding office or work location.


"LIBOR" means the London Inter-Bank Offered Rate as published from time to time in The Wall Street Journal.


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"Note" means the Corporation's unsecured non-negotiable promissory note issued by the Corporation in partial payment for Stock purchased from a Holder in certain circumstances where the dollar amount of Stock being repurchased exceeds $100,000. Sections 4.5 and 6.3 of this Agreement describe the procedures for issuance of Notes, a form of which is attached hereto as Exhibit A. The Note bears interest at the greatest of ten percent (10%) per annum, 3% above the three month LIBOR or the minimum rate of interest required by the Internal Revenue Code of 1986, as amended, to preclude the imputation of interest.


"Option Holder" means an employee of the Corporation who holds an option to purchase Common Stock pursuant to the Incentive Compensation Plan. All Option Holders shall be subject to this Agreement as a condition of the grant of Options.


"Own" when used with respect to shares of Common Stock of the Corporation includes beneficial and record ownership of Shares.


"Person" means any individual, partnership, corporation, trust or other entity.


"Plans" means the Incentive Compensation Plan and the Stock Purchase Plan.


"Protected Termination" means either termination of the Holder's employment by the Corporation without Cause or resignation of the Holder from employment with the Corporation with Justification.


"Put Option Notice" shall be the notice, required to be given during April or October in any year, in which a Holder commits, subject to withdrawal in certain circumstances, to tender Put Option Shares to the Corporation for repurchase.


"Put Option Shares" means Shares owned by a Holder for at least six months that the Holder may tender to the Corporation (commencing in October, 1996) for repurchase commencing January 1, 1997.


"Put Option Share Price" shall mean the price at which a Holder's Put Option Shares are required to be purchased under Section 4.1 of this Agreement.


"Security" has the meaning set forth in the Act.


"Shareholder" means those Persons who own shares of the Common Stock acquired pursuant to the Incentive Compensation Plan, the Stock Purchase Plan, or otherwise and who have entered into this Agreement.


"Shares" means all shares of Common Stock which a Holder may own or may in the future own, whether of record or beneficially.


"State" means the Commonwealth of Virginia.


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"State Acts" means the securities laws of any state or the District of Columbia.


"Statoil" means Den norske stats oljeselskap, a.s, a corporation organized under the laws of the Kingdom of Norway.


"Stock Purchase Plan" means Statoil Energy, Inc. 1995 Stock Purchase Plan, pursuant to which the Corporation has initially made available 150,000 shares of Common Stock for purchase by eligible employees.


"Terminated Shareholder" means a Holder whose employment with the Corporation has terminated.


"Termination" means the termination of a Shareholder's employment.


"Transfer" means the sale, hypothecation pledge, assignment or other transfer, be it voluntary or involuntary to a Shareholder or third person, inter vivos, testamentary, by operation of the laws of devise and descent or any other laws; PROVIDED, HOWEVER) that the pledge of Shares by a Holder to the Corporation pursuant to the Stock Purchase Plan in order to secure the Holder's installment purchase obligations thereunder shall not be deemed to be a Transfer for any purpose under this Agreement.


2. GENERAL.


2.1. Termination of Prior Agreement. The parties hereto that are parties to the Incentive Compensation Plan Stockholders Agreement dated as of December 29, 1993 hereby agree to supersede that agreement with this Agreement and hereby agree that agreement has been terminated as of the date of this Agreement.


2.2. Transfer Restrictions. Each Holder covenants, promises and agrees that he or she shall not Transfer all, any portion of, or any interest or rights in, the Shares Owned or which in the future may become Owned by such Holder, except pursuant to the terms and provisions of this Agreement. Each Holder hereby acknowledges the reasonableness of the restrictions on Transfers imposed by this Agreement in view of the purposes of the Corporation and the relationships of the Holders. Unless the Transfer is made in conformance with and pursuant to the terms of this Agreement, the Transfer of any Shares by any Holder shall be deemed invalid, null and void, and of no force or effect, and the transferee of any such shares shall not be entitled to vote such shares receive dividends on such shares or have any other rights in and with respect to such shares.


2.3 Permitted Transfers. A Holder may freely and without restriction transfer Shares to another Holder who at the time of the transfer is an employee of the Corporation, to the Corporation, to Statoil, to Bradley or to a member of Holder's immediate family, including a trust for the benefit of family members, provided that in the case of intra-family Transfers, all transferees shall have executed an instrument, in form and content satisfactory to the Corporation, undertaking to become a party to this Agreement and to be bound by all of its


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provisions, a form of which undertaking is attached hereto as Exhibit B.


2.4 Applicability of Agreement to Bradley Shares. With respect to Shares Owned by Bradley, this Agreement shall apply only to Shares Bradley may acquire in the future pursuant to the Incentive Compensation Plan or from a Holder pursuant to Section 2.3 of this Agreement.


3. COMPUTATION OF ESTABLISHED VALUE PER SHARE


3.1 Determination of Established Value Per Share. Each year the Committee shall cause the Established Value Per Share to be determined pursuant to the provisions of this Section 3 and the Established Value Per Share shall be applicable for transactions occurring during such year, except as otherwise provided in this Agreement.


3.2 Selection of Appraiser. The Committee shall select an Appraiser who shall be directed to determine the Established Value Per Share applicable to Common Stock which may be repurchased by the Corporation during calendar year 1996 and each succeeding calendar year. In all instances, the Appraiser shall be selected in good faith by the Committee and shall be experienced in valuing energy related business enterprises.


3.3. Method of Determination of Established Value Per Share. The Appraiser shall make a determination of the Established Value Per Share based on its determination of the fair market value of the Corporation as of January 1 of each calendar year, commencing January 1, 1996, determined without any discount for minority interests or lack of liquidity of the Shares, based upon its assessment of the most likely price to which a willing buyer and willing seller would agree for the Corporation as a whole and its judgment as to whether such fair market value should be based upon a going concern value approach, a liquidation value approach, another valuation approach, or a combination of one or more valuation approaches. The Appraiser shall also consider in good faith such factors as may be suggested in the reasonable discretion of the Committee with the input of management of the Corporation and such other factors as the Appraiser, in the independent exercise of its professional judgment, determines to be customary and appropriate under the circumstances.


3.4 Effect of Committee Determinations of Established Value Per Share. The Committee may waive the requirement that an Appraiser determine the Established Value Per Share for any particular year or may override the Appraiser's determination of the Established Value Per Share then in effect in the event that the Committee determines, in its sole and conclusive discretion, that another transaction in shares of the Corporation's capital stock (other than a repurchase by the Corporation of Shares pursuant to this Agreement or a repurchase of shares of Common Stock owned by Bradley or transferees of Bradley pursuant to the Shareholders Agreement dated February 10, 1994, as amended) occurring since the last computation of Established Value Per Share is fairly representative of the current fair market value per share of the Corporation's Common Stock. In such event, the transaction price per share of Common Stock for such transaction shall become the Established Value Per Share for purposes of subsequent repurchases pursuant to this Agreement occurring during the remainder


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of the calendar year in which the Committee makes its determination and such Established Value Per Share shall be binding unless challenged by a Holder pursuant to Section 7 of this Agreement.


3.5 Timing of Delivery of Appraiser's Report. Unless the Committee waives the requirement that the Appraiser determine the Established Value Per Share as permitted pursuant to Section 3.4 of this Agreement the Corporation shall require the Appraiser to deliver to the Corporation a written report indicating its determination of the Established Value Per Share on or before March 31 of each year commencing March 31, 1996 (or as soon thereafter as audited financial statements are available).


3.6 Committee Determination for 1995 Calendar Year. With respect to Common Stock repurchases occurring during calendar year 1995, the Committee has conclusively determined that the Established Value Per Share shall be $10.00 and that the Appraiser shall not be required to compute the Established Value Per Share for any repurchases of Common Stock that may occur during calendar year 1995 pursuant to this Agreement.


4. MANDATORY REPURCHASES BY THE CORPORATION FROM ACTIVE EMPLOYEES.


4.1 Exercise of Put Option. Commencing October 1, 1996, a Holder who is an active employee of the Corporation may provide a Put Option Notice to the Corporation by which the Holder exercises the rights provided under this Section 4.1 to require the Corporation to purchase all or a portion of his Shares. A Put Option Notice may be given only as to any Shares owned by a Shareholder for at least six (6) months at the time the Put Option Notice is given. A Put Option Notice may only be given during the months of April and October in any year (though in no event earlier that October 1996), and the Corporation shall not be obligated to purchase Shares as to which a timely Put Option Notice has not been provided.


4.2 Mechanics of Exercising Put Option. Shares as to which a timely Put Option Notice have been given shall be purchased, out of lawfully available funds, at the Established Value Per Share determined for the calendar year in which the Put Option Notice is given. The Corporation shall provide a person who has timely given a Put Option Notice a written response by the May 15 or November 15 immediately following the tender of the Holder's Put indicating whether the Corporation plans to purchase the Put Option Shares for cash, to pay the purchase price for the Put Option Shares in installments as permitted pursuant to Section 4.5 (only if the aggregate Established Value Per Share for the Shares to be repurchased from the Holder in question in any twelve month period exceeds $ 100,000), or to decline to purchase such Shares because of a lack of lawfully available funds. (Section 9 of this Agreement sets forth the criteria for determining that the Corporation lacks lawfully available funds to effect a purchase.)


4.3 Right to Withdraw or Amend Put Option Notice. In the event the Corporation elects to utilize installment payments as permitted pursuant to Section 4.5 or the Corporation lacks lawfully available funds to effect the repurchase of the Put Option Shares in full, the Holder shall have the right to withdraw his Put Option Notice and terminate the


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Corporation's obligation to purchase the Put Option Shares at such time or to amend the Put Option Notice to reduce the number of Put Option Shares to be repurchased pursuant to the Put Option Notice, provided there is lawfully available funds to effect the repurchase of the reduced number of Shares. Any amendment to the Put Option Notice, as permitted by the preceding sentence, shall be received by the Corporation no later than the May 25 or November 25 immediately following the Put Option Notice, as the case may be.


4.4 Closing of Put Option Share Purchase. Subject to the Holder's right to withdraw the Put Option Notice pursuant to Section 4.3, the Closing of purchases pursuant to Put Option Notices that have not been withdrawn shall occur not later than the May 30 or November 30 immediately following the Put Option Notice, as the case may be; provided, that the Closing of the purchase of any Shares as to which the Put Option Notice is given in October, 1996 shall occur on January 2, 1997 provided that the Corporation has lawfully available funds to repurchase such shares. The Corporation shall provide the Holder written notice as to the date of Closing under this Section 4.4.


4.5 Installment Payments. The Corporation shall have the right to pay up to a portion, as specified herein, of the purchase price for any shares to be repurchased pursuant to Section 4, in installments; provided, however, that this installment payment method shall not be available if the aggregate Established Value Per Share for the Shares to be repurchased from the Holder in question in any twelve month period is less than or equal to $100,000. The maximum amount of the purchase price that may be paid by the Corporation under the installment payment method shall be seventy-five percent (75%) of the excess of the aggregate purchase price for the Shares to be repurchased over $100,000. Accordingly, if the aggregate purchase price for the Put Option Shares of Holder is greater than $100,000, at least $ 100,000 and twenty-five percent (25%) of the aggregate purchase price in excess of $100,000 shall be paid in cash on the Closing Date and the remaining portion may be paid at Closing by the making, sealing and delivering of the Note to the Holder in a principal amount equal to such remaining portion of the aggregate purchase price. The Note shall be payable in 12 equal quarterly installments of p ...