NEWFIELD EXPLORATION COMPANY STOCK OPTION AGREEMENT
Exhibit 10.2
NEWFIELD EXPLORATION COMPANY
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of February 7, 2008 (the “Date of
Grant”) and is by and between Newfield Exploration Company, a Delaware corporation (the “Company”),
and Xxxxx X. Xxxxx (“Employee”).
1. Grant.
(a) The Option. Pursuant to the Newfield Exploration Company [2007/ 2000] Omnibus Stock Plan (as amended from time to time, the “Plan”), this Agreement
evidences the grant by the Company of an award of an option (the “Option”) to purchase all
or any part of an aggregate of shares of Common Stock (the “Underlying Shares”)
for a purchase price of $48.45 per share (the “Purchase Price”). The Option shall not be
treated as an incentive stock option within the meaning of section 422(b) of the Code.
(b) Plan Incorporated. Employee acknowledges receipt of a copy of the Plan and agrees
that the Option shall be subject to all of the terms and conditions of the Plan, which terms
and conditions are incorporated herein for all purposes. Capitalized terms used but not
defined in this Agreement shall have the meanings ascribed to such terms in the Plan.
2. Exercise of Option.
(a) Continuous Employment. Subject to its earlier expiration or termination, the
Option may be exercised, by written notice to the Company at its principal executive office
addressed to the attention of its chief financial officer (or such other officer or employee
of the Company or third party administrator as the Company may designate from time to time),
at any time and from time to time after the date of grant hereof, but, except as otherwise
provided below, the Option shall not be exercisable for more than a percentage of the
aggregate number of Underlying Shares determined by the number of full years from the Date
of Grant to the date of such exercise, in accordance with the following schedule:
| Percentage of Underlying | ||||
| Number of Full Years | Shares that may be Purchased | |||
Less than 1 year |
0 | % | ||
1 year but less than 2 years |
331/3 | % | ||
2 years but less than 3 years |
662/3 | % | ||
3 years or more |
100 | % | ||
(b) Death or Disability. Subject to the earlier expiration or termination of the
Option, upon Employee’s separation from service with the Company by reason of Employee’s
death or Disability, the Option may be exercised in full by Employee (or Employee’s estate
or the person who acquires this Agreement by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) at any time during the
period of one year following such separation from service. After the expiration of
such one year period, the Option shall terminate and shall not be exercisable.
(c) Voluntary Termination or Involuntary Termination for Cause. If Employee
voluntarily terminates his employment with the Company (other than upon a Qualified
Retirement) or if Employee’s employment with the Company is terminated involuntarily for
Cause, then the Option shall terminate immediately and shall not be exercisable. The
Committee may, in its sole discretion, advise Employee in writing, prior to a voluntary
termination of Employee’s employment with the Company, that such termination will be treated
as an involuntary termination other than for Cause that is governed by Section 3(d).
(d) Other Involuntary Termination. Subject, in all cases, to the earlier expiration or
termination of the Option, if Employee’s employment with the Company terminates
involuntarily other than for Cause, then the Option may be exercised by Employee at any time
during the 90 day period following such termination, or by Employee’s estate (or the person
who acquires this Agreement by will or the laws of descent and distribution or otherwise by
reason of the death of Employee) during a period of one year following Employee’s death if
Employee dies during such 90 day period, but in each case only as to the number of shares
Employee was entitled to purchase hereunder as of the date Employee’s employment so
terminates. After the expiration of such 90 day period (or after the expiration of the one
year period following Employee’s death if Employee dies during such 90 day period), the
Option shall terminate and shall not be exercisable.
(e) Qualified Retirement. Subject to the earlier expiration or termination of the
Option, if Employee’s employment with the Company terminates as a result of Employee’s
Qualified Retirement, the Option may be exercised in full by Employee (or Employee’s estate
or the person who acquires this Agreement by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) at any time during the five year period
following such retirement. After the expiration of such five year period, the Option shall
terminate and shall not be exercisable.
3. Term. Notwithstanding anything in this Agreement to the contrary, the Option shall
terminate on, and shall not be exercisable on or after, the ten year anniversary of the Date of
Grant.
4. Payment of Purchase Price. The Purchase Price shall be paid in full at the time of
exercise (a) in cash, (b) by delivering or constructively tendering to the Company shares of Common
Stock having a Fair Market Value equal to the purchase price (provided such shares used for this
purpose must have been held by Employee for such minimum period of time as may be established from
time to time by the Committee), (c) if the Common Stock is listed or traded on a national
securities market, through a “cashless exercise” in accordance with a policy or program established
by the Company or (d) any combination of the foregoing. No fraction of a share of Common Stock
will be issued by the Company upon exercise of the Option or accepted by the Company in payment of
the purchase price. In lieu thereof, Employee shall provide a cash payment for such amount as is
necessary to effect the issuance and acceptance of only whole shares of Common Stock. Until the
purchase price for Underlying Shares has been paid in full, the holder of such shares shall not be,
or have any of the rights or privileges of, a stockholder of the Company with respect to such shares.
2
5. Definitions.
(a) “Cause” means Employee has (i) failed to fulfill the duties of his employment
position as prescribed by the Board, the Company’s officers or Company policy, (ii) engaged
in conduct constituting willful misconduct or fraud or (iii) been convicted of any felony,
any crime involving moral turpitude or any crime committed in the course of Employee’s
employment.
(b) “Disability” has the meaning set forth in Section 409A(a)(2)(A)(ii) of the Code.
(c) “Qualified Retirement” means (i) Employee’s retirement date is no earlier than
February 15, 2010 and (ii) Employee provides at least six months prior written notice to the
Board.
6. Tax Withholding. To the extent that the exercise of the Option or the disposition
of Underlying Shares is compensation income to Employee for federal or state income tax purposes,
Employee shall deliver to the Company at the time of such exercise or disposition such amount of
money or shares of Common Stock as the Company may require to meet its obligation under applicable
tax laws or regulations. Upon an exercise of the Option, Employee hereby authorizes the Company,
in the Company’s sole discretion, to satisfy any such withholding requirement out of any cash or
shares of Common Stock distributable to Employee upon such exercise.
7. Compliance with Securities Laws.
(a) Registration of Underlying Shares. The Company has registered under the Securities
Act of 1933, as amended (the “Act”), the issuance and sale of Underlying Shares upon
exercise of the Option, and intends to keep such registration effective throughout the
period this Option is exercisable. In the absence of such effective registration or an
available exemption from registration under the Act, the issuance and sale of Underlying
Shares will be delayed until registration of such issuance and sale is effective or an
exemption from registration under the Act is available. The Company intends to use its
reasonable efforts to ensure that no such delay occurs. If an exemption from registration
under the Act is available upon an exercise of the Option, Employee (or the person permitted
to exercise the Option in the event of Employee’s death or incapacity), if requested by the
Company to do so, will execute and deliver to the Company in writing an agreement containing
such provisions as the Company may require to assure compliance with applicable securities
laws.
(b) Resale of Underlying Shares. Employee shall not sell or otherwise dispose of any
of the Underlying Shares in any manner that would constitute a violation of applicable state
or federal securities laws. The certificates representing the Underlying Shares may bear
such legend or legends as the Committee deems appropriate.
8. Community Interest of Spouse. The community interest, if any, of any spouse of
3
Employee in the Option or any of the Underlying Shares shall be subject to all of the terms,
conditions and restrictions of this Agreement and the Plan.
9. Binding Effect. This Agreement shall be binding upon and inure to the benefit of
any successors to the Company and all persons lawfully claiming under Employee.
10. Entire Agreement. This Agreement and the Plan constitute the entire agreement of
the parties hereto with regard to the subject matter hereof, and contain all the covenants and
agreements between the parties with respect to the Option and the Underlying Shares. Without
limiting the scope of the preceding sentence, all prior understandings and agreements, if any,
among the parties hereto relating to the subject matter hereof are hereby null and void and of no
further force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its officer
thereunto duly authorized, and Employee has executed this Agreement, all as of the Date of Grant.
| NEWFIELD EXPLORATION COMPANY | ||||
| By: | ||||
| Xxxxx X. Xxxxxxx | ||||
| Xx. Vice President & Chief Financial Officer | ||||
| Xxxxx X. Xxxxx | ||||
4
