XXXXXXX PETROLEUM
CORPORATION
THIS
RESTRICTED STOCK AGREEMENT (this “Agreement”) is made and entered into as of
_____________________ by and between Xxxxxxx Petroleum Corporation, a Delaware corporation
with its principal offices at Denver, Colorado (the “Company”), and the
executive officer of the Company or one of its affiliates whose signature is set forth on
the signature page hereof (the “Participant”).
W I T N E S S E T H :
WHEREAS,
the Company has adopted the Xxxxxxx Petroleum Corporation 2003 Equity Incentive Plan (as
amended, the “Plan”) to permit shares of the Company’s common stock
(the “Stock”), to be awarded to certain key salaried employees and
non-employee directors of the Company and any affiliate of the Company; and
WHEREAS,
the Participant is an executive officer of the Company, and the Company desires such
person to remain in such capacity and to further an opportunity for his or her stock
ownership in the Company in order to increase his or her proprietary interest in the
success of the Company;
NOW,
THEREFORE, in consideration of the premises and of the covenants and agreements herein set
forth, the parties hereby mutually covenant and agree as follows:
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1. Award
of Restricted Stock. Subject to the terms and conditions set forth
herein, the Company hereby awards the Participant the number of shares of
Stock set forth on the signature page hereof (the “Restricted
Stock”).
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2. Restrictions.
(a) Except as otherwise provided herein, Restricted Stock may not be sold,
transferred, pledged, assigned, encumbered or otherwise alienated or
hypothecated until the date of release (the “Release Date”)
determined as follows:
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(i) the
Release Date with respect to one-third of the shares of Restricted Stock
shall be the first anniversary of the Grant Date specified on the
signature page hereof (the “Grant Date”) if the
Compensation Committee of the Board of Directors of the Company (the “Committee”)
determines the Performance Contingency (as defined below) has been
satisfied with respect to the Company’s fiscal year immediately
preceding the first anniversary of the Grant Date;
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(ii) the
Release Date with respect to two-thirds of the shares of Restricted Stock
(less any shares of Restricted Stock for which there already has been a
Release Date) shall be the second anniversary of the Grant Date if the
Committee determines the Performance Contingency has been satisfied with
respect to the Company’s fiscal year immediately preceding the second
anniversary of the Grant Date; and
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(iii) the
Release Date with respect to all of the shares of Restricted Stock (less any
shares of Restricted Stock for which there already has been a Release
Date) shall be the third anniversary of the Grant Date if the Committee
determines the Performance Contingency has been satisfied with respect to
the Company’s fiscal year immediately preceding the third anniversary
of the Grant Date.
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If
the Committee determines that the Performance Contingency has not been satisfied with
respect to the Company’s fiscal year immediately preceding the third anniversary of
the Grant Date, then all Restricted Stock that previously has not been released shall be
forfeited to the Company on the date the Committee makes such determination.
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(b) Within
six weeks after the end of each of the Company’s fiscal years preceding
the first three anniversaries of the Grant Date, the Committee will determine
whether the Performance Contingency has been satisfied with respect to such
fiscal year based on the criteria set forth in this Section 2. The “Performance
Contingency” will be satisfied with respect to such a fiscal year if
at the end of such fiscal year the Company has achieved a ____% increase
(compounded annually) in the amount by which the PV10% After Tax Value Per
Share (as defined below) at the end of such fiscal year exceeds the Debt Per
Share (as defined below) at the end of such fiscal year compared to the amount
by which the PV10% After Tax Value Per Share at the end of the fiscal year
immediately preceding the Grant Date exceeds the Debt Per Share at the end of
the fiscal year immediately preceding the grant date.
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(c) “PV10%
After Tax Value Per Share” means an amount equal to the quotient of
(i) the standardized measure of discounted future net cash flows relating to
the Company’s proved reserves as of the end of a fiscal year calculated in
accordance with Securities and Exchange Commission guidelines using prices at
such fiscal year end as reported in the Company’s Annual Report on Form
10-K and an annual discount rate of 10% divided by (ii) the Company’s
issued and outstanding shares as of the end of such fiscal year.
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(d) “Debt
Per Share” means an amount equal to the quotient of (i) the Company’s
consolidated long-term debt as of the end of a fiscal year divided by (ii) the
Company’s issued and outstanding shares as of the end of such fiscal year.
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3. Initial
Issuance. The Restricted Stock shall be issued as soon as practicable in
the name of the Participant but shall be held in a segregated account by the
transfer agent of the Company. Unless forfeited as provided herein, Restricted
Stock eligible for release pursuant to the terms hereof shall cease to be held
in such segregated account and certificates for such Restricted Stock shall be
delivered or such Restricted Stock shall be transferred electronically to the
Participant on the applicable Release Date.
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4. Transfer
After Release Date; Securities Law Restrictions. On the applicable Release
Date as determined in accordance with Paragraph 2, that portion of Restricted
Stock shall become free of the restrictions of Paragraph 2 and be freely
transferable by the Participant. Notwithstanding the foregoing or anything to
the contrary herein, the Participant agrees and acknowledges with respect to
any Restricted Stock that has not been registered under the Securities Act of
1933, as amended (the “Act”) (i) he or she will not sell or
otherwise dispose of such Stock except pursuant to an effective registration
statement under the Act and any applicable state securities laws, or in a
transaction which, in the opinion of counsel for the Company, is exempt from
such registration, and (ii) a legend will be placed on the certificates for the
Restricted Stock to such effect.
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5. Termination
of Employment or Death. If the Participant’s employment with the
Company (as applicable) is terminated for any reason (including death) prior to
the Release Date, all Restricted Stock that has not been released shall be
forfeited to the Company on the date on which such termination of status
occurs.
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6. Certificate
Legend. In addition to any legends placed on certificates for Restricted
Stock under Paragraph 4 hereof, each certificate for shares of Restricted Stock
may bear the following legend:
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“THE
SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER
VOLUNTARY, INVOLUNTARY OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS SET
FORTH IN THE XXXXXXX PETROLEUM CORPORATION 2003 EQUITY INCENTIVE PLAN AND A RESTRICTED
STOCK AGREEMENT BETWEEN XXXXXXX PETROLEUM CORPORATION AND THE REGISTERED OWNER HEREOF. A
COPY OF SUCH PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM THE CORPORATE SECRETARY OF
XXXXXXX PETROLEUM CORPORATION.” |
When the restrictions imposed by
Paragraph 2 hereof terminate, the Participant shall be entitled to have the foregoing
legend removed from the certificates representing such Restricted Stock.
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7. Voting
Rights; Dividends and Other Distributions. (a) While the Restricted
Stock is subject to restrictions under Paragraph 2 and prior to any
forfeiture thereof, the Participant may exercise full voting rights for
the Restricted Stock registered in his or her name and held in a
segregated account hereunder.
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(b) While
the Restricted Stock is subject to the restrictions under Paragraph 2 and
prior to any forfeiture thereof, the Participant shall be entitled to
receive all dividends and other distributions paid with respect to the
Restricted Stock. If any such dividends or distributions are paid in
Stock, such shares shall be subject to the same terms, conditions and
restrictions as the shares of Restricted Stock with respect to which they
were paid, including the requirement that Restricted Stock be held in a
segregated account pursuant to Paragraph 3 hereof.
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(c) Subject
to the provisions of this Agreement, the Participant shall have, with
respect to the Restricted Stock, all other rights of holders of Stock.
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8. Tax
Withholding. (a) It shall be a condition of the obligation of the
Company to issue or release from the segregated account Restricted Stock
to the Participant, and the Participant agrees, that the Participant shall
pay to the Company upon demand such amount as may be requested by the
Company for the purpose of satisfying its liability to withhold federal,
state, or local income or other taxes incurred by reason of the award of
the Restricted Stock or as a result of the termination of the restrictions
on such Stock hereunder.
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(b) If
the Participant does not make an election under Section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Restricted Stock
awarded hereunder, the Participant may satisfy the Company’s
withholding tax requirements by electing to have the Company withhold that
number of shares of Restricted Stock otherwise deliverable to the
Participant from the segregated account hereunder or to deliver to the
Company a number of shares of Stock, in each case, having a Fair Market
Value (as defined in the Plan) on the Tax Date (as defined below) equal to
the minimum amount required to be withheld as a result of the termination
of the restrictions on such Restricted Stock. The election must be made in
writing and must be delivered to the Company prior to the Tax Date. If the
number of shares so determined shall include a fractional share, the
Participant shall deliver cash in lieu of such fractional share. All
elections shall be made in a form approved by the Committee and shall be
subject to disapproval, in whole or in part, by the Committee. As used
herein, “Tax Date” means the date on which the Participant must include
in his or her gross income for federal income tax purposes the fair market
value of the Restricted Stock over the purchase price therefor, if any.
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9. Powers
of Company Not Affected. The existence of the Restricted Stock shall
not affect in any way the right or power of the Company or its
stockholders to make or authorize any combination, subdivision or
reclassification of the Stock or any reorganization, merger,
consolidation, business combination, exchange of shares, or other change
in the Company’s capital structure or its business, or any issue of
bonds, debentures or stock having rights or preferences equal, superior or
affecting the Restricted Stock or the rights thereof, or dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise. Nothing in this Agreement shall
confer upon the Participant any right to continue in the employment of the
Company, or interfere with or limit in any way the right of the Company to
terminate the Participant’s employment at any time.
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10. Interpretation
by Committee. The Participant agrees that any dispute or disagreement
which may arise in connection with this Agreement shall be resolved by the
Committee, in its sole discretion, and that any interpretation by the
Committee of the terms of this Agreement or the Plan and any determination
made by the Committee under this Agreement or the Plan may be made in the
sole discretion of the Committee and shall be final, binding, and
conclusive. Any such determination need not be uniform and may be made
differently among Participants awarded Restricted Stock.
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11. Miscellaneous.
(a) This Agreement shall be governed and construed in accordance with the
internal laws of the State of Delaware applicable to contracts made and to
be performed therein between residents thereof.
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(b) This
Agreement may not be amended or modified except by the written consent of
the parties hereto.
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(c) The
captions of this Agreement are inserted for convenience of reference only
and shall not be taken into account in construing this Agreement.
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(d) Any
notice, filing or delivery hereunder or with respect to Restricted Stock
shall be given to the Participant at either his or her usual work location
or his or her home address as indicated in the records of the Company, and
shall be given to the Committee or the Company at 0000 Xxxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Secretary. All
such notices shall be given by first class mail, postage prepaid, or by
personal delivery.
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(e) This
Agreement shall be binding upon and inure to the benefit of the Company and
its successors and assigns and shall be binding upon and inure to the
benefit of the Participant, except that the Participant may not transfer
any interest in any Restricted Stock prior to the release of the
restrictions imposed by Paragraph 2.
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(f) This
Agreement is subject in all respects to the terms and conditions of the
Plan.
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12. Change
of Control. (a) Notwithstanding any other provision to the contrary
contained in this Agreement, effective upon a Change in Control of the
Company (as defined below), the restrictions imposed upon the Restricted
Stock (except for any such shares which were previously forfeited to the
Company) by Paragraph 2 of this Agreement shall immediately be deemed to
have lapsed and the Release Date shall be deemed to have occurred as of
the date of the Change in Control of the Company with respect to such
Restricted Stock.
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(b) The
following terms shall have the following meanings when used in this
Paragraph 12:
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(i) |
“Act” means the Securities Exchange Act of 1934, as amended. |
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(ii) “Affiliate”and“Associate” shall
have the respective meanings ascribed to such terms in Rule l2b-2 of
the General Rules and Regulations under the Act.
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(iii) A
Person shall be deemed to be the “Beneficial Owner” of any
securities:
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(A) which
such Person or any of such Person’s Affiliates or Associates has the
right to acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement or
understanding, or upon the exercise of conversion rights, exchange rights,
rights, warrants or options, or otherwise; provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to beneficially
own, (i) securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase, or (ii) securities issuable upon exercise of rights issued
pursuant to the terms of any Rights Agreement of the Company, at any time
before the issuance of such securities;
(B) which
such Person or any of such Person’s Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has “beneficial
ownership” of (as determined pursuant to Rule l3d-3 of the
General Rules and Regulations under the Act), including pursuant to any
agreement, arrangement or understanding; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security under this clause (B) as a result of an agreement, arrangement
or understanding to vote such security if the agreement, arrangement or
understanding: (i) arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable rules and
regulations under the Act and (ii) is not also then reportable on a
Schedule l3D under the Act (or any comparable or successor report);
or
(C) which
are beneficially owned, directly or indirectly, by any other Person with
which such Person or any of such Person’s Affiliates or Associates
has any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as
described in clause (B) above) or disposing of any voting securities of
the Company.
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(iv) “Board” means
the Board of Directors of the Company.
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(v) “Change
in Control” means the occurrence of any of the following:
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(A) any
Person (other than (i) the Company or any of its subsidiaries, (ii) a
trustee or other fiduciary holding securities under any employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities
or (iv) a corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of
stock in the Company (“Excluded Persons”)) is or becomes
the Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates after the
date of this Agreement, pursuant to express authorization by the Board
that refers to this exception) representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined Voting
Power of the Company’s then outstanding voting securities; or
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(B) the
following individuals cease for any reason to constitute a majority of the
number of directors of the Company then serving: (i) individuals who, on
the date of this Agreement constituted the Board and (ii) any new director
(other than a director whose initial assumption of office is in connection
with an actual or threatened election contest, including but not limited
to a consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company’s shareholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who either
were directors on the date of this Agreement, or whose appointment,
election or nomination for election was previously so approved
(collectively the “Continuing Directors”); provided,
however, that individuals who are appointed to the Board pursuant to or in
accordance with the terms of an agreement relating to a merger,
consolidation, or share exchange involving the Company (or any direct or
indirect subsidiary of the Company) shall not be Continuing Directors for
purposes of this definition until after such individuals are first nominated
for election by a vote of at least two-thirds (2/3) of the then Continuing
Directors and are thereafter elected as directors by the shareholders of
the Company at a meeting of shareholders held following consummation of
such merger, consolidation, or share exchange; and, provided further, that
in the event the failure of any such persons appointed to the Board to be
Continuing Directors results in a Change in Control of the Company, the
subsequent qualification of such persons as Continuing Directors shall not
alter the fact that a Change in Control of the Company occurred; or
(C) the
shareholders of the Company approve a merger, consolidation or share
exchange of the Company with any other corporation or approve the issuance
of voting securities of the Company in connection with a merger,
consolidation or share exchange of the Company (or any direct or indirect
subsidiary of the Company) pursuant to applicable stock exchange
requirements, other than (i) a merger, consolidation or share exchange
which would result in the voting securities of the Company outstanding
immediately prior to such merger, consolidation or share exchange
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least 50% of the combined Voting Power of the voting
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger, consolidation or share
exchange, or (ii) a merger, consolidation or share exchange effected to
implement a recapitalization of the Company (or similar transaction) in
which no Person (other than an Excluded Person) is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
(not including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates after the
date of this Agreement, pursuant to express authorization by the Board
that refers to this exception) representing 20% or more of either the then
outstanding shares of common stock of the Company or the combined Voting
Power of the Company’s then outstanding voting securities; or
(D) the
shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company or an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets (in
one transaction or a series of related transactions within any period of
24 consecutive months), other than a sale or disposition by the Company of
all or substantially all of the Company’s assets to an entity at
least 75% of the combined Voting Power of the voting securities of which
are owned by Persons in substantially the same proportions as their
ownership of the Company immediately prior to such sale.
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Notwithstanding
the foregoing, no “Change in Control” shall be deemed to have occurred if
there is consummated any transaction or series of integrated transactions immediately
following which the record holders of the common stock of the Company immediately prior to
such transaction or series of transactions continue to own, directly or indirectly, in the
same proportions as their ownership in the Company, an entity that owns all or
substantially all of the assets or voting securities of the Company immediately following
such transaction or series of transactions.
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(vi) “Person” means
any individual, firm, partnership, corporation or other entity, including
any successor (by merger or otherwise) of such entity, or a group of any
of the foregoing acting in concert.
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(vii) “Voting
Power” means the voting power of the outstanding securities of the
Company having the right under ordinary circumstances to vote at an election
of the Board.
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IN
WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly
authorized officer and the Participant has hereunto affixed his or her signature, all as
of the day and year first set forth above.
| COMPANY |
PARTICIPANT |
| XXXXXXX PETROLEUM CORPORATION |
By:_______________________________ |
________________________________ |
| Name:_____________________________ |
No. of Shares of Restricted Stock:______ |
| Title:______________________________ |
Grant Date:_______________________ |
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